1896. NEW ZEALAND.
REPORT OF THE BANKING COMMITTEE. TOGETHER WITH THE MINUTES OF THE PROCEEDINGS AND EVIDENCE, AND APPENDIX.
Brought up on the 9th October, 1896, and ordered to be printed.
Me. GKAHAM, Chaibman.
WELLINGTON. BY AUTHORITY : JOHN MACKAY, GOVERNMENT PRINTER.
1896.
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1896. NEW ZEALAND.
HOUSE OF REPRESENTATIVES BANKING COMMITTEE.
INDEX. SUMMARY. Page. Orders of Reference ... ... ... ... ... ... i Report, Interim (No. 1) ... ... ... ... ... ... ii Report, Interim (No. 2) ... .. ... ... ... ... ii Report, Interim (No. 3) ... ... ... ... .. ... iii Report, Interim (No. 4) ... ... ... ... ... ... iii Report of Committee ... ... ... ... ... ... iii Minutes of Proceedings ... ... ... ... ... ... xiv Minutes of Evidence ... ... ... ... ... 1-413 John Murray, Correspondence with ... ... ... ... 414-425 Extracts from " Australian Investors' and Banking Record " {separate foiioing) 1-105 Exhibits and Register ... ... ... ... ... 106-277
EVIDENCE.
Booth, Wm.— Pages Ist day .. , . .. .. .. 2-5 2nd , .. .. . . .. .. 5-12 3rd „ .. .. .. .. .. 12-18 4th „ .. .. .. .. .. 18,19 sth „ .. .. .. 19-21 6th „.. ■ ■ ■ • • • •• 22-28 7th ~ .. .. .. .. .. 28-34 Bth „ .. .. .. .. .. 34-44 9th ~ .. .. .. .. .. 44-52 10th , .-. .. .. .. .. 52-63 11th „ .. .. .. .. .. 63-70 12th „ .. .. .. .. .. 70-78 13th „ .. .. .. .. .. 78 Brown, D. H. .. .. .. .. 396-398 Butt, John Marten — Ist day .. . . .. .. .. 233-243 2nd „ .. .. .. .. .. 244-256 3rd „ .. . . .. .. .. 256-269 4th „ .. .. .. .. .. 351-353 sth „ .. .. .. ... .. 413 Evans, Wm. .. .. .. .. 393-396 Foster, Walter George — Ist day .. .. .. .. .. 21,22 2nd „ .. .. . • ■ • ■■ 269-278 3rd „ .. ... .. .. .. 278-288 4th „ .. .. .. .. .. 398-400 Hanna, J. C. — Ist day .. .. .. .. .. 378-382 2nd „ .. .. .. .. .. 383-391 Johnston, W. W., Hon. .. .. .. 353-361 Macarthy, T. G.— Ist day .. .. .. .. .. 207-221 2nd „ .. .. .. .. .. 221-233 Mackenzie, Henry .. . . .. .. 408-413
Meek, Thomas .. .. .. 391-393,397 McLean, George, Hon.— Ist day .. .. .. ~ . . 361-371 2nd „ .. .. .. .. .. 371-378 Rhind, W. G. .. .. .. ... 378 Smith, C. O'Hara .. .. .. .. 22 Stewart, W. D., Hon.— lstdav .. .. .. .. .. 343-350 2nd „ .. .. .. .. .. 350-301 Tolhurst, G. K. .. .. 400 408 Vigers, W. B. .. .. . .. 335-343 Ward, J. G., Hon.— Ist day .. .. .. .. .. 288 2nd „ .. .. . . .. .. 288-335 Watson, William— Ist day .. .. .. .. .. 1, 2 2nd „ .. .. .. .. .. 2 3rd „ .. .. . . ... .. 79 4th „.. .. .. .. . . 79-93 sth „.. .. . . .. .. 93-99 6tb „ .. .. .. .. 99-108 7tb . . . ... .. .. .. 108-117 Bth .. .. .. .. .. 117-125 9th „.. .. .. .. . 125-135 10th „ .. .. .. .. .. 135-146 11th „ .. .. .. .. .. 146-153 12th „ .. .. .. .. .. 153-161 13th „ .. .. .. .. .. 161-167 14th „ .. .. .. .. .. 167-170 15th „ .. .. .. .. .. 171-176 16th „ .. .. .. .. .. 177-185 17th „ .. .. .. .. .. 185-189 18th „ ... .. .. .. .. 189-198 19th „ .. . . .. .. .. 198-207
ORDERS OF REFERENCE. Extracts from the Journals of the House of Representatives. Tuesday, the 30th Day of June, 1896. Ordered, "That a Select Committee of ten members be appointed to examine and report upon the following matters: (1.) The affairs of the Bank of New Zealand, the Bank of New Zealand Estates Company (Limited), the Auckland Agricultural Company (Limited), and the Colonial Bank of New Zealand, in so far as the same relate to the banking legislation of 1893, 1894, and 1895, with special reference to all the circumstances leading up to that i—L 6.
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legislation, or which have since transpired, the fullness and accuracy of the information then disclosed by the directors, officers, and agents of those institutions, and their conduct and fitness. (2.) To ascertain what amounts have been written off since the Ist day of January, 1888, and what led to such writing-off; and to deal with all such other matters as the Committee deems necessary or expedient in the premises: Provided that the Committee shall not be empowered to inquire into the ordinary business of persons or companies doing business with the Bank of New Zealand, excepting so far as relates to such writing-off and what led to the same. (3.) The appointment of the President and General Manager of the Bank of New Zealand, and their connection with the Colonial Bank, or their connection with any of the constituents of the Colonial Bank, or with the banking legislation of 1893, 1894, and 1895. (4.) Any negotiations which may at any time have taken place between the Colonial Bank and the Bank of New Zealand and the Ministry, or any member thereof, with a view to amalgamation or purchase. (5.) The purchase of the Colonial Bank by the Bank of New Zealand, with special reference to— (a) The position of the Colonial Bank at the time of the first proposal for amalgamation or purchase, and subsequently; (b) the accuracy or otherwise of the representations made to the Bank of New Zealand, the Government, or any member thereof, with reference to suoh amalgamation or purchase: (c) the amount paid for good-will, how-it was arrived at,- and the correctness or otherwise of the estimate. (6.) The information touching the premises in possession of the Government, or any member thereof, at the time of the banking legislation of 1893, 1894, and 1895, and since that time. The Committee to have power to call for persons and papers, and to confer with any similar Committee appointed by the Legislative Council. The Committee to consist of the Hon. Mr. J. McKenzie, Mr. Graham, Mr..Montgomery, Mr. McGowao,. Mr. , Mr. , Mr. , Mr. , and the Mover ; five to be a quorum; to report within twenty-one days."—(Hon. Mr. Seddon.) Frtoay, the 3rd Day or July, 1896. Ordered, " That the names of Mr. G. Hutchison, Mr. Tanner, Mr. Maslin, Mr. Guinness, and the Hon. Major Steward be added to the Banking Committee."—(Hon. Mr. Seddon.) Friday, the 10th Day of July, 1896. Ordered, " That Standing Orders Nos. 223 and 229 be suspended, so as to enable the proceedings of the Banking Committee to be open to the Press, except when the Committee are deliberating."—(Hon. Mr. Seddon.) Thursday, the 16th Day of July, 1896. i • ' -. ..- ■" Ordered, " That the words ' and to confer with any similar Committee of the Legislative Council.be omitted from the order of reference appointing a Select Committee to inquire into banking matters." —(Hon. Mr. Seddon.) Wednesday, the 22nd Day of July, 1896. Ordered, "'That the Banking Committee have leave to postpone drawing up their report for twenty-one days as from the 21st instant." —(Mr. Graham.) Tuesday, the 11th Day of August, 1896. Ordered, " That the Banking Committee be granted an extension of twenty-one days in which to bring up their report."—(Mr. Graham.) - : ■>■ Tuesday, the Ist Day of September, 1896. . . : -.;; \ '"•, Ordered, " That a further extension of twenty-one days be granted to the Banking Committee in whioh to bring up their report."—(Mr. Graham.) Tuesday, the 22nd Day of September, 1896. Ordered, " That the Banking Committee have an extension of ten days in which to bring up their report."— (Mr. Graham.) L. Friday, the 2nd Day of October, 1896. 'Ordered, ," That the Banking Committee have an extension of seven days in which to bring up their report."--" (Mr. Graham.) ' ' ' ', Thursday, the Bth Day of October, 1896. Ordered, " That the Banking Committee have leave to sit this evening during the sitting of the House." ...
EEPOETS.
INTERIM REPORT. The Banking Committee desires to report:— ■ •; ,; 1. That, in reply to a communication from the Banking Committee, House of Representatives, : inviting the Committee of the Legislative Council to meet and confer with it, the following com-' munication has been received from the Chairman of the Committee of the Legislative Council:— . " Banking Committee, 14th July, 1896. —On the. motion of the Hon. Mr. Kelly, resolved, Tha,t the Chairman inform Mr. Graham, Chairman of the Committee of the House of Representatives, that this Committee is prepared to join the Committee of the House of Representatives if the order, of reference is made the same in all respects as that of the Committee of the Legislative Council; and also if Counsel are not present, nor Press reporters admitted." 2. That thereupon it was resolved by your Committee, That they did not deem it advisable to apply to the House to amend the order of reference, and proceeded to conduct the inquiry as directed by the House. 15th July, 1896. : V
INTERIM REPORT. . . The Committee desires to report to the House that Mr. William Watson, a witness on his oath before the Banking Committee, was asked the following question : " What are the names of persons and corporations in whose favour such writings-off took place, and the amount in each case so written off?" To which he gave the following reply: "Having regard to the terms of my appointment, and the declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present, and I am acting according to the advice of the bank's counsel. Further, it is my duty to the bank and the colony to decline to give such information. Ido not wish to add anything further to my answer." The. Committee, under the circumstances, reports the matter to the. House, and requests the House to deal with the witness in such manner as it may think fit; ■' 17th July, 1896.
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INTERIM REPORT. I am directed to report that the Banking Committee have passed the following resolution: "That no member of the Committee shall speak longer than five minutes at a time, or more than twice on any one motion or amendment, provided that this rule shall not come into force till reported to the House, and that the Chairman be requested to report this resolution, together with the Committee's proceedings relating thereto, to the House this afternoon." Copy of minutes of proceedings attached. (See Friday, 24th July, 1896, for minutes of proceedings.) 24th July, 1896. ~
INTERIM REPORT. I am directed by the Banking Committee to report that the taking of evidence is now completed, and to apply that a further extension of seven days be granted to the Committee in which to prepare and bring up the report. Ist October, 1896.
..'.,;,:.,'. ['.:■{■:<''■■* ,;;.::...,',...- REPORT, The Committee appointed to examine and report into the affairs of the Bank of New Zealand, the Bank of New Zealand Estates Company (Limited), the Auckland Agricultural Company (Limited), the Colonial Bank of New Zealand, the banking legislation of 1893 and 1894 and 1895, and what led to such legislation, and the several matters set out in the order of reference, have made a searching and exhaustive inquiry, extending over three months, into the several matters submitted to them, and have the honour to report thereon as follows :— RETROSPECT. 1888. In the year 1888 a crisis occurred in the affairs of the Bank of New Zealand. The directors, at a meeting held on'the 26th April, recommended that a dividend should be declared at the rate of 7 per cent, on the original capital, but at the same time advised that a shareholders' committee should be appointed to inquire into the affairs of the bank. A committee was appointed for this purpose, and reported on the 3rd October, inter alia, that— " Our examination disclosed a mass of securities, taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover for which had become obviously inadequate, altogether involving losses which the directors had not faced, but which, upon a rigorous examination, we feel convinced will absorb not only the whole of the Reserve Fund, but also nearly one-third of the paid-up capital of the bank, say, ~£BOO,GOO in all, j " You will naturally and properly expect from us something in elucidation of a state of things so startling, and which we had so little right to expect. " It is obvious to us that for years past the bank has been paying a rate of dividend it ought not to have paid. Securities have been held and accounts kept going in the vain hope of a recovery of the values placed upon them in what was, in fact, a period of inflation ; and supervening upon this, within the last two or three years, heavy losses in Australia brought matters to the climax which we are now under the unpleasant necessity of facing. " Finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000 ; while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." The nature of some of these transactions can be judged by reference to Mr. George Buckley's speech at the meeting of shareholders on the 24th October, 1889 (p. 23, Extracts from Banking Records—Appendix hereto). These losses were met by writing off £300,000 from the bank capital (and also the whole of ; the' Reserve Fund, £500,000). Dividends at the rate of 7 per cent, were paid during the year, amounting to £59,500. The writings off accounts for the year amounted to £216,885. 1889. In 1889 the share capital was increased by the issue of 25,000 new shares of £10 each, £10 paid up, and 25,000 shares of £10 each, £7 paid up. This, together with the then share capital, £700,000, brought up the capital to £1,124,824. Dividends at the rate of 7 per cent, were paid during the year, amounting to £72,438. The writings off accounts amounted to £109,565. •:.':" 1890. In 1890 the capital stood at £1,125,000. No dividend was paid during the year. The writings off the accounts, consequent on the losses revealed to the shareholders' committee, amounted to the unprecedented sum of £1,169,555, of which £1,088,795 was written off the Consolidated Properties Account." ";:■;. . 1891. In 1891 the capital was written down by £227,167, leaving £897,833. Dividends were paid amounting to £43,750. The writings off the accounts amounted to £18,949, and £10,000 was placed to the credit of a new Reserve Fund. 1892. In 1892 the capital of the bank was £900,000, the increase, £2,167, being due to the payment of calls in arrear. Dividends at the rate of 5 per cent., amounting to £45,000, were paid during the year, and the Reserve Fund was increased to £35,000. The writings off accounts amounted to £20,198,".... ...
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1893. In 1893 the bank's capital remained at £900,000. 'Dividends were paid amounting to £45,000, and the Reserve Fund was increased to £45,000. The writings off accounts amounted to £13,532. 1894. In the beginning of this year, 1894, the capital stood at £900,000. No dividends were declared, and the Reserve Fund stood at £45,000. Towards the end of this year the £2,000,000 "A " guaranteed stock was created. The writings-off accounts amounted to £15,164. 1895. In 1895 the capital stood at £3,059,745, being £ Old capital ... ... ... ... ... 900,000 "A" guaranteed stock ... ... ... ...2,000,000 Proceeds of first call ... .... ... ... ... 159,745 £3,059,745 No dividends were paid. During this and the following year £1,531,951 was written off, which ,was allocated as follows :— £. 8. d. I H £ «. d. Capital ... ... ... 900,000 0 0 j Call, 1895, to Estates Reserve Fund ... ... 45,000 0 0 1 Company Share AcCall, 1895, received to 13th count ... 441,206 July, 1896 ... ... 441,206 0 0 Share capital to Profits ... ... ... 7,031 10 5 Estates Company Profits ... ...£49,470 Share Account ...323,100 And from Suspense —-—■ — Accounts ... 4,723 To Estates Company ... 764,306 0 0 ... 54,193 0 0 Contingency Fund ... 171,136 General Contingency Account 62,480 18 8 Bad debts written off 542,316 Interest Suspense Account ... 3,720 5 10 Further, for March, Recoveries ... ... 105 6 3 1896 ... ... 54,193 Consolidated Properties Account... ... ... 4110 10 To bank ... ... ... 767,645 0 0 Reserved Profit Account ... 17,968 8 0 Bad Debt Suspense Account 204 0 0 £1,531,951 0 0 £1,531,951 0 0 1896. On 31st March, 1896, the capital stood at £2,570,841, composed of:—• Guaranteed stock .. ... ... ... ... ... £2,000,000 Preference shares ... ... ... ... ... ... 500,000 Proceeds to date of second call ... ... ... ... 47,423 Reserve Fund (premium on "A " stock) ... ... ... 23,418 £2,570,841 No dividends were paid. LOSSES AND WRITINGS-OFF. It will thus be seen that since the year 1888 no less a sum than £3,095,799 has been writtten off accounts owing to losses. From this, however, should be deducted the sum of £171,136 nowstanding to the credit of the Contingency Fund Account, thus leaving £2,924,663. The Committee, however, are of the opinion that, in addition to this, the following losses will be required to be provided for : — Estimated deficiency in properties transferred to Realisation Board (1895) ... ' ... ... ... ... ... £855,000 Estimated additional deficiency ... ... ... ... 45,000 Contingency Fund (the whole will be required) ... ... ... 171,136 Ascertained" losses in 1896 ... ... ... ... ... 45,000 £1,116,136 To this add the above-mentioned sum ... ... ... 2,924,663 Making a total of ascertained and estimated losses ... ... £4,040,799 Besides this there may be losses in the trading concerns remaining in the hands of the Estates Company ;of these, however, the Committee have been unable to form any reliable estimate. During the period in which these losses were made no less than £265,688 was paid away by the directors in dividends. These figures tell the story of the past management of the bank. THE BANK OF NEW ZEALAND ESTATES COMPANY. This company was formed in 1890 to take over the " Globo assets " of the Bank of New Zealand. These consisted of real estate, trading concerns, and other properties of various kinds which had fallen into the hands of the bank. They had been administered since 1889 in a special depart-
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ment separate from the bank's other business. These assets were valued in the bank's books at £4,250,269 in 1888 ; but at the instance of the shareholders' committee in that year they were were written down by £800,000, the net book-value then being £3,450,269. They were valued by Mr. Hean in 1890, and further reduced by £342,276, leaving a net value of £3,107,993. To this sum, for some unexplained reason, £54,507 was added by the London Board, and the properties were taken over by the Estates Company from the bank at £3,162,500, being paid for by—■ Debentures ... ... ... ... ... ... £1,312,500 Shares in the Estates Company ... ... ... ... 1,850,000 £3,162,500 The debentures were redeemable in 1910 at 103, or before that date at 105. These debentures were redeemed as follows: £750,000 on 30th May, 1895, and £750,000 on 24th November, 1895. The loss on the Estates Company's debenture operations amounted to no less than £305,286, besides the loss occasioned by the high interest paid (5-§- per cent.) and large office expenses. The Committee are of opinion, viewing the matter in the light of subsequent events, that it would have been the more prudent course not to have formed the Estates Company, but to have called up the reserve liability of the shareholders, and thus provided the bank with the necessary working capital. The separation of the Estates Company from the Bank of New Zealand was in name only, the Bank being practically the only shareholder, and the company's separate existence seems to have been purely nominal. The effect has been, through the operation of the Act of 1889, to enable a misleading item to appear on the bank's balance-sheets (the shares of the Estates Company), and to allow dividends to be paid when the bank was actually going from bad to worse every year. The following table, furnished by Mr. Foster and Mr. Cuff, purports to show the gross revenue for the years ending 31st March, 1891, to 31st March, 1896 :— * Geoss Revenue from Stations and other Properties. flß9l. 1892. 1893. 1894. 1895. {1896. Stations .. .. .. £16,265 £72,991 £39,998 £35,913 £9,883 £58,493 §44,858 Other Assets .. .. 52,608 48,863 41,250 44,226 25,302 53,201 Totals .. .. £68,873 £121,854 £126,106 £80,139 £35,185 £111,694 Average—£96,672 per annum. * " Gross Revenue " means the revenue less the expenses of working the stations and trading concerns, including rates and taxes, but not including office management or interest on capital. f Seven months and a half. { The properties belonging to the Estates Company were divided into two portions as from the 31st March, 1895. In the previous years, though the revenue of the stations is shown separately from the other assets, both the stations and the trading concerns were managed by the Estates Company. § This amount represented unexhausted improvements, which the directors consider should have been credited to profit in previous years. During the years subsequent to 1890, owing to the fall in agricultural produce, in wool, and in frozen meat, the Estates Company's properties steadily depreciated in value, until they were no longer able to pay interest on the debentures which had been created. They thus became a heavy burden on the bank, and at the 31st March, 1895, the pro forma combined balance-sheets of the Estates Company and the Auckland Agricultural Company showed a deficiency, after writing down the book-value of the properties to the level of the latest valuation received, of no less than £1,764,383. By the legislation of 1895 the Estates Company's properties (£4,026,162 book-value) were divided into two parts. Properties of the book-value of £2,731,706 were transferred to the Realisation Board. The trading concerns, freeholds beyond New Zealand (£53,174 book-value), shares (£214,080), and sundry other assets, amounting in all to £1,294,456 were retained by the bank. Since that time realisations to the amount of £90,497 have already taken place ; the deficiency on the latest ascertained value being £2,332 In addition to that, there are uncompleted sales to the Government Land-purchase Board of property valued at £99,028; the deficiency on the latest valuation of these properties will be £23,801. The trading concerns retained by the bank have, during the year ending 31st March, 1896, paid 6 - 56 per cent, on their book-cost (£451,242), and 9-11 per cent, on their latest ascertained value (£317,820). The Committee consider it undesirable that the bank should engage in commerce, and recommend that the trading concerns should be realised as soon as possible. To effect this the directors estimate from two to three years will be required. The Committee have carefully inquired into the properties now held by the Realisation Board, and the evidence brought before them shows that the realisation will probably not fall far short of the estimates placed, before the Joint Committee in 1895. On the other hand, it seems unlikely that these properties will all be realised within the eight years now remaining. The Committee consider that the speedy realisation of these properties is in the interest of the bank and the colony, and have no doubt that the Board appointed are doing their utmost to bring this about AUCKLAND AGRICULTURAL COMPANY. The Auckland Agricultural Company was formed in 1881, its nominal capital being £800,000 The Bank of New Zealand held shares in this company, but transferred its interest to the Estates Company, although, for book-keeping purposes, the Auckland Agricultural Company continued as a separate entity. Its assets, amounting to £636,162 on the 3.lst March of that year; were handed over to the Realisation Board under the legislation of 1895. Most of the properties were in the Auckland District. Its debentures outstanding were directed to be paid off by debentures issued by the Assets Realisation Board under the legislation of 1895. This was done on the 15th May, 1896. The Committee have been unable to obtain details of the present values of the Auckland Agricultural Company's properties. The Committee recommend that these properties should be realised as soon as possible.
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~;.,■,.'.... ADJUSTMENT OF STATION ACCOUNTS. ... .. The Committee have taken evidence in respect to the adjustment of station accounts as between the Realisation Board and the Estates Company, provided for by clause 16 of " The Bank of New Zealand and Banking Act, 1895." The Government Auditor gave his certificate authorising the issue of debentures to the amount of £2,810,000; the Colonial Treasurer refused to approve. Messrs. Kember and Smith were instructed to investigate, and reported that the issue of debentures should not exceed £2,593,819. Further investigation took place, and resulted in the Government Auditor by a second certificate authorising the issue of debentures for £2,680,000, being £130,000 less than his first certificate. Owing to these difficulties, delay has taken place in the issue of the debentures authorised by the legislation of 1895. The Committee find also that the sum of £42,000, liabilities of stations on overdrafts and otherwise to the bank, was not taken into account by the Committee of 1895 in forming their estimate of the deficiency in the Estates Company. Against this, however, there are assets amounting to £30,000. The Committee recommend that the debentures be issued as soon as possible, in accordance with the Government Auditor's latest certificate. ■ - BANKING LEGISLATION. - :;"■ ■■.■ ■' 1889. During the session of 1889 a private Bill, " The New Zealand Bank Act 1861 Amendment Act, 1889," was passed with the assistance of the Government of the day. Your Committee deem it advisable to call attention to its provisions, since by subsection (3) of section 5 of this Act the Bank of New Zealand was permitted to pay dividends without provision being made for losses on its estates. Section 6 was restrospeetive, and validated the payments of dividends, and anything which was done by the Bank or Board, from October, 1888, to August, 1889. 1893. During the session of 1893 the Government, at the request of the Bank of New Zealand, introduced the Bank-note Issue Bill, which subsequently became law. This Act authorised the Governor to guarantee, under certain circumstances, the note-issue of any bank doing business in New Zealand. Previous to its introduction a conference was held, at which representatives of all the banks doing business in the colony were present. They agreed that it would be prudent to pass the Bill, in view of the danger of the Australian banking crisis extending to New Zealand. On the 9th of October, 1893, the Colonial Treasurer (the Hon. Mr. Ward), having noticed that the Bank of New Zealand coin reserve was below the legal limit, called the attention of the bank authorities to the matter, The General Manager contended that the law had been complied with. The Colonial Treasurer, although not accepting the bank's view of the law, did not, .under the critical circumstances existing at the time, deem it advisable to insist upon the coin reserve being increased, but gave instructions that the position of the bank should be carefully watched. 1894. On the 24th June Mr. John Murray saw the Colonial Treasurer, and disclosed to him, for the nrst time, the fact that the bank was in a serious position. On the following morning an interview took place between the Premier, the Treasurer, and Mr. Murray, at which Mr. Murray stated that, unless the colony came to the rescue, the Bank of New Zealand must close its doors in the course of a few days. He presented a cable from the directors in London empowering him to act on their behalf. The bank balance-sheet of the 31st March and the quarterly Gazette returns were produced, and Mr. Murray admitted that, notwithstanding the apparently sound position of the bank Ets therein shown, there was no hope of it being able to carry on beyond the following Monday (2nd July). He asserted that, since the 31st March issue of the balance-sheet, the position had become so impaired that the directors, in preparing the balance-sheet for the August meeting, found themselves again unable to declare a dividend ; that losses had been discovered in the bank; that there were no receipts on account of a large portion of the shares held by the bank in the Estates Company ; that the bank had been obliged to pay a large portion of the interest on the company's debentures; and that these combined circumstances rendered it impossible for the bank to further carry on business. As a result of this interview, Mr. Murray was requested to place the position of the bank before the Government by letter, and to meet the whole of the Ministers the following day. On the afternoon of the same day (25th June) Mr. Murray wrote the following letter : — Siß, — Bank of New Zealand, Wellington, 25th June, 1894. I have the honoui to inform you that I have been commissioned by the directors of this bank to communicate with the Government regarding its affairs, and to say that, owing to low prices, bad seasons, and other circumstances, the directors find that it will be quite impossible to declare a dividend to shareholders at the approaching annual meeting, the certain result of which must be the closing of the bank ; because even now, notwithstanding efforts to collect resources, the executive find the utmost difficulty in maintaining the gold reserve prescribed by law. The very low price of the bank shares in the market is itself evidence of distrust which may at any moment develop into panic. That the closing of the Bank of New Zealand would be a calamity to the colony of the first magnitude can be questioned by no one. Its business relations in New Zealand are larger and more important in proportion to the population and resources of the country than are those of any bank in any other colony. This will appear more strikingly when the following figures are considered : The bank has within New Zealand ninety-five branches or agencies. At these there are kept 25,000 current accounts, with an aggregate on deposit of £1,600,000; 12,000 fixed deposits, £2,800,000; which means, after allowing for cases of persons holding more than one fixed deposit, say, 35,000 separate depositors, with a total of £4,400,000 on deposit. .'".' Oh the other hand, there is afforded accommodation by way of overdraft to 4,600 persons to the total amount of £2 550,000; and there are, besides, 950 discount accounts, representing a large number of traders', acceptances, the aggregate amount being £600,000.
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•" That many'of these persons would find accommodation elsewhere is no doubt true, but these would be the better off, large numbers of well-doing but not rich men would be ruined, promising enterprises crushed, and the industries of the colony would suffer damage from which it would take years to recover. That the lock-up of the money of 35,000 depositors would cause immense dislocation of business, inconvenience, and loss goes without saying. Among these depositors there is the Auckland Savings-Bank, with, say, £60,000 at its credit in the Bank of New Zealand. You are aware that a run on it took place last year. There is also the Government of New Zealand, with about £800,000, between actual deposits and drafts of the bank held. This large sum is in addition to the liabilities to the public detailed above. There are, say, £1,500,000 of London deposits which, as quickly as the money could be collected in the colony, would be withdrawn from use there. I will only add that the bank has 1,300 shareholders in New Zealand, who, besides the capital they have at stake, are liable for £720,000. It is not my place to allude to other banks, but I think I only echo a general opinion when I say that the trouble would not stop short with the Bank of New Zealand. On this point recent Australian experience is suggestive. Finally, it is clear that the evil would be intensified by the depression admittedly now existing in the colony, or would greatly intensify it. Employment, already scarce, would become scarcer, and the finding of work for the unemployed would strain the resources of the Government, and unavoidably involve much waste of these; while, as a matter of course, the public revenue would suffer seriously. He would be a bold man who would permit such a calamity to overtake New Zealand if he could prevent it, and I am firmly persuaded it may be prevented if the Government will meet the crisis wisely, boldly, and in good time. The business of the bank is as yet practically intact—: distrust has not to any material extent reached depositors; and it only needs that the bank be put upon a stable footing to avert the mischief which as yet, happily, is only imminent. But I must respectfully warn the Government that it is imminent, and, if they determine to adopt any measures to deal with the situation, these would need to be taken at once to be effective. To do this two things are required: (1) That the bank be placed in possession of increased capital resources, partly to fortify its cash reserves, partly to enable it to extend to its customers the accommodation they require in the second half of the year in anticipation of their wool-clips and crops of the ensuing season; (2) and that this be done to an amount which will suffice to' maintain confidence in the bank's stability, even if no dividend be paid for a time on its existing capital. The directors hoped to have been able themselves to have issued the required amount of preference capital, but this has been found impracticable. - - ;. I have therefore to propose to the Government that the colonial guarantee be given to an. issue of two millions in preference shares, bearing not exceeding 4 per cent, interest, the period to be. ten years ; such issue to be then replaced by a fresh issue of ordinary shares or otherwise, and the State relieved of its guarantee. No dividend to be in the meantime paid on the present capital till the Estates Company assets be disposed of, and the business of the bank declared by an auditor of the Government's appointing to be clean and sound. In seeking the interposition of the State, I have no idea of the bank shareholders being relieved of one penny of the loss which may fall upon them at the expense of the.taxpayer. As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000; reserve liability, £1,500,000: total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin. Of the proposed two millions, one to be at the disposal of the bank in its ordinary business, the other million to be held in reserve, and invested only in such manner as the Colonial Treasurer may approve. .. I have verbally suggested to you precautions which the Government might take to secure itself and to guard against a recurrence of the state of things which calls for such exceptional treatment; but it is for the Government to impose conditions. I need not, therefore, dwell on : that aspect of the matter herein. I will only ask permission to add that, apart from preventing so terrible a misfortune to the colony, such arrangements as I have suggested (including State supervision and public audit) would have the effect of placing and maintaining the banking business of the colony fundamentally on a sound footing. The want of a great bank, the true position of which was known to the Government by independent audit of its own appointee, and through which the financial assistance of the State could in time of monetary crisis be extended to the community without hesitation, was severely and even disastrously felt recently in Australia. The great nations of the Old World have each their national banks in more or less intimate relations to the State. It is felt that these banks have, in case of need, the State behind them; and on their stability the immense fabric of banking, currency, and credit rests. In entering upon such relations, the Government of New Zealand would only be following the highest examples. I have, &c, The Hon. the Premier. John Murray. The following day a conference was held, all the Ministers and Mr. Murray being present. The position of the bank and the Estates Company was discussed. Detailed information was given in respect to the position of the bank in New Zealand. With respect to the Estates Company T however, no detailed information seems to have been given, although asked for, beyond Mr. Murray's statement that "there was a big hole to fill." Mr. Murray stated that, in respect to the Bank of New Zealand,, he was satisfied that if the Government guaranteed an issue of £2,000,000 share capital it would be ample to meet every emergency. He was asked to obtain, as early as possible, a balance-sheet showing the position of the Bank of New Zealand in the colonies, Fiji,.and London. In respect to the position of the bank in London, he stated there would be a difficulty in obtaining .
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details by cable, and no details were obtained. After carefully considering the matter, the Government decided to ask Parliament to guarantee the £2,000,000. The Bank of New Zealand Share Guarantee Bill was accordingly prepared. On the 29th June Mr. Murray wrote to the Premier as follows : — Sir, — Bank of New Zealand, Wellington, 29th June, 1894. I have the honour to hand you a copy of the balance-sheet of the Bank of New Zealand. Since that balance-sheet was issued the position has become impaired, and, indeed, seriously compromised, by causes set out in my letter to you of the 25th instant; but this does not imply that any heavy losses in the bank's business have been made. To the best of my knowledge and belief no such losses have been made. The difficulty arises rather out of the circumstances stated in my letter. As a banker of forty-five years' standing—thirty years of which have been spent in New Zealand—and having occupied a prominent position during much of that time, and being in no way personally interested (some shares in the bank standing in my name do not directly or indirectly belong to me), I wish to be permitted to give my honourable assurance, —(1) That the occasion is one of the gravest public urgency ; (2) that by the measure I have proposed I am absolutely convinced that the State will not lose one penny, but will, on the contrary, avert great loss to itself as well as to the community; (3) that by this measure the banking affairs of the colony will be placed on a greatly-improved footing for the future; and (4) that if the Government finally determine to go on with the measure it should be put through to-day. I have, &c., The Hon. the Premier. John Murray. During the day the Premier conferred with the leader of the Opposition (Captain Russell), the Hon. Sir R. Stout, and the Hon. Mr. Mitchelson ; and the Colonial Treasurer conferred with the Hon. Mr. McLean, the Hon. Sir R. Stout, and Mr. Bell. The Bill was introduced as an urgent measure, passed the House of Representatives, and was sent to the Legislative Council. The Council appointed a Select Committee to investigate and report. The Committee took the evidence of the Premier, the Colonial Treasurer, and Mr. John Murray. No information in respect to the Estates Company was obtained further than that previously given to the Government by Mr. Murray. The Committee, however, recommended that the Bill should be allowed to proceed, and it was passed on the 30th June. This Act provided that the colony should guarantee the issue of £2,000,000 shares of the Bank of New Zealand for ten years ; that the head office should be removed from London to Wellington, and authorised the calling-up of £500,000 of the shareholders' reserve liability. The Government were also empowered to appoint the President, with a power of veto, and the Auditor. An amendment Act was passed later in the session authorising stock to be issued instead of shares. Mr. Hanna, in his evidence before this Committee, stated that he furnished a report to Mr. Murray on the 9th June, 1894, giving in detail the position, pointing out that the deficiencies in the Estates Company, including the deficiencies in the London balance-sheet (£200,000), amounted to £1,175,561, and recommending that application should be made for Government assistance. Mr. Murray, however, states that he does not recollect having received this memorandum. Beyond the assurance that there was " a big hole to fill," the Government did not obtain information as to the financial position of the Estates Company, and, seeing the important bearing it had in respect to the Bank of New Zealand, the Committee are of the opinion that it was essential that information should have been insisted on by the Government and the Committee of the Legislative Council, and that the withholding of this information, if intentional, was reprehensible. Had, however, fuller information been obtained at the time, it would not have been sufficient reason for the Government to refuse to assist the bank. From detailed information now in possession of the Committee, they have no doubt that the action taken in assisting the Bank of New Zealand in 1894 was prudent, and that by so doing a national disaster was averted. It was not then practicable, in the short time at the disposal of Parliament, to pass legislation finally dealing with a subject so intricate and so difficult as the separation of the Estates Company from the bank. 1895. In consequence of discoveries made at the end of the previous year by the President and directors of the bank, assisted by the Government Auditor, Mr. Butt, it became apparent that the position of the bank was even worse than had been previously represented, and the directors deemed it necessary to bring the matter under the notice of the Government. On the 23rd July the President wrote to the Colonial Treasurer as follows :— Sir,— Bank of New Zealand, Wellington, 23rd July, 1895. I have the honour to hand you herewith balance-sheets of the Bank of New Zealand, the Bank of New Zealand Estates Company, and the Auckland Agricultural Company, as of 31st March, 1895. You are aware that the Bank of New Zealand Estates Company is entirely owned by the Bank of New Zealand, and the £750,000 debentures of the Estates Company guaranteed by the bank. In like manner the Auckland Agricultural Company is owned by the Estates Company, and the debentures of the Agricultural Company guaranteed by the bank. In the remainder of this letter, therefore, the term "Estates Company" will include the Auckland Agricultural Company. I have also, with much regret, to enclose a letter, dated yesterday, which I have received from the Government Auditor of the bank for the colonies, and to state, with the concurrence of the other directors, the true position of the bank, involved as it is with the affairs of the Estates Company. In the bank itself there are £3,085,296 represented as assets which are entirely unrenmnerative, £1,850,000 of this amount being shares of the Estates Company, and £1,235,296 consisting of other
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debts, of which £376,898 are irrecoverable, and others are of so doubtful a character that the board consider provision to the extent of £200,000 should be made for them to place the bank in a thoroughly sound position. In the Estates Company there is a deficiency of £472,938, which sum is not represented by assets at all, and is altogether apart from the book-values of the properties and other assets. Besides the amount of £3,085,296 above mentioned, there is amongst the debts due to the bank at 31st March the large sum of £1,442,000 due by the Estates Company, on whose debit balances it has hitherto been the custom to charge interest at the rate of 5 per cent. —a charge which, owing to the recurring yearly deficits accruing from the working of the Estates Company, the board do not feel justified in continuing any longer. The severest economies have been introduced into both the bank and Estates Company — economies which, with other adjunctive measures instituted, are calculated to produce, without impairing efficiency, no less than £85,000 annually to better the results of the two concerns ; but, whilst the magnificent portion of the business which is sound might enable the bank to stagger along under its load, the entanglement with the Estates Company is such that, without severance from it, the bank can no longer carry on. The board of the bank have given lengthy and careful consideration to the whole matter, and, in view of the report which they will have to present to shareholders at the annual general meeting in August, have decided to request the Government to take steps to prevent disaster. In the opinion of the board it is imperatively necessary that action should be taken by the Government by way of further legislation, to be declared before the shareholders' meeting takes place; otherwise the necessary disclosures would imperil the existence of the bank and the safety to the colony of the £2,000,000 stock guaranteed by the Government, besides rendering any subsequent efforts to save the bank and the good-will of its really valuable business very problematical. The board consider it their duty to point out to you the widespread ruin and disaster which, by deterioration of values and impossibility of sales, would be caused to kindred institutions and all classes of the community, let alone numerous shareholders of the bank, if the business and assets of the bank and the Estates Company should be exposed to immediate or even protracted liquidation. Such a calamity, they think, would result as has never yet been experienced by any British colony, and such they are convinced that prompt and judicious legislation would now avert and render altogether unnecessary. To this end I and the other directors are anxious to confer with the Government on the matter, and beg to request that you will arrange for a conference at the earliest possible time which will be convenient to the Government, and inform me, so that the board may duly attend. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President. [Note. —The balance-sheets enclosed appear in Exhibit No. 49.] Parliament being then in session, on the recommendation of the Government, and with the approval of the bank, a Joint Committee of both Houses was appointed to inquire into the position of the bank and the Estates Company. This Committee reported on the 28th August, 1895 : — "There is a deficiency in the bank of £376,900, and a contingent dependency of £200,000. " There is a deficiency of £467,077 in the Estates Company, against which no assets exist, and a further deficiency of £444,601 in trading concerns, and properties outside New Zealand. These altogether amount to £1,488,578. Of this sum, £148,110, though shown as a liability, is really a debt due by the Agricultural Company, and represented by assets. Deducting this from the aforesaid sum of £1,488,578, there remains £1,340,468. This is provided for as follows : — £ Capital, bank ... ... ... ... .... ... 900,000 Estimated amount of call made ... ... ... ... 450,000 £1,350,000 leaving a balance of £9,532, which goes to a dependency account." They recommended that " the colony should, render such assistance to the bank as'will restore confidence, insure stability, and enable it to carry on its business in a satisfactory and profitable manner." To carry this recommendation into effect, they advised that legislation should be introduced to transfer the whole of the freeholds, leaseholds, stations, stock, and implements belonging to the Estates Company to a Realisation Board to be established for that purpose; that the Board should be authorised to issue debentures for £2,734,000, bearing 3f per cent, interest. Such debentures were to be handed over to the Bank of New Zealand, and the deficiency, if any, thereon, after realisation of the Estates Company's properties, guaranteed by the colony to the bank. Further important recommendations were made by the Committee to protect the interests of the colony, these are contained in the Committee's report (Appendix, 1895, 1.-6). The Bank of New Zealand and Banking Act, passed on the 4th September, 1895, gave legislative effect to the Committee's recommendation. THE PURCHASE OF THE COLONIAL BANK. Some negotiations for amalgamation of the Bank of New Zealand with the Colonial Bank took place as early as 1889. Nothing, however, was then done, and the subject seems to have dropped till 1894, when the General Manager of the National Bank was approached by Mr. John Murray on behalf of the Bank of New Zealand. His proposals were not favourably entertained. Mr. Murray then turned his attention to the Colonial Bank. The Hon. G. McLean, chairman of directors of the Colonial Bank, appears for some years past to have advocated the amalgamation of the businesses of several New Zealand banks, so as to form one strong bank for the colony. ii—l. 6.
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When consulted on the subject of the proposed Share Guarantee Act of 1894, he advised the Government not to uphold the Bank of New Zealand, but to appoint the Colonial Bank as the bank for the colony, and through its agency liquidate the Bank of New Zealand. This proposal was not adopted. Shortly after the banking legislation of 1894, negotiations for the amalgamation of the Colonial Bank and the Bank of New Zealand began in earnest These culminated in an agreement, which was forwarded to the Colonial Treasurer on the 11th September, 1894, and subsequently laid on the table of the House. These proposals contemplated an amalgamation between the two banks, but not the purchase of one by the other. On receipt of this agreement the Treasurer wrote the following memorandum : — Colonial Treasurer's Office, Wellington, The Hon. the Premier. 12th September, 1894. I received last night the attached proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. Since the colony guaranteed £2,000,000 to the Bank of New Zealand the whole matter has given me the greatest concern and anxiety, not so much on account of the guarantee to the bank proper, but on account of the position of the Bank of New Zealand Estates Company. Attached to the bank as it now is, it will, in my opinion, render it impossible for the bank to extricate itself, even with the colony's guarantee, and must, if not now dealt with, call in the future for further substantial aid from the colony. If the Estates Company is left under tha same control as the bank itself, the duties of the President, Auditor, and Colonial Treasurer will be greatly interfered with, —and, indeed, I may add that, in my humble opinion, the Treasurer's life would not be worth living. To insure himself against the possibilities of disaster in the guarding of the £2,000,000, he would require to know almost every detail of the way in which the two concerns —namely, the Estates Company and the bank itself—were operated upon, otherwise the possibility of a loss in either of being transferred or even absorbed by the other would be not only easy to do, but exceedingly difficult over so huge a concern to detect. No President or Treasurer would feel safe (where two large businesses, conducted ostensibly as two establishments, but in reality one) in assenting to the investment of the funds guaranteed by the.State. I'reco'gnised at the time, and stated so in the House, that the Government would take steps this session to separate the Estates Company from the bank. How to effect this has been the difficulty to solve, and day by day since the House passed the bank legislation it has engaged my attention. The result of the considerations that have occupied the attention of the executive of the bank and myself are embodied in the attached proposals. They are, — 1. An amalgamation between the Bank of New Zealand and the Colonial Bank. 2. The clearing of both of all bad or doubtful accounts. 3. Each proprietary to be held responsible for and to provide for any losses made on any accounts now held by either. 4. The capital of the combined banks to be £3,600,000. 5. All profits after certain provisions named in the proposal hereto to be paid to liquidate the Assets Company. 6. The Estates Company to be separated from the bank, the colony undertaking, should any deficiency ultimately arise, to make good such. This is virtually the position now. 7. The collateral securities against the Assets Company to be held" by the Government to be £2,100,000. The profits from the bank to be paid into the Assets Company estimated to realise at least another £500,000. Total, £2,600,000. I am of opinion that, to guard the interests of the colony, the Agent-General should be appointed to the London board ; not if the Estates Company remains attached to the bank. The colony, with a clean and sound bank, would gain by having such a representative on the London board. There should also be a small advising board in Melbourne or Sydney to control and advise upon the Australian business. The policy in each of the Australian Colonies should be to reduce business gradually, and to confine the business of the bank there entirely to one of a liquid character. • Advances there on property or real estate should generally be avoided. The Government to control the Estates Company by the appointing of a president or chairman to it, and also two directors. The bank shareholders, who would be liable for £1,500,000, also to appoint two directors. The Government Bank of New Zealand Auditor also to be auditor of the Estates Company. The name of the Estates Company to be changed by the excision of the words " Bank " and " New Zealand." It would be well, in my opinion, to completely change its name. The past odium attaching to it would thus not continue to live daily in the history of the bank, and the colony could well afford not to have its name attached to it either. The position is both a difficult and a serious one. In the absence of the proposal now under consideration being adopted, the next best course, and one which could be adopted, would be to separate the Estates Company from the bank, and guarantee its outcome, holding the uncalled capital of the Bank of New Zealand against any loss that might arise. In the event of this course being adopted, the colony should control the Estates Company as suggested under the amalgamation scheme. If this course is thought to be preferable to an amalgamation, it will be essential to retire, the £1,500,000 of Estates Company debentures, and to do this an issue of 3-|-per-ceut. Government stock would be necessary. So far as my opinion is worth anything, the latter scheme has much less to recommend it than an amalgamation. The whole matter, however, requires the most careful consideration of all the Ministers. Wellington, 12th September, 1894. J. G. Ward. These proposals were considered by the Government, and the following letter was forwarded by the Hon. Mr. J. G. Ward to Mr. John Murray and the Hon. Mr. McLean:—
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"Gentlemen, " Colonial Treasurer's Office, Wellington, 22nd November, 1894. " I have the honour to acknowledge the receipt of your joint letter of the 11th instant, covering proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. " In reply, I have to state that the matter has received the careful consideration of the Government. " Without in any way committing the Government to any fixed course or approval of the proposals, it will be necessary— " 1. If any legislation is undertaken by the Government, that it shall be of a permissive character, to enable the Government to be satisfied, before assenting to an amalgamation, that the general interests of the colony are conserved and protected. " 2. That, in addition to the scrutiny which is proposed in the memorandum of agreement, the Government to appoint a special representative or representatives, independent of either bank, to examine and report to the Government on the various accounts and assets proposed to be dealt with. " 3. The shareholders of each bank to be responsible for and to make good all losses on existing business that is not passed by the colony's valuers. " 4. That, upon the expiration of ten years, the profits of the combined bank shall still continue to be paid to the Estates Company, until any deficit in the winding-up of the Estates Company is liquidated. The Government lien upon the interests of the shareholders in the Bank of New Zealand to be continuous until all liability to the colony is at an end. " 5. The Government to nominate a chairman and two directors of the Estates Company, and the shareholders of the Bank of New Zealand to nominate two directors to the same, the said board to have full control over the uncalled capital of £1,500,000 of the Bank of New Zealand shareholders "6. In addition to the appointment of a president and auditor to the Bank of New Zealand, the Government to appoint one director to the combined bank. " I should like to have your reply to the foregoing before noon on Monday. The Government will then further consider the matter, and decide what course they deem it desirable to take. " I have, &c, "J. G. Ward, Colonial Treasurer. " John Murray, Esq., and the Hon. George McLean, Wellington." The banks declined to acquiesce in these conditions, and during the session of 1894 nothing was done to give effect to the proposals for amalgamation submitted by Messrs. Murray and McLean. On the 23rd October a clause was inserted in the Bank-note Issue Act prohibiting amalgamation of the Bank of New Zealand with any other bank without the consent of Parliament. It was, however, clearly contemplated that amalgamation would at some time take place between the Bank of New Zealand and the Colonial Bank; and, with this object in view, the Government Auditor, Mr. Butt, during the recess, made a preliminary investigation into the business of the Colonial Bank. During the session of 1895 negotiations were renewed, the basis of the proposals being the purchase by the Bank of New Zealand of the good business of the Colonial Bank instead of amalgamation as before proposed. The Joint Committee of 1895 took evidence with respect to the proposed purchase, and came to the conclusion that the purchase by the Bank of New Zealand of some other banking business was desirable for the purpose of increasing its earning-power. During the session protracted negotiations took place between the directors of the two banks. For the purpose of ascertaining the position of the Colonial Bank, its accounts were minutely investigated by Messrs. Litchfield and Buller, inspectors of the Bank of New Zealand. These gentlemen appear to have treated the accounts severely, and to have been most careful in guarding the interests of the Bank of New Zealand. Their vie<v of the Colonial Bank's accounts was less sanguine than those of the general manager of that bank and the President of the Bank of New Zealand. The directors of the Bank of New Zealand preferred to take the advice of their inspectors, and the evidence adduced before this Committee shows that, under the stringent system of liquidation adopted, their estimates have proved more correct. These inspectors were subsequently given appointments for three years to make their position in the bank assured. After the Colonial Bank had been completely "taken to pieces" three lists were made of its accounts. These were subsequently increased to four—the "B " list being divided into two. The "A" list (£926,197) consisted of accounts considered good. The "B" list (£604,695) contained doubtful accounts, against which cover was taken amounting to £272,072. The "C" list contained accounts in respect to which the Bank of New Zealand directors required time to consider whether they would take them over. For this list cover was taken amounting to £55,233. The cover taken for the " B " and " C " lists (£327,205) was a general or " umbrella " cover —that is, the deficiencies on some accounts could be made up from the surpluses on others. The witnesses are all agreed that the cover provided will be sufficient. The "D " list (£102,274) contained accounts which were inoperative, and. could not be taken over by the Bank of New Zealand. Considerable difficulty arose as to the amount of cover necessary for the accounts in the " B " and "C" lists, and at one time negotiations were in consequence completely broken off. They were, however, resumed, and a final agreement was arrived at on the 18th October, 1895. This provided that the accounts in the " A " list should be taken over without cover ; that the accounts in the "B" list should be managed, realised, and adjusted, under the supervision of the selling bank, by the purchasing bank for two years (subject to extension of time by mutual arrangement). At the end of that time the selling bank might resume control of the accounts, receiving at the same time the cover and securities held against them,
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From the evidence taken, it appears that the Bank of New Zealand can take over any account in the "B " list, if it does so, the cover provided for such account remains as security for the other accounts in such list; but at the end of the two years, in the absence of any arrangement as to any extension of time, the Bank of New Zealand may proceed to liquidate all or any of the accounts in the "B" list. With respect to the accounts in the " C " list, the purchasing bank had three months in which to take them over, with the cover provided, or to reject them. The directors decided not to take them over. The consideration for the transfer of the business of the selling bank is somewhat complicated. The amount agreed to be paid for good-will was £75,000. The book-value of the Colonial Bank premises was £125,000, and they were taken over at that price; but it was estimated that there would be a loss on realisation of from £30,000 to £35,000. This amount has therefore to be added to the £75,000. On the other hand, the Colonial Bank guaranteed the Bank of New Zealand against contingent losses in respect of an advance made by them of £20,000, and on another account of £5,000. The advance of the first-named amount so guaranteed was recommended by the President of the Bank of New Zealand, and, upon representations made by him, was agreed to by the directors. It has, however, been stated in evidence that these representations were incorrect, Mr. Watson having been oversanguine a.t the time ; and, as the Colonial Bank was interested in the account, it was deemed advisable to obtain their guarantee. This was done. The sum of £20,000 has since been paid to the Bank of New Zealand. The sum of £5,000 represented a certain bill of exchange which was purchased by the Bank of New Zealand and was met at maturity, but concerning which a difficulty arose after the payment of the draft, for which the Colonial Bank considered the Bank of New 'Zealand responsible, but finally withdrew its objection and guaranteed the amount. The Committee have been unable to form any accurate estimate of the value of the guarantee or its influence on the amount paid for good-will. .On the 25th October, 1895, the agreement received legislative sanction, and the House recommended that legislation should be introduced to remedy any defect which might exist in the contract. In accordance with this resolution, an amending Act was passed on the 31st October, 1895, ratifying the purchase agreement, and rendering it unnecessary to lay any of the lists on the table of the House, or to produce them in Court. This Bill originated with the bank, and was submitted to the Premier, who, since 1894, had charge of the banking question. He handed it to the Law Draftsman. The'only instructions given were to make it as complete as possible, and it was with this object that the Law Draftsman inserted the clauses dispensing with the production of the lists. The Hon. Mr. Ward in no way promoted this legislation, but merely moved the second reading of the Bill, the details of which were furnished to him by the Law Draftsman. Members of the Ministry were informed from time to time that negotiations were proceeding for the purchase of the Colonial Bank; but the evidence shows that no member of the Government took any part in the negotiations, or was informed of the contents of any of the lists. Your Committee have made careful inquiry into the results of the purchase of the Colonial Bank by the Bank of New Zealand. The evidence all goes to show that the purchase was a desirable one, and that the Bank of New Zealand made a good bargain. The Committee have carefully inquired into the increased earning-power of the bank obtained by the purchase, and, although it is somewhat early to speak with certainty, the evidence supports the estimate given to the Joint Committee in 1895 by the President. Whilst the purchase is satisfactory to the Bank of New Zealand, it has proved disastrous to some clients of the Colonial Bank whose accounts are in the " B " and " C " lists, and the liquidation under the Companies Act has entailed some loss on the shareholders of the Colonial Bank. The evidence is in favour of additional power being given to the liquidators, so as to enable them to compromise or nurse the accounts. The evidence goes to show that it would be advisable for the directors of the Bank of New Zealand and the liquidators of the Colonial Bank to arrange for the taking over of accounts, the cover being determined by arrangement. Your Committee are of opinion that if the suggestions of witnesses to give power to permit the present liquidators to continue the liquidation, as provided by the deed of settlement of the Colonial Bank, instead of being restricted by the provisions of the Companies Act—which requires the liquidators to obtain an order from the Supreme Court before they can compromise any account —are to be given effect to, such power should be only given subject to the approval of the shareholders of the bank. Beyond this your Committee have no recommendation to make on the subject. The Colonial Bank. The balance-sheets of the Colonial Bank, and the conduct of its directors and officers, are included among the subjects mentioned in the order of reference. On these points, however, the Committee have not made a detailed enquiry, but from the evidence brought before them are of the opinion that the balance-sheet dated the 31st August, 1895, did not fully disclose the position of the Colonial Bank. This will be apparent when it is mentioned that the whole of the accounts which subsequently figured in the " A," " B," " C," and " D " lists, were put down in it as good assets. The Committee consider that the position of the Colonial Bank, as disclosed in the examination which preceded the purchase agreement, shows that mismanagement must have taken place, the responsibility for which rests upon the directors and officers of that institution. Directors and Officers of the Bank of New Zealand. The Committee are of the opinion that the crisis in the bank's history in 1888 was directly traceable to the errors of judgment and gross mismanagement of the directors and officers of the
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bank. The Committee are further of opinion that the conduct of the directors and the executive officers of that time ought to have been inquired into with a view to criminal proceedings. That the directors were not warranted in recommending a dividend on the 26th April, 1888, or in paying dividends at any time subsequently, if the real losses of the bank had been deducted from the profits made; that neither in their balance-sheets nor in their statements to the shareholders did they disclose the real position of the bank, but based their estimates of value, not upon the current market prices of the time, but upon an imaginary rise in the value of land and produce which they apparently expected to take place. The system of maintaining a fictitious book-value of property the real value of which had decreased year by year is one which your Committee cannot too strongly condemn, and that it should be a direction to the Board of Directors that the officers responsible should not be continued in the service of the bank. The present directors since their appointment appear to have been anxious to discover the bed-rock value of the properties and accounts of the bank. Your Committee are of opinion that the law preventing directors from having overdrafts in the bank should be extended to officers of the bank, and to companies the directors of which are also directors of the Bank of New Zealand. The President and General Manager. The Presidency was first offered to Mr. Watson, the Chief Inspector of the Colonial Bank, on the 25th September, 1894. He declined, considering the salary insufficient. It was then offered to Mr. Coates, the General Manager of the National Bank of New Zealand, but was not accepted by him, as his directors would not release him from his previous engagement. It was again offered to Mr. Watson on the 6th October, 1894, at a salary increased to £2,250 per annum, and accepted by him. The Government do not appear to have been specially anxious to appoint Mr. Watson, but were chiefly desirous of obtaining a competent man to fill the position. The present General Manager (Mr. Henry Mackenzie, formerly General Manager of the Colonial Bank) was appointed on the 25th day of November, 1895. Several of the directors were opposed to this appointment, on the ground that it was undesirable that the two chief officers of the Bank of New Zealand should be chosen from the staff of a bank the management of which they considered had been far from satisfactory. On the other hand, several directors favoured the appointment of Mr. Mackenzie, on the ground that it would give confidence to the customers of the Colonial Bank, and that there would be less risk of losing the good accounts, and thus it would be for the benefit of the Bank of New Zealand. The Premier was consulted, and refused to advise, but suggested that Mr. Mackenzie should be temporarily appointed. This the majority of the directors agreed to, though Mr. Booth recorded his dissent, and Mr. Mackenzie was appointed, subject to three months' notice. Reorganization . In the opinion of your Committee it is essential for the success of the Bank of New Zealand, and to inspire and maintain confidence in that institution, that important alterations in the management should be made. Your Committee therefore recommend that a reorganization should take place : The office of President should be abolished; a new General Manager should be appointed ; the Directors should be increased to eight, and should consist of three representing the shareholders, three to be appointed by the Governor in Council, one to be elected by the House of Representatives, and one by the Legislative Council. The Chairman to have the power of veto and to be selected by the Governor in Council. That, as far as practicable, the chief commercial centres of the colony should be represented on such Board of Directors. Balance-sheets. The investigations made by the Committee have shown that a large percentage of balancesheets of public companies have failed to show bills under discount as liabilities, and, in some cases, even as contingent liabilities. They are of opinion that the present law is insufficient to provide for banks and companies showing the exact position of their affairs in their balance-sheets, and that legislation should be introduced to further protect shareholders and the public. Agreement with Bank Officials. (President and Government Auditor.) Shortly after the appointment of the President and Government Auditor, the salary of the former was secured by deed during the term of his engagement, and an agreement was made with the latter that, in the event of his losing his position as Auditor, he would be reinstated in the service of the bank. These agreements were entered into without the knowledge or consent of the Government. Your Committee are of opinion that they should not have been made without the approval of the Government, and that Mr. Butt's agreement should be cancelled. Private Accounts. Your Committee were unable to make any investigation into private accounts. At the commencement of the inquiry, questions were asked of the President with this object, but he declined to give any information in respect to the accounts of clients of the bank, asserting that to do so
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would injure the institution. Your Committee reported the matter to the House, with the result that the President was fined £500. Other witnesses took the same course as Mr. Watson ; but your Committee, considering it would delay the inquiry, deferred bringing the matter again before the House until presenting their final report. Present Position and Prospects of the Bank of New Zealand. Your Committee have carefully inquired into the present position of the bank. They find that, in addition to the deficiency estimated by the Joint Committee in 1895, further losses had been made before the 31st March, 1896, amounting to £54,193, mainly upon Australian securities. During the course of this inquiry, evidence was adduced showing that another deficiency on one account had recently come to light, estimated at between £45,000 and £50,000. The evidence, however, points to the fact that the true position of the bank has now been placed before the Committee. Your Committee consider that in New Zealand its business is now sound, but recommend that it should be confined, as far as possible, to this colony, except for the purpose of exchange. Your Committee are of opinion that, if the outlook for our commerce and agricultural products continue as satisfactory as it is at the present time, and if competent, expert, and reliable management is assured, the bank will ultimately be able to meet all its engagements. John Graham, 9th October, ] 896. Chairman.
MINUTES OF PBOCEEDINGS.
Monday, 13th July, 1896. The Committee met at 11.30 a.m. Present: Mr. Graham, Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The three orders of reference, dated the 30th June and the 3rd and 10th July, 1896, were read by the clerk. On the motion of the Hon. Mr. Seddon, Mr. Graham was appointed Chairman of the Committee. The Hon. Mr. Seddon moved, That the Chairman of the Committee communicate with the Committee of the Legislative Council and ask them to meet and confer with this Committee. Mr. G. Hutchison moved, by way of amendment, to strike out all the words after " That," and insert, in lieu thereof, the following: "in view of the fact that five out of the ten members of the Committee appointed by the Legislative Council, that last session sat with the Committee of the House of Representatives as a joint secret Committee, and reported in favouring the legislation passed last session (which is part of the matters now to be inquired into), this Committee refrains from meeting or conferring with such Committee appointed by the Legislative Council." A discussion ensued. Upon the amendment being put, a division was called for, and the names were taken down as follow :— Ayes, 2. —Mr. G. Hutchison, Mr. Maslin. Noes, 8. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Upon the original motion being put, it was resolved in the affirmative. Sub-committee : Order of Business. — Resolved, on the motion of the Hon. Mr. Seddon, That a sub-committee, consisting of Mr. G. Hutchison, Mr. Montgomery, Mr. Tanner, Mr. Guinness, Hon. Major Steward, and the Mover, be appointed to arrange the order of business, and frame issues for the guidance of the general Committee. The Hon. Mr. Seddon raised the question as to whether the parties or institutions concerned should be represented by counsel. A discussion ensued. Mr. McGowan moved, That institutions or individuals who may have to come before this Committee may be represented by counsel, and that the Committee dispense with addresses of counsel. Hon. Major Steward moved the amendment of " the previous question." And the question being put, "That the question be not now put," it was resolved in the affirmative. Mr. G. Hutchison moved, That the meeting, at its rising to-day, adjourn till 11.30 o'clock to-morrow. Mr. McGowan moved, by way of amendment, That " Wednesday " be inserted instead of " to-morrow." Upon the amendment being put, a division was called for, and the names were taken down as follow :—
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Ayes, 6. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Major Steward, Mr. Tanner. Noes, 4.—Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Mr. Seddon. So it was resolved in the affirmative. The meeting then adjourned until Wednesday next, at 11.30 o'clock a.m.
Wednesday, 15th July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman stated that he had received a memorandum from the Chairman of the Banking Committee (Legislative Council) covering the following resolution, "That the Chairman inform Mr. Graham (Chairman of the Committee of the House of Representatives) that this Committee is prepared to join the Committee of the House of Representatives if the order of reference is made the same in all respects as that of the Committee of the Legislative Council, and also if counsel are not present nor Press reporters admitted." Resolved, on the motion of the Hon. Mr. Seddon, That this Committee proceed with the inquiry ; that a letter be sent to the Chairman of the Committee (Legislative Council) intimating that this Committee does not deem it advisable to apply to the House to amend the order of reference. Resolved, on the motion of the Hon. Mr. Seddon, That the persons and corporations named in the order of reference, or otherwise interested, may, if they so wish, be represented by counsel. Resolved, on the motion of the Hon. Mr. Seddon, That such counsel shall not be entitled to address the Committee. •The Hon. Mr. Seddon moved, That questions suggested by counsel be put through the Chair. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. G. Hutchison, Mr. Maslin, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 3. —Mr. Guinness, Mr. McGowan, Mr. Montgomery. So it was resolved in the affirmative. Resolved, on the motion of the Hon. Mr. Seddon, That notice be sent to the persons and corporations interested of the decision which has been lastly arrived at by the Committee. Resolved, on the motion of the Hon. Mr. Seddon, That the Chairman report to the House the communication received from the Legislative Council, and also the decision arrived at by the Committee in reference to the proceedings. Hon. Mr. Seddon moved, That the report of the sub-committee be now considered. The report of the sub-committee was then considered, and, after certain alterations were made therein, on the motion of the Hon. Major Steward, it was agreed to, as follows : — Report of the Sub-committee appointed by the Banking Committee of the House of Representatives, 13th July, 1896. The sub-committee propose the following arrangement of the headings of the subject-matter of inquiry included in the order of reference : — I. — The Bank of New Zealand. 1. Its position in the year 1888, and at the time of each half-yearly balance since that date. 2. The several valuations made from time to time of its assets since Ist January, 1888. 3. Its management from time to time since 1888. 4. Its balance-sheets from the Ist January, 1888, their truth and fulness. 5. The amounts written off since the Ist of January, 1888. 6. What led to such writing-off. 7. The fulness and accuracy of the information disclosed since Ist January, 1888, by its directors, officers, and agents. 8. The conduct and fitness of such directors, officers, and agents. ll. — Bank of New Zealand Estates Company. 1. The circumstances leading up to and connected with its formation. 2. Its position at the date of its formation, and at the date of each balance since then. 3. The several valuations made of its assets, the amounts written off, what led thereto, and the adjustments ami report in connection with the issue of debentures. 4. Its balance-sheets, their truth and fulness. 5. Its management from time to time. ..... 6. The present position, value, and prospects of the properties known as the globo assets, distinguishing between those transferred to the Realisation Board and those remaining with the Estates Company on behalf of the bank. 7. The conduct and fitness of its directors, officers, and agents. 8. The present position, value, and prospects of all properties now held by the bank ; also, all statements and reports compiled in reference thereto.
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lll. — The Auckland Agricultural Company. 1. The circumstances leading up to and connected with its formation. 2. Its position at the date of its formation, and at the date of each balance since then. 3. The several valuations made of its assets, the amounts written off, what led thereto, and the adjustments and reports in connection with the issue of debentures. 4. Its balance-sheets, their truth and fulness. 5. Its management from time to time. 6. The present position, value, and prospects of the properties now belonging to it. 7. The conduct and fitness of its directors, officers, and agents. 8. The present position, value, and prospects of all properties now held by the bank ; also, all statements and reports compiled in reference thereto. IV. — The Colonial Bank of New Zealand. 1. Its position in 1893, and at the time of each half-yearly balance since that date. 2. The several valuations made of its assets in 1893, and subsequently. 3. Its management in 1893, and subsequently. 4. Its balance-sheets for 1893, and subsequently; their truth and fulness. 5. The amounts written off since the Ist day of January, 1888. 6 What led to such writing-off. 7. What other amounts (if any) should have been written off. 8. The fulness and accuracy of the information disclosed by its directors, officers, and agents. 9. Their conduct and fitness. V. — The President and General Manager of the Bank of New Zealand. 1. Their appointments. 2. Their connection with the (a) Colonial Bank, (b) persons or companies who may have been its clients. Vl.—Banking Legislation of 1893, 1894, 1895. 1. The circumstances leading up to such legislation or connected therewith. 2. The connection therewith of the President, General Manager, directors, officers, and agents of the Bank of New Zealand and the Colonial Bank. Vll. — The Purchase of the Colonial Bank. 1. Any negotiations which may at any time have taken place between the Colonial Bank, the Bank of New Zealand, and the Ministry, or any member thereof, with a view to amalgamation or purchase. 2. The position of the Colonial Bank at the time of the first proposal for amalgamation or purchase and subsequently. 3. The accuracy or otherwise of the representations made to the Bank of New Zealand, the Government, or any member thereof, with reference to such amalgamation or purchase. 4. The amount paid for good-will, how it was arrived at, and the correctness or otherwise of the estimate. 5. Who were instrumental in promoting such purchase or amalgamation. VIII. — The Information in the Hands of the Government, or any Member thereof, touching the Premises at the Time of the Banking Legislation of 1893, 1894, and 1895, and since that Time. 1. The source or sources of such information. 2. The fulness and accuracy thereof. Resolved, on the motion of the Hon. Mr. Seddon, That the report be printed, and that copies thereof be forwarded to the corporations, officers, directors, and persons mentioned in the order of reference. Resolved, on the motion of the Hon. Mr. Seddon, That the Government be requested to supply all correspondence, papers, and documents touching the subject-matter of the inquiry, and to have : same, printed. Mr. Montgomery moved, That an evidence sub-committee be appointed to ascertain what evidence should be brought forward to facilitate the inquiry on the various points included in the order of reference; the sub-committee to consist of the Hon. Mr. Seddon, Mr. G. Hutchison, the Hon. Major Steward, and the Mover. Upon the question being put, it passed in the negative. Resolved, on the motion of the Hon. Mr. Seddon, That the President of the Bank of New Zealand be asked to attend to-morrow and produce the balance-sheets and correspondence referred to in section 1 of the report of the sub-committee, together with all agreements and draft agreements existing between the banks and its officers. Resolved, on the motion of Mr. G. Hutchison, that Mr. Watson be also requested to produce original agreement of the 18th October, 1895, made between directors of the Bank of New Zealand "and Colonial Bank (not including the original " A," " B," " C," and " D " lists mentioned therein) ; ' all drafts, memoranda made, and all correspondence relating to the terms of such agreement; all correspondence as to the appointment of President; and also all other documents, papers, and writings in any way relating to the matter before referred to, in his possession, custody, or Control. Mr. G. Hutchison gave notice to move at a future date :—
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(1.) Henry Mackenzie, General Manager of the Bank of New Zealand, Wellington, to attend to give evidence, and to produce— (1.) Copies (certified as correct) of the lists referred to as " B " and " C " in the agreement of the 18th October, 1895, made between directors of the Bank of New Zealand and of the Colonial Bank; and of all other entries (if any) which appear in respect of the J. G. Ward Association, of Joseph George Ward, on " A " or " D " lists. (2.) The share-register of the bank since the Ist January, 1893. (3.) The minute-books of the directors of the bank in so far as they relate to the takingover, realisation, or liquidation of any accounts in the " B " or " C " lists, and as to the appointment of General Manager. (4.) The originals (or certified copies) of the valuations of " landed property and bank premises " (£121,691 ss. 5d.), and of the " furniture and stationery " (£6,250), referred to in paragraph 25 (b) of the agreement of the 18th October, 1895. (5.) Copy of the circular making the call of the first £500,000 of the reserve liability of the shareholders. (6.) The debentures paid or retired of the Estates Company. (7.) The debentures of the Ward Association held by the bank. (2.) Joseph George Ward, managing director of the J. G. Ward Farmers' Association (Limited), to attend to give evidence, and to produce— (1.) Copy of the articles of association and memorandum of incorporation of the association. (2.) The original share-register of the association, and applications for and allotments and transfers of shares. (3.) The original balance-sheets and directors' reports of the association. (4.) Up to the 30th June, 1896, all the original books of account, letter-books, original letters and telegrams (as received), and all other documents, papers, and writings relating to the affairs of the association, including the originals of all bills of exchange, or promissory notes, drafts, and cheques retired or returned. (5.) Copy of the articles of. association and memorandum of incorporation of the Ocean Beach Refrigerating Company (Limited), and all the books of account and records of such company, including copies of all circulars issued for or by the company. (6.) Copies of income-tax returns of association made in 1893 and 1894, &c. (3.) Keith Ramsay, William Brown Vigers, and William Lawrence Simpson, the official liquidators of the Colonial Bank (Limited), to attend to give evidence, and to produce— (1.) Copy deed of settlement of the bank. (2.) The balance-sheets and reports of directors since Ist January, 1893. (3.) The original share-register of the bank. (4.) The original books of account, reports of bank inspectors, managers, and agents, presscopy letters, original letters and telegrams as received, and all other documents, papers, and writings dealing with or relating to the accounts and affairs of the J. G. Ward Farmers' Association (Limited), and of (since January, 1892) the Hon. Joseph George Ward, including (among other documents comprised in the foregoing requisition)— (a) the original cable (or telegram) as delivered from the telegraph-office on or about the 28th June, 1895, and referred to in the evidence of William Brown Vigers before the Supreme Court on the sth June, 1896 ; (b) all other cables (or telegrams) as delivered, and all original letters from London or elsewhere on the same subject; (c) the code in use by the bank at the time of the receipt of such cables (or telegrams); (d) the draft or bill of exchange for £20,000 drawn by the manager of the J. G. Ward Farmers' Association on or about the 29th June, 1895 ; (c) the warrants given in respect to or in connection with such draft or bill of exchange ; (/) the draft for £16,000 afterwards drawn by the Hon. J. G. Ward; (g) ihe scrip or shares lodged therewith; and (h) the promissory note for £55,230 (or thereabouts) given by the Hon. J. G. Ward on or about the 19th October, 1895. (5.) All letters and communications as to the deposit by the Colonial Treasurer (in 1894) of £150,000. (6.) The debentures of the Ward Association held for the bank. (7.) All other books, documents, papers, and writings relating to the matters respectively above mentioned, and now in the possession, custody, or control of any one or more of such liquidators. (4.) John Marten Butt, Auditor of the Bank of New Zealand, Wellington, to attend and give evidence, and to produce— (1.) All regulations defining the duties and powers of the Auditor (under section 14 of " The Bank of New Zealand Guarantee Act, 1894 "). (2.) All drafts of agreements for amalgamation, and all notes, memoranda, writings, and papers in any way relating thereto. (3.) All documents, papers, writings, and correspondence as to the audit of the bank's accounts. (5.) George Todd, managing director of the Assets Realisation Board, Wellington, to attend to give evidence, and to produce — (1.) A copy of the accounts of the Board as audited in terms of section 27 of " The Bank of New Zealand and Banking Act, 1895." (6.) That this Committee appoint two accountants to examine and report upon the several balance-sheets of the J. G. Ward Farmers' Association (Limited), and upon the dealings of the Association and of Mr. J. G. Ward with the Colonial Bank ; and to prepare a balance-sheet of the
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affairs of the Association up to the 30th June, 1896. And that this Committee take steps to make available for the use of such accountants all the books and papers of the Association and of the Colonial Bank in any way relating to the transactions above referred to. (7.) That the following persons be intimated their attendance will be required as witnesses before the Committee at such time as may be afterwards fixed: — John Murray, Sydney. G. A. Birch, Manager Bank of New Zealand, Timaru. R. A. Chisholm, Manager Bank of New Zealand, Invercargill. John Fisher, Invercargill. Walter Johnston, Director Bank of New Zealand, Wellington. William Booth, Director Bank of New Zealand, Wellington. Hon. George McLean, M.L.C. Captain Colbeck, Auckland. W. S. Wilson, Auckland. The Committee then adjourned until to-morrow, at 11 o'clock a.m.
Thursday, 16th July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. A letter, dated the 15th July, 1896, was read from Mr. Victor M. Braund, offering, as a banking expert, to assist the Committee, and the same was ordered to lie upon the table. Some discussion took place as to whether the notice of motion given by Mr. G. Hutchison should be considered prior to the hearing of Mr. Watson's evidence. After discussion, it was Resolved, on the motion of the Hon. Mr. Seddon, That a sub-committee, consisting of Mr. Montgomery, Mr. G. Hutchison, Hon. Major Steward, Mr. Graham, and the Mover, be appointed to consider, report, and advise as to what witnesses and evidence should be produced. The proceedings of the sub-committee to be open to the public and the Press the same as the Committee, and that such sub-committee make its first report to-morrow, and thenceforward from time to time. Three to be a quorum. Resolved, on the motion of the Hon. Major Steward, That members of the Committee be requested to send in to such sub-committee the names of any witnesses they may wish to be summoned, and a list of any documents required to be produced. Mr. Guinness gave notice to move at a future meeting : — 1. For balance-sheet and all returns since their formation, with a certified copy by dulyqualified accountants up to 30th June, 1896, of Walter Guthrie and Co. (Limited), New Zealand Pine Company (Limited), Colonial Hardware, Woodware, and Implement Company (Limited), Colonial Implement and Engineering Company (Limited). 2. For return of all sums paid for the various businesses purchased by Walter Guthrie and Co., or any of the above limited liability companies, with original agreements, and what amount these businesses now stand in their books at, what additions have been made to the original sums paid, and why entries were made in their books considerably in excess of the amounts paid to the sellers. , 3. All the original papers, bills, drafts, deeds of arrangements as between all the foregoing companies and the various individuals, firms, directors, or companies interested, and also as between the foregoing and the Bank of New Zealand. 4. For a return of all payments or concessions made by cash, shares, or otherwise to Walter Guthrie, or any member of his family, W. B. Scandrett, Joseph Stock, J. C. Colbeck, Sir Robert Stout, Stout, Mondy, and Sim, or to any of them, or to any officer past or present of the Bank of New Zealand. 5. For production of all original papers, valuations, prospectus, deeds, or otherwise, drawn up for protection of each or any or all of above companies in London or elsewhere, with certificates of the principals and auditors and valuators, with detail statements how valuations were arrived at and made up. 6. All correspondence between the several Invercargill managers of the Bank of New Zealand and their head office concerning any or all of the above; also as between the bank and Walter Guthrie, Sir Robert Stout, or any person connected with any of the businesses ; also between Sir Robert Stout and Walter Guthrie, or the firm of Stout, Mondy, and Sim, or any member thereof. 7. The amount of bills under discount in the Batik of New Zealand of any or all the above companies at the date of their balances, and whether such amounts were shown in their balancesheets. Also the amount of English bills or credits current at date of balance, and whether such were shown in balance-sheets. 8. The interests held by the Bank of New Zealand, or the New Zealand Estates Company, or any officer representing the bank, in any or all of the foregoing companies, and the circumstances that led to their becoming possessed of them. 9. That the following witnesses be summoned to attend and produce all books, deeds, documents, or correspondence having any bearing upon the several matters referred to above—namely, Sir Robert Stout, Walter Guthrie, H. V. Haddock, Mondy, Sim, Sievwright, Wallace, late manager Walter Guthrie, and Co., W. B. Scandrett, Joseph Stock, W. Young, W. Ross, W. Booth (Christchurch'), D. A. Smith (Invercargill), James McAlister, P. H. Miller, W. Barclay, G. D. Newman, John Innes, James Collins, J. C. Colbeck, and the following managers or ex-managers of the Bank of New Zealand who have been stationed at Invercargill—Messrs. Ewen, McOwen, Harper, McKay,
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Graves, Chisholm, Buller; the President and the Auditor of the Bank of New Zealand : also the officer appointed by the New Zealand Estates Company to visit and report upon the properties of Walter Guthrie and Co., the New Zealand Pine Company, or any of the other companies connected with them. 10. Copy of Walter Guthrie's, Sir Robert Stout's, or any other director's account with any of the above-named companies, showing what amounts were overdrawn at various times, and nature of security, if any, held against same. 11. The return of all timber areas, with the estimated amount of timber available, held by any of the foregoing companies : — (a.) From the Crown ; (b.) From private individuals ; (c.) From companies or corporations ; and a certificate of their value from some responsible Government officer, with amounts already paid, and liabilities on same before timber can be removed. 12. That two certificated accountants examine and furnish report upon each of the balancesheets of any of the above firms or companies since 1888. 13. That the Bank of New Zealand furnish a return showing the amounts written off the indebtedness of any of the above firms or companies prior to 1894, and since 1894, showing such amounts separately. 14. All original papers and documents submitted to the bank by any of the directors of any of the above firms or companies, or any person connected with same. Resolved, on the motion of Mr. G. Hutchison, That all witnesses shall be examined on oath or affirmation. Mr. Theo. Cooper stated he was present as counsel on behalf of the Bank of New Zealand. Mr. William Watson, President of the Bank of New Zealand, was sworn and gave evidence, and the same was taken down by the reporter. During the examination of the witness, in reply to a question of the Hon. Mr. Seddon, Mr. Watson said, " Having regard to the terms of my appointment, and the declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present, and I am so acting according to the advice of the bank's counsel." Resolved, on the motion of the Hon. Mr. Seddon, That the Committee do now deliberate. The strangers having withdrawn, the Committee deliberated in reference to Mr. Watson's refusal to answer the question asked of him, and decided on a course of procedure. Upon strangers being readmitted, Mr. Watson was asked to attend to-morrow morning at 11 o'clock a.m., and the Committee then adjourned till that hour.
Friday, 17th June, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting having been read, and amended by including therein copies of the notices of motion given by Mr. Guinness, were then confirmed. Resolved, on the motion of Mr. Guinness, That the Committee do now deliberate. Strangers having withdrawn, the Chairman stated he had consulted Mr. Speaker as to the refusal of Mr. Watson to answer certain questions. The Speaker had informed him that the refusal of the witness to answer questions was quite indefensible, and no declaration of secrecy conferred upon him the privilege of refusing to answer questions, and that. the matter should be, in his opinion, reported to the House. Mr. W. S. Reid, Solicitor-General, attended, and made a statement in reference to the question of privilege. Mr. Reid having withdrawn, Mr. Montgomery proposed, That the Committee continue their inquiry with other witnesses than Mr. Watson. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 3. —Mr Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Mr. Tanner proposed —(1) That Mr. Watson be recalled and asked what amounts were written off in successive years from 1888 to the present time ; and (2) afterwards asked as to the accounts which were benefited or liquidated by such writing-off. After discussion, motion withdrawn. Resolved, on the motion of the Hon. Mr. Seddon, That Mr. Watson, President of the Bank of New Zealand, having refused to answer a certain question put by the Hon. the Premier yesterday, in reference to the writings-off of the accounts of persons and corporations, Mr. Watson be recalled and asked by the Chairman the question as put by the Premier yesterday. The strangers having been readmitted, Mr Watson attended, and also Mr. Theo. Cooper. The Chairman asked Mr. Watson the following question: " What are the names of the persons and corporations in whose favour such writings-off took place, and the amount in each case so written-off? " Mr. Watson replied, " Having regard to the terms of my appointment, and the declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present; and lam acting according to the advice of the bank's counsel. Further, it is my duty
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to the bank and the colony to decline to give such information. Ido not wish to add anything further to my answer. The Committee then deliberated, and strangers withdrew. Resolved, on the motion of the Hon. Mr. Seddon, That the Committee, under the circumstance, report the matter to the House, and request the House to deal with the witness in such manner as it may think fit. Strangers having been readmitted, Resolved, on the motion of the Hon. Mr. Seddon, That Mr. Harper, late of the Bank of New Zealand, Invercargill, be called as a witness. Mr. Tanner gave notice to move :— For the production of all information relating to the visit of the Hon. W. W. Johnston and Mr. Horton to London, and its connection with the Bank of New Zealand, including— (1.) A copy of the report or instructions furnished by the officers or directors of the Bank of New Zealand (or any of them) to the two above-named gentlemen, prior to their departure for London, or subsequently. (2.) By whom such instructions (if any) were compiled. (3.) Copy of circular, report, or prospectus issued by the officers or directors of the bank of New Zealand after the arrival in London of the two above-named gentlemen, relating to the position of the Bank of New Zealand, or the necessity for raising fresh capital. (4.) Copies of correspondence between Messrs. Johnston and Horton (or either of them) and the directors or officers of the Bank of New Zealand (or any of them) in London, between the years 1889 and 1893, bearing upon the position of the Bank of New Zealand or Estates Company, or both, or with relation to any attempt to raise fresh capital, or attempt to reform or reconstruct the Estates Company. (5.) Copy of any report by Messrs. Johnston and Horton (or either of them) to Mr. Murray, or to the directors of the Bank of New Zealand, upon the position of the Bank of New Zealand, the balance-sheet of the Bank of New Zealand, or the position of the Estates Company or the Auckland Agricultural Company. Mr.' Montgomery moved, That the sub-committee should have discretionary power from time to time to order that such documents as have been produced be printed for the information of the Committee. Upon the question being put, a division was called for, and the names were taken down as follow:— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 2.—Hon. Mr. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. Mr. McGowan moved, That the Committee adjourn until to-morrow at 11 o'clock. Upon the question being put, a division was called for, and the names were taken down as follows :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Committee adjourned accordingly.
Tuesday, 21st July. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting were read and confirmed. Order of reference 16th July, 1896, read. Hon. Mr. Seddon stated that he had received a communication from the Hon. the Speaker informing him that the fine imposed upon Mr. Watson had been paid. The Committee then deliberated, and the strangers withdrew. Resolved, on the motion of the Hon. Mr. Seddon, That the President, directors, and officers of the Bank of New Zealand be the first witnesses called. Prior to the resolution being agreed to, Mr. Hutchison asked if the motion should not be first submitted to the sub-committee. The Chairman ruled it was not necessary. Resolved, on the motion of the Hon. Mr. Seddon, That Mr. William Booth be now called. Strangers being readmitted, the following gentlemen were present : Mr. Theo. Cooper, counsel for the Bank of New Zealand; Mr. Oliver Samuel, as counsel for Hon. J. G. Ward ; and Messrs. W. Watson, William Booth, T. G. Macarthy, and Hon. W. W. Johnston. Mr. William Booth, director Bank of New Zealand, was sworn, and made a statement, which was taken down by the reporter. At 1 o'clock p.m. the Commitee adjourned until to-morrow at 11 o'clock a.m.
Wednesday, 22nd July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of previous meeting read and confirmed. The Chairman road the following report from the sub-committee : —
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The sub-committee recommend that the following witnesses be summoned, and be requested to produce the several documents, respectively : — 1. Henry Mackenzie, General Manager of the Bank of New Zealand, Wellington, to attend to give evidence, and to produce — (1.) Certified copies of all entries in the " A," " B," " C," and " D " lists referred to in the agreement of the 18th October, 1895, made between directors of the Bank of New Zealand and of the Colonial Bank in respect of any writings-off since the Ist January, 1888, only. (2.) Certified copies of all entries in the books of the Bank of New Zealand since the Ist January, 1888, in respect of any writings-off. (3.) The minute-books of the directors of the bank in so far as they relate to the takingover, realisation, or liquidation of any accounts in the " B " or " C " lists in respect of any writings-off, and as to the appointment of General Manager and President. (4.) The originals (or certified copies) of the valuations of "landed property and bank premises" (£121,691 ss. 5d.), and of the "furniture and stationery" (£6,250) referred to in paragraph 25, (b), of the agreement of the 18th October, 1895. (5.) Copy of the circular making the call of the first £500,000 of the reserve liability of the shareholders. (6.) The debentures paid or retired of the Estates Company. 2. Joseph George Ward, late Colonial Treasurer, to attend to give evidence. 3. Keith Ramsay, William Brown Vigers, and William Lawrence Simpson, the official liquidators of the Colonial Bank (Limited), to attend to give evidence, and to produce — (1.) Copy deed of settlement of the bank. (2.) The balance-sheets and reports of directors since the Ist January, 1893. (3.) All letters and communications as to the deposit by the Colonial Treasurer (in 1894) of £150,000. (4.) All other books, documents, papers, and writings relating to the matters respectively above mentioned, or to the matters included in the order of reference, and now in the possession, custody, or control of any one or more of such liquidators. 4. John Martin Butt, Auditor of the Bank of New Zealand, Wellington, to attend and give evidence, and to produce— (1.) All regulations defining the duties and powers of the Auditor (under section 14 of " The Bank of New Zealand Guarantee Act, 1894 "). (2.) All drafts of agreements since 1888 for purchase or amalgamation, and all notes, memoranda, writings, and papers in any way relating thereto. (3.) All documents, papers, writings, and correspondence, confidential or otherwise, as to the audit of the bank's accounts. (4.) All other books, documents, papers, and writings relating to the matters respectively above mentioned or included in the order of reference. 5. George Todd, Chairman of the Assets Realisation Board, Wellington, to attend to give evidence, and to produce— (1.) A copy of the accounts of the Board as audited in terms of section 27 of " The Bank of New Zealand and Banking Act, 1895." (2.) All other books, documents, papers, and writings relating to the matters respectively above mentioned or included in the order of reference. 6. That the following persons be intimated their attendance will be required as witnesses before the Committee, at such time as may be afterwards fixed : — John Murray, Sydney. G. A. Birch, Manager Bank of New Zealand, Timaru. R. A. Chisholm, Manager Bank of New Zealand, Invercargill. John Fisher, Invercargill. Walter Johnston, Director Bank of New Zealand, Wellington. William Booth, Director Bank of New Zealand, Wellington. Hon. George McLean, M.L.C. Captain Colbeck, Auckland. W. S. Wilson, Auckland. S. Graves, Ashburton, Merchant. J. C. Hanna, Wellington. A. R. Lyons, Napier. W. C. Cuff. J. McCaw. W. S. Foster, Wellington. T. G. McCarthy, Wellington. George Buckley, Christchurch. George E. Tolhurst, Wellington. Directors Colonial Bank and Bank of New Zealand. Major George, Auckland. 7. W. S. Foster, Wellington, to be called, and to produce— (1.) All balance-sheets submitted to the Committee in the session of 1895 ; also, all station accounts and balance-sheets of the several stations; also, all balance-sheets and draft balance-sheets prepared between the 22nd June, 1895, and the 10th October, 1895, in connection with the stations, stock, real estate, and leasehold properties; also, balance-sheets submitted to the Government Auditor for adjustment of the accounts as between the Estates Company, the Assets Realisation Board, and the
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Government, together with all draft balance-sheets prepared for that purpose ; also, copy of original certificates of the Government Auditor, showing adjustments as between the Government, the Assets Company, and the Realisation Board ; also, the second or extended certificates; also, the report of Messrs. Smith, and Kember, in respect to the adjustment and their statement of accounts; also, the rejoinder to the same. (2.) All other documents, papers, and writings relating to the matters respectively above mentioned or included in the order of reference. 8. That Mr. William Booth be subpoenaed, and requested to produce a return of all expenses incurred in connection with the banking legislation prior to 1894, and since, showing— (1.) The amount paid for legal expenses, Bill-drafting, and the names of all firms or companies who received the same, whether direct or through any other legal firm or company; showing separately the amount received for legal services by any member of Parliament. (2.) To furnish also the names of legal firms or companies who have received indirect payments by way of retainers, refreshers, counsel-fees, and expenses for services rendered in connection with the same legislation. (3.) The amount of money (if any) paid to Mr. John Murray for his services in connection with the negotiations connected with the banking legislation of 1893, 1894, and 1895. The Hon. Mr. Seddon moved, That the consideration of the report be postponed till to-morrow. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4.—Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. So it was resolved in the affirmative. Mr.'William Booth then continued his statement, which was taken down by the reporter. At 1 o'clock the Committee adjourned until 11 o'clock to-morrow, Mr. Booth being asked to attend at 11.30 a.m.
Thursday, 23rd July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting read and confirmed. Order of reference 22nd July read. The Chairman brought up the following report from the sub-committee in continuation of the one brought up yesterday : — 9. That Mr. Walter Guthrie be subpoenaed to attend, and to produce all books, papers, and documents relating to any writings-off by the Bank of New Zealand in respect of any company with which he is associated. 10. Statements wanted from General Manager or President of the Bank of New Zealand : — (1.) Statement showing in detail the "landed property and bank premises" referred to in paragraph 25, (b), of the agreement of the 18th October, 1895, with the value of each, and the price against any since sold, and the present income in respect of any remaining unsold. (2.) Statement showing in detail the "furniture and stationery" referred to in paragraph 25, (c), of the agreement of the 18th October, 1895. (3.) Statement showing the transfers of shares of the Bank of New Zealand since Ist January, 1893, with the price appearing to have been paid, and the date of such transfers taking effect. (4.) Statement showing the amount received to date of the first call of £500,000 on reserve liability of shareholders. (5.) Statement showing the amount received to date in respect of the first instalment of the second call of £500,000 on reserved liability of shareholders. (6.) Statement showing the recoveries in respect of the £200,000 "contingent liability," being part of the estimated losses of the bank referred to in report of Committee of 1895, page 2. (7.) Statement showing the details of the £148,110 set against the debt of the Auckland Agricultural Company as good assets (vide Report of Committee of 1895, page 2). (8.) Statement showing in detail the cost of administration of the bank in each half-year since Ist January, 1888, till 31st March, 1896. (9.) Statement in respect of the £2,000,000 guaranteed stock, showing the dates of receipt and amount of each instalment, the amounts paid for underwriting (and to whom), and of all charges and expenses. 11. Statements wanted from Mr. Foster or Mr. Todd :— (1.) A statement in tabular form, showing the whole of the globo assets on the 17th day of August, 1895 (the date of the Joint Committee Report), and detailing against each property— (a.) " The book-value "; * (b.) " The bank's latest ascertained value "; * (c,) Any valuations ascertained since the 17th August, 1895, with dates of such valuations; (d.) All realisations since 17th August, 1895, with date and result of each ;
* As referred to in Report of Committee,
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(c.) Whether the title to each is considered good, bad, or doubtful. Such statement to show separately— (1.) Those assets referred to in "The Bank of New Zealand and Banking Act, 1895," as the subject of sale to the Assets Realisation Board. (2.) The remaining assets (retained by the Bank of New Zealand). (3.) A statement showing the details of the £148,110 set against the debt of the Auckland Agricultural Company as good assets (vide Report of Committee of 1895, p. 2). 12. The production of all information relating to the visit of the Hon. W. W. Johnston and Mr. Horton to London, and its connection with the Bank of New Zealand, including— (1.) A copy of the report or instructions furnished by the officers or directors of the Bank of New Zealand (or any of them) to the two above-named gentlemen, prior to their departure for London, or subsequently. (2.) By whom such instructions (if any) were compiled. (3.) Copy of circular, report, or prospectus issued by the officers or directors of the Bank of New Zealand after the arrival in London of the two above-named gentlemen, relating to the position of the Bank of New Zealand, or the necessity for raising fresh capital. (4.) Copies of correspondence between Messrs. Johnston and Horton (or either of them) and the directors or officers of the Bank of New Zealand (or any of them) in London, between the years 1889 and 1893, bearing upon the position of the Bank of New Zealand or Estates Company, or both, or with relation to any attempt to raise fresh capital, or attempt to reform or reconstruct the Estates Company. (5.) Copy of any report by Messrs. Johnston and Horton (or either of them) to Mr. Murray, or to the directors of the Bank of New Zealand, upon the position of the Bank of New Zealand, the balance-sheet of the Bank of New Zealand, or the position of the Estates Company or the Auckland Agricultural Company. The report of the sub-committee was then considered on the motion of the Hon. Mr. Seddon. Section 1 agreed to. * Section 2 : Mr. G. Hutchison moved, by way of amendment, to add " to subpoena the Hon. J. G. Ward, as managing director of the J. G. Ward Farmers' Association (Limited), and to produce : — (1.) Up to the 31st December, 1895, all the original books of account, letter-books, original letters and telegrams (as received), and all other documents, papers, and writings relating to the affairs of the association, including the originals of all bills of exchange, or promissory notes, drafts, and cheques retired or returned. (2.) Copy of the articles of association and memorandum of incorporation of the Ocean Beach Refrigerating Company (Limited), and all the books of account and records of such company, including copies of all circulars issued for or by the company. (3.) Copies of income-tax returns of association made in 1893 and 1894, &c." A letter from the Hon. J. G. Ward, dated 23rd July, 1896, addressed to the Chairman of the Committee, referring to the question of " writings-off," was read. A discussion ensued. Upon the question being put, " That the amendment moved by Mr. Hutchison be agreed to," a division was called for, and the names were taken down as follow :— Ayes, 3. —Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 7.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Resolved, on the motion of the Hon. Major Steward, to add " and to produce all books, papers, and documents relating to any writings-off by the Bank of New Zealand, or by the Colonial Bank, in respect of the account or accounts of any company or business with which he is connected, and to all other matters included in the order of reference." The Chairman stated that the letter referred to by the Hon. Mr. Ward as written by the Hon. Sir Robert Stout had only been read before the sub-committee. Resolved, on motion of the Hon. Mr. Seddon, That the letter referred to from the Hon. Sir Robert Stout be treated as read. Mr. Maslin gave notice to move, That the sub-committee set up to advise what evidence should be procured for the Banking Committee be dissolved. Mr. Montgomery gave notice to move, That no member of the Committee shall speak longer than ten minutes at a time, or more than twice on any one motion. At 1.30 o'clock p.m. Mr. G. Hutchison moved, That the Committee adjourn until 10 o'clock to-morrow. Hon. Mr. Seddon moved, by way of amendment, That the hour be 11 o'clock. And the question being put, " That the hour be 11 o'clock," it was resolved in the affirmative.
Friday, 24th July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. Montgomery moved, That no member of the Committee shall speak longer than ten minutes at a time, or more than twice on any one motion. Hon. Major Steward moved, by way of amendment, That the word " ten " be struck out, and " five " inserted in lieu thereof.
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And the question being put, " That the word ' ten ' be retained," a division was called for, and the names were taken down as follow :— Ayes, 4. —Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon. Noes, 6.—Mr. Graham, Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. So it passed in the negative. The question being then put, " That the word ' five ' be inserted in lieu of ' ten,' " a division was called for, and the names were taken down as follow :— Ayes, 6. —Mr. Graham, Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 4—Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. Mr. Montgomery moved, That the word "motion" be struck out, with a view of inserting the word " question." And the question being put, "That the word ' motion' be retained," a division was called for, and the names taken down as follow :— Ayes, 5.- —Mr. Graham, Mr. Guinness, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his casting-vote with the " Ayes." So it was resolved in the affirmative. Words retained. Mr. Montgomery moved, That the words " or amendment " be added. And the question being put, a division was called for, and the names were taken down as follow :— Ayes, 6. —Mr. Graham, Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 4.— Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon. So it was resolved in the affirmative. Mr. Guinness moved to add to the motion, " Provided that this rule shall not come into force till reported to the House." And the question being put, a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Guinness, Mr. G. Hutchison, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon. Noes, 4.—Mr. Graham, Mr. Maslin, Hon. Mr. Steward, Mr. Tanner. So it was resolved in the affirmative. Mr. Montgomery moved to add, " and that the Chairman be requested to report this resolution to the House this afternoon." Hon. Mr. Seddon moved to insert, after the word "resolution," the words "together with the Committee's proceedings relating thereto." And the question as amended being put, it was resolved in the affirmative. The question was then put, "That the motion as amended be agreed to," and a division being called for, the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 4.—Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. Resolved, on the motion of Mr. Maslin, That the sub-committee set up to advise what evidence should be procured for the Banking Committee be dissolved. The consideration of the report of the sub-committee was further proceeded with. Section 3 : Mr. G. Hutchison moved to insert on the subpoena to the liquidators of the Colonial Bank the following requisition, struck out by the Evidence Committee, after subsection (3) : — (4.) The original books of account, reports of bank inspectors, managers, and agents, presscopy letters, original letters and telegrams as received, and all other documents, papers, and writings dealing with or relating to the accounts and affairs of the J. G. Ward Farmers' Association (Limited), and of (since January, 1892) the Hon. Joseph George Ward, including (among other documents comprised in the foregoing requisition) — (a) the original cable (or telegram) as delivered from the telegraph-office on or about the 28th June, 1895, and referred to in the evidence of William Brown Vigers before the Supreme Court on the sth June, 1896 ; (b) all other cables (or telegrams) as delivered, and all original letters from London or elsewhere on the same subject; (c) the code in use by the bank at the time of the receipt of such cables (or telegrams) ; (d) the draft or bill of exchange for £20,000 drawn by the manager of the J. G. Ward Farmers' Association on or about the 29th June, 1895 ; (c) the warrants given in respect to or in connection with such draft or bill of exchange; (/) the draft for £16,000 afterwards drawn by the Hon. J. G. Ward; (g) the scrip or shares lodged therewith; and (h) the promissory note for £55,230 (or thereabouts) given by the Hon. J. G. Ward on or about the 19th October, 1895. And the question being put, a division was called for, and the names were taken down as follow :— Ayes, 3. —Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 7.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon Hon. Major Steward, Mr. Tanner.
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So it passed in the negative. Section 3 agreed to. Sections 4 and 5 agreed to. Section 6 agreed to after striking out "Hon. Walter Johnson," "William Booth," " T. J. Macarthy," " W. S. Foster," and " Directors Colonial Bank and Bank of New Zealand." Section 7 agreed to. Section 8 agreed to after striking out " subpoenaed and requested," and inserting "required," line 1; and inserting the following clause at the end of subsections (1), (2), and (10) ; and also inserting, at the end of clause 2, " together with the dates of any such payment and amounts of any such accounts outstanding, and to produce all other books, documents, papers, and writings relating to the matters respectively above mentioned or included in the order of reference"; and also inserting, after the word " paid," subsection (3), line 1, the words " or agreed or promised to be paid." Section 9 agreed to. Section 10 : Agreed to add, " and to produce all other books, documents, papers, and writings relating to the matters respectively above mentioned, or included in the order of reference." And the question being put, " That the clause, as amended, be agreed to," a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3. —Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Section 11 agreed to. Mr. G. Hutchison moved to have it recommitted. Negatived. Section 12 agreed to, and resolved to add same paragraph to sections 5 and 7. Section 13 agreed to ; to be added to No. 8. Section 11: Resolved, That it be also added to No. 8. Hon. Mr. Seddon gave notice to move, That the gentlemen who were directors of the Colonial Bank from Ist January, 1888, until the bank went into liquidation be subpoenaed to give evidence, and to produce all books, papers, &c. Hon. Mr. Seddon moved, That the Committee adjourn until 10.30 o'clock on Tuesday next, to resume the evidence of Mr. Booth. Mr. G. Hutchison moved, by way of amendment, to insert " Monday," instead of " Tuesday." And the question being put, " That the word ' Tuesday,' be retained," a division was called for, and the names taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3.—'Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Committee adjourned accordingly.
Tuesday, 28th July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Hon. Mr. J. McKenzie, Mr. McGowan, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting were read. Before the minutes were confirmed, Mr. Tanner desired to have it recorded that he had voted in error in the division on section No. 10, sub-committee's report. The Chairman stated that the minutes being a record only of what had taken place, he had no power to grant the request; but, by consent of the Committee, Mr. Tanner's explanation might be recorded in to-day's proceedings. This being agreed to, the minutes were then confirmed. ' The Chairman made a statement as to the decision of the House on the report of the Committee presented last Friday. Hon. Mr. Seddon moved, That the Committee do now adjourn. The Chairman refused to allow any discussion on the motion. Mr. Montgomery desired to speak to a point of order in regard to certain words made use of to him by the Hon. Mr. Seddon at the last meeting. The Chairman stated it was now too late to refer to the matter, and declined to allow it to be discussed. Mr. Montgomery stated, under such circumstances, he would withdraw ; and withdrew accordingly. Mr. William Booth was called, and continued his statement, which was taken down by the reporter. At this stage of the proceedings strangers withdrew, and the Committee deliberated. Resolved, on the motion of the Hon. Mr. J. McKenzie, That witnesses not under examination be requested to withdraw. Resolved, on the motion of Mr. G. Hutchison, That Mr. John Murray be cabled to to attend; that a formal notice be posted to him, and that he be asked to let the Committee know when he is likely to be present. Mr. G. Hutchison moved, That Mr. Vigers be asked to attend this day week, and be requested to bring the documents required by the Committee. Hon. Mr. Seddon moved, by way of amendment, That Mr. Vigers be requested to hold himself in readiness to attend, and to have all the papers and documents ready, but not to leave Dunedin until he receives a telegram from the Chairman asking him to come to Wellington. iv—l. 6.
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Upon the amendment being put, it was resolved in the affirmative. Resolved, on the motion of the Hon. Major Steward, That the evidence, &c, be printed, and that the Government give the necessary instructions to have it printed as soon as possible. The Committee then adjourned.
Wednesday, 29th July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Hon. Mr. McKenzie, Mr. Maslin, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. The minutes of the previous meeting were read and confirmed. The Chairman stated that the notices had been sent to witnesses as ordered by the Committee. Hon. Mr. Seddon moved, That, as there is a no-confidence motion on in the House, the Committee do adjourn until the conclusion of the debate. After discussion the mover obtained leave to strike out "until the conclusion of the debate," and insert "till Friday next." Mr. Hutchison moved, by way of amendment, to strike out "Friday next," and insert " to-morrow." Upon the question being put, " That the words ' Friday next' be retained," a division was called for, and the names were taken down as foliow_: — Ayes, s. —Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 3.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery. The motion was then put, and it was resolved in the affirmative. The Committee then adjourned until Friday next at 10.30 o'clock a.m.
Friday, 31st July, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman stated he had received a telegram from Mr. John Murray, Sydney, in which Mr. Murray stated he had received the Committee's request to attend, and that he was writing. Mr. Guinness moved, That the Committee do adjourn until Monday next at 10.30 a.m. Upon the question being put, a division was called for, and the names were taken down as follow:— Ayes, 4. —Mr. Guinness, Mr. McGowan, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. So it passed in the negative. Mr. William Booth attended, and handed in certain statements, returns, and documents, and the same were numbered 2 to 11 inclusive. Hon. Mr. Seddon moved, That the Committee do adjourn until Monday next at 10.30 a.m. And the question being put, a division was called for, and the names were taken down as follow :— Ayes, 6. —Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Tanner. So it was resolved in the affirmative. The Committee adjourned accordingly.
Monday, 3rd August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. W T illiam Booth attended and handed in further statements, which were marked as Exhibits 12 and 13. Hon. Mr. Seddon moved, That the Committee adjourn until 10.30 o'clock on Wednesday. Mr. Graham moved, by way of amendment, That the Committee proceed to deliberate. Upon the amendment being put, it passed in the negative. Upon the original motion being put, a division was called for, and the names were taken down as follow:— Ayes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his casting-vote with the " Noes." So it passed in the negative. Hon. Mr. Seddon moved, That the Committee do now deliberate. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his easting-vote with the " Ayes."
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So it was resolved in the affirmative. Strangers then withdrew, and the Committee deliberated. Hon. Mr. Seddon moved, That the Committee report the proceedings to the House, and ask the House to direct whether the Committee proceed during the continuance of the no-confidence debate. After discussion, the motion was withdrawn. Hon. Major Steward moved, That the further proceedings of the Committee be adjourned until after the want-of-confidence debate is concluded; but Mr. Booth's reply to the Committee's request,—that he was not at present prepared to supply, " (11.) (a.) Statement showing in detail the ' landed property and bank premises' referred to in paragraph 25, (b), of the agreement of the 18th October, 1895, with the value of each, and the price against any since sold, and the present income in respect of any remaining unsold," —be considered. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his casting-vote with the " Noes." So it passed in the negative. The Committee then considered Mr. Booth's reply to the Committee's request to produce the statement referred to in section 11 (a). Mr. Hutchison moved, after the word "each," in line three, to insert "as at the date of the balance-sheets of the Colonial Bank, mentioned in such agreement." After discussion, motion withdrawn. Resolved, on the motion of Mr. Hutchison, That' Mr. Booth be asked to produce the statement referred to. Mr. Hutchison moved, That Mr. W. S. Foster be directed to attend at the next sitting of the Committee; to produce the documents mentioned in his subpoena for the purpose of the same being printed. The Chairman ruled that the motion could not be put without notice. Mr. Hutchison then gave notice to move it at the next meeting. The witnesses were readmitted. The Chairman informed Mr. Booth of the Committee's decision, and asked him to produce the statement referred to, at the next meeting. Hon. Mr. Seddon stated that, as the Committee, by the casting-vote of the Chairman, had decided to go on with the inquiry notwithstanding the no-confidence debate in the House not being concluded, he would postpone asking any further questions of the witness until the conclusion of the debate. Mr. Montgomery proceeded to examine the witness. Hon. Mr. Seddon moved, That the Committee do now adjourn. After discussion, the Hon. Mr. Seddon asked leave to withdraw the motion. Leave refused. And the question being put, it passed in the negative. Hon. Mr. Seddon moved, That the Committee proceed to deliberate. And the question being put, a division was called for, and the names were taken down as follow:— Ayes, 5. —Mr. McGowan, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his casting-vote with the " Noes." So it passed in the negative. Mr. Booth's examination was being proceeded with when Mr. Theo. Cooper asked leave to interpose why certain questions should not be answered. A discussion ensued. Mr. McGowan moved, That the Committee do now adjourn. And the question being put, it passed in the negative. The Chairman ruled that, in accordance with a resolution of the Committee, counsel could not address the Committee. Mr. Guinness moved, That the Committee do now deliberate as to whether counsel is entitled to raise objections on a question put to the witness. And the question being put, a division was called for, and the names were taken down as follow:— Ayes, 5. —Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4.—Mr. Graham, Mr. Hutchison, Mr. Montgomery, Mr. Tanner. So it was resolved in the affirmative. Strangers then withdrew, and the Committee deliberated. Mr Guinness moved, That Mr. Cooper be permitted to raise objections to any question that may be put to a witness. The Chairman ruled that the question could not be put without notice. A discussion ensued. Hon. Mr. Seddon gave notice to move at next meeting, That, notwithstanding the resolution passed on the 15th day of July last, as to counsel addressing the Committee, this may be relaxed on motion by the Committee, without notice, being carried, that in respect to any particular objection made on question being put to witness.
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Hon. Mr. Seddon moved, That the Committee adjourn until Wednesday next. Mr. Hutchison moved to strike out " Wednesday," and insert " Tuesday." On the question being put, " That ' Wednesday ' be retained," a division was called for, and the names were taken down as follow :— Ayes, 8. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 2. —Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And the original motion being put, a division was called for, and the names were taken down as follow :— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. The witnesses were then readmitted, and the Chairman announced the determination the Committee had come to. Mr. Guinness gave notice to move at the next meeting, That this Committee report to the House that, in its opinion, it is desirable the order of reference suspending Standing Orders Nos. 223 and 229, so as to admit the Press to its proceedings, be rescinded. Mr. Hutchison moved, That the hour of meeting on Wednesday next be 10 o'clock. Hon. Mr. Seddon moved, by way of amendment, that the hour be 10.30. And, upon the amendment being put, it was resolved in the affirmative. The Committee adjourned accordingly.
Wednesday, sth August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. ':' The minutes of the previous meeting were read and confirmed. A letter was read from Mr. William Booth asking to be excused from attendance till Tuesday next, and also one from Mr. J. C. Hanna asking the Committee to take his evidence as early as possible. Ordered, That the same do lie upon the table. The following notices of motion were given : — No. 1 : Mr. McGowan to move, That from the evidence disclosed in the balance-sheets from 1888 till 1894, showing an average writing-off from customers' accounts of £114,810 per annum, and the payment of dividends during that period not earned by the bank, and if the writing-off for 1895 is included the average for the eight years will total nearly £300,000 per annum, this Committee have come to the conclusion that it is against the interests of the Bank of New Zealand, and indirectly injurious to the colony, to further continue this inquiry. No. 2 : Mr. Montgomery to move, That the following persons be required to attend on Monday next, to produce the documents mentioned in their respective subpoenas: Henry Mackenzie, W. B. Vigers, J. M. Butt, G. Todd, W. G. Foster, J. C. Hanna, G. Buckley. No. 3 : Mr. Montgomery to move, That the Committee appoint Wednesday in each week for ! the consideration of notices of motion, and that on all other days the taking of evidence precede the consideration of notices of motion. No. 4 : Hon. Mr. McKenzie to move, That the evidence of Mr. C. O'Hara Smith be taken at at early date, owing to the state of his health. Mr. Hutchison moved, That Mr. W. G. Foster be directed to attend at the next meeting of the Committee, to produce the documents mentioned in his subpoena, for the purpose of the same being printed. Hon. Mr. Seddon asked that the Committee deliberate and that strangers withdraw. The Chairman ruled that this could only be done by resolution of the Committee. Hon. Mr. Seddon moved, That the Committee do now deliberate. And the question being put, a division was called for, and the names were taken down as follow: — Ayes, 4. —Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. McGowan, Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it passed in the negative. Mr. Hutchison proposed the motion previously stated. Hon. Mr. Seddon asked if the motion could be put in the face of a previous resolution of the Committee, deciding that certain witnesses' evidence be first taken. The Chairman ruled that the motion was in order, as Mr. Foster was to be called not to give evidence but to produce certain documents. Upon the question being put, a division was called for, and the names were taken down as follow:— Ayes, 6. —Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward. Noes, 3.—Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. Hon. Mr. Seddon moved, That notwithstanding the resolution passed on the 15th day of July last, as to counsel addressing the Committee, this may be relaxed on motion by the Committee, without notice, being carried, that in respect to any particular objection made on question being put to witness. ;
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Hon. Mr. McKenzie moved to add, " But at no one time shall counsel be allowed to speak to the question for more than ten minutes." And, on the question being put, " That the words proposed to be added be so added," a division was called for, and the names were taken clown as follow :— Ayes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. And upon the motion as a whole being put, a division was called for, and the names were taken down as follow :— Ayes, 4.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward. So it passed in the negative. Mr. Guinness moved the motion of which he had given notice at last meeting. Hon. Mr. McKenzie moved, That the motion be postponed until to-morrow. And the Hon. Mr. McKenzie's motion being put, a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.—Mr. Hutchison, Mr. Maslin. So it was resolved in the affirmative. Hon. Mr. Seddon moved, That the Committee deliberate as to the advisability or otherwise of continuing Mr. Booth's evidence to-day. A division was called for, and the names were taken down as follow :— Ayes, 6. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 3.—Mr. Hutchison, Mr. Montgomery, Mr. Maslin. ' So' it Was resolved in the affirmative. The Committee then deliberated, and strangers withdrew. Hon. Mr. Seddon moved, That Mr. Booth be excused from attendance until Friday next. Mr. Hutchison moved, by way of amendment, That the reason before the Committee in deliberation being the letter already read from Mr. Booth before the open Committee, the Committee in deliberation is of opinion that the public interests require that the evidence of Mr. Booth, or some other witness, be proceeded with. And upon the amendment being put, a division was called for, and the names were taken down as follow: — Ayes, 5. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. And the votes being equal the Chairman gave his casting vote with the " Ayes." So it was resolved in the affirmative. The Chairman put the amendment as the substantive motion. Hon. Mr. Seddon asked, as a point of order, if this could be done. The Chairman ruled that it could. Upon the amendment being put as the substantive motion, a division was called for, and the names were taken down as follow :— Ayes, 5. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. And the votes being equal the Chairman gave his casting vote with the " Ayes." So it was resolved m the affirmative. Hon. Mr. Seddon moved, That Mr. Booth be excused till Tuesday next, and that Mr. J. C. Hanna and Mr. O'Hara Smith be required to attend on Friday next at 10.30 a.m. to give evidence and produce documents. Mr. Montgomery moved to strike out " Friday ' and insert " to-morrow." And upon the question being put that " Friday " stand, a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. And the votes being equal 'the Chairman gave his casting vote with the " Noes." So it passed in the negative. Mr. Montgomery proposed, That " to-morrow " be inserted in lieu of " Friday." And the question being put, That " to-morrow " be inserted, a division was called for, and the names were taken down as follow :— Ayes, 5. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. And the votes being equal, the Chairman gave his casting-vote with the " Ayes." The motion, as amended, was then put, and a division being called for, the names were taken down as follow^: — Ayes, 3.—Mr. Hutchison, Mr. Montgomery, Mr. Tanner. Noes, 7. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr, McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. \ -
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So it passed in the negative. Hon. Mr. Seddon moved, That Mr. Booth be notified to attend and give evidence on Friday at 10.30 a.m., and that, until interrupted by resolution, the taking of his evidence be proceeded, with. Mr. Montgomery moved to strike out " Friday," and insert " to-morrow." And upon the question being put, " That ' Friday' stand," a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Mr. McGowan, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr, Tanner. So it was resolved in the affirmative. Mr. Tanner moved, That Exhibit No. 12, share-transfer list of the Colonial Bank, be printed. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, B.—Mr. Graham, Mr, Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Maslin, Hon. Major Steward, Mr. Tanner. Noes, 2.—Mr. Montgomery, Hon. Mr. Seddon. So it was resolved in the affirmative. Resolved, on the motion of the Hon. Mr. Seddon, That Mr. Booth be excused from attendance until Friday next. Mr. Hutchison gave notice to move, That the resolution of the 21st July, as to the order of calling witnesses, be rescinded, and that in future witnesses be called in such order as the Committee at the time (and without notice of motion) shall determine. Hon. Mr. McKenzie wished to move without notice, That, in consequence of Mr. C. O'Hara Smith having to leave the colony owing to ill-health, the Committee proceed to take his evidence on Friday next. Objection being offered, the Chairman ruled the motion could not be put. Hon. Mr. McKenzie then ga : ve notice to move it at next meeting. Mr. Hutchison wished a letter from Mr. Norman E. Burton, in reference to the cables sent to Sydney, to be read. The Chairman ruled it could not be read at this stage of the proceedings. Hon. Mr. McKenzie moved, That the Committee adjourn until Friday next at 10.30 o'clock. Upon the question being put, a division was called for, and the names were taken down as follow:— Ayes, s.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, 4. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. So it was resolved in the affirmative. Committee adjourned accordingly.
Friday, 7th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. A letter from Mr. John Murray, Sydney, to the Chairman was read. Ordered to lie upon the table, and to be considered later on. A letter from Mr. Norman Burton, referring to the cables sent to Sydney, was received and read. Resolved, on the motion of Hon. Mr. McKenzie, that the evidence of Mr. C. O'Hara Smith be taken at an early date, owing to the state of his health. Mr. W. G. Foster, Manager, Assets Realisation Board, attended and handed in certain documents which were marked Exhibits 14, 15, 16, 17, (a), (b), (c), 18, and 19 inclusive. Hon. Mr. Seddon supplemented the list of documents handed in by Mr. Foster, and the same were marked 20, (a), (b), (c), (d), (c), (/), (g), and 21 inclusive. Resolved, on the motion of Hon. Mr. Seddon, That Mr. C. O'Hara Smith be asked to produce a statement bearing on the subject-matter of the inquiry. Mr. Smith attended and stated he had no other statement than the one already handed in. As the Committee were not at present prepared to receive Mr. Smith's evidence, he then withdrew. Mr. Booth attended for further examination. Hon. Mr. Seddon stated, as a matter of personal explanation, that he had attempted to prevent the inquiry going on while the no-confidence motion was proceeding, but, as he had promised that if the debate was not ended by to-day the inquiry should proceed, he would offer no further opposition. He had tried to get the debate ended last evening, but unsuccessfully. Mr. Booth then handed in further documents which were marked as Exhibits Nos. 22, 23, and 24. Mr. Booth then continued his statement, which was taken down by the reporter. Resolved, on the motion of Mr. Hutchison, That the Committee adjourn until 10.30 o'clock a.m. to-morrow, it being understood that if the no-confidence debate was not concluded before 2 a.m. to-morrow, then the Committee should not meet until 11 o'clock a.m. and rise at 1 p.m.
Saturday, Bth August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Hon. Mr. Seddon, Mr. Tanner. Minutes of the previous meeting read and confirmed.
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Mr. William Booth attended, and made a further statement, which was taken down by the reporter. Mr. Booth handed in a document, which was marked Exhibit No. 25. During Mr. Booth's examination Mr. Montgomery asked, Was this advance of £20,000 and £5,000 secured on the debentures of the Ward Farmers' Association ? The witness declined to answer the question. Hon. Mr. Seddon, as a point of order, asked if the question could be put, as in accordance with the order of reference. After discussion, the Chairman ruled that the question could not be put until it was proved the amount was a writing-off. At 1 p.m. the Committee adjourned until Monday next, at 10.30 a.m.
Monday, 10th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Major Steward, Mr. Tanner. The minutes of the previous meeting were read and confirmed. The Chairman read a letter received from Mr. J. C. Hanna, asking to be excused from waiting further to give evidence, so that he might be allowed to proceed to Auckland, and that, when required, he would immediately return to Wellington. The Committee agreed to Mr. Hanna's request. Mr. Booth made a further statement, which was taken down by the reporter. During Mr. Booth's examination Mr. Hutchison asked Mr. Booth, does this sum of £20,000 previously mentioned by you have reference to a parcel of debentures ? Hon. Mr. Seddon raised a point of order as to whether or not the question came within the order of reference. After discussion, the Chairman ruled the question was premature and irrelevant at the present time. . At a further stage of the examination Mr. Hutchison asked Mr. Booth, " Whether the directors —you being one—are responsible for these two advances at the time they were made ?" A discussion ensued. The Chairman ruled that the question is one that could be put. At 1.30 p.m., Mr. Maslin asked the Committee to adjourn until 3 o'clock p.m. Hon. Mr. McKenzie moved, by way of amendment, That the Committee adjourn until 10 o'clock to-morrow. The question being put that 3 o'clock p.m. stand, a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, 4.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. At 3 o'clock p.m. the Committee resumed. The Chairman asked for directions as to which of the exhibits should be printed. Resolved, to print Exhibits Nos. 14, 15, 16, and 17(a). 17(6) : The Hon Mr. Seddon moved, That it be printed ; and a division being called for, the names were taken down as follow :— Ayes, 7.—Mr. Graham, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3. —Mr. Guinness, Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. Resolved, to print 17 (c), 18, 19, 20 (a), (b), (c), (d), (c), (f\, (g), and 21, and 24. Resolved, on motion of Mr. Montgomery, That an index of the exhibits be prepared showing which are printed and which are not. Resolved, That Mr. Foster be asked to supply further statement of balance-sheets of the stations, showing profit and loss accounts of the Estates Company for 1895-1896. Mr. Hutchison moved, That there being evidence now before the Committee that under the agreement of the 18th October, 1895, between the Colonial Bank and the Bank of New Zealand, that the last named, or " purchasing bank," has complied with so much of clause 18 as provides : "That the purchasing bank shall immediately on their contract taking effect write-off the amounts standing in the right-hand column of the 'C' list, and credit the respective accounts in such list with the amounts so written-off," this Committee calls on Mr. W. Booth, the witness now under examination, to produce a certified copy of such " C " list. The Chairman ruled that such a motion could not be put without notice. Resolved, on the motion of Mr. Hutchison, That the consideration of Mr. Booth's refusal to answer certain questions be deferred. Mr. Guinness desired to move the notice of motion standing in his name asking the House to amend the order of reference. Objection being taken, the Chairman ruled it could not be put, as Mr. Booth's evidence should be first completed in accordance with a previous resolution of the Committee. The Committee at 4.15 p.m. adjourned until to-morrow at 10.30 a.m.
Tuesday, 11th August, 1896. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr; McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner,
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Minutes of the previous meeting read and confirmed. Mr. Booth attended and made a further statement, which was taken down by the reporter. During Mr. Booth's examination Mr. Hutchison asked to the investigation into the position of the Ward Association. Hon. Mr. Seddon asked, as a point of order, whether the question could be put as coming within the order of reference. A discussion ensued. The Chairman ruled that at the present time the question was premature and irrelevant. Further on, Mr. Hutchison asked, " Is not the Ward Association, now in liquidation, a debtor to the Bank of New Zealand?" Objection being taken, the Chairman ruled that the question could not be put. Resolved, on the motion of Mr. Montgomery, That the Chairman apply for a further extension of twenty-one days in which to bring up the report of the Committee. At 1 o'clock p.m. the Committee adjourned until 10.30 a.m. to-morrow.
Wednesday, 12th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Order of reference of the 11th August read. The Chairman read a letter from Mr. John Murray, of Sydney, in reference to his attending as a witness. Ordered, That the letter do lie upon the table and be considered later on, together with the other matters standing over for consideration. Mr. William Booth attended and made a further statement, which was taken down by the reporter. During 'Mr. Booth's examination two exhibits were handed in and marked Nos. 26 and 27. At 1 o'clock p.m. the Hon. Mr. McKenzie moved, That the Committee adjourn until to-morrow at 11 o'clock a.m. Mr. Hutchison moved, by way of amendment, That the hour be 10.30 a.m. And the question being put, That the words " 11 o'clock " stand, a division was called for, and the names were taken down as follow :— Ayes, 7.—Mr. Graham, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. ■ Noes, 2.—Mr. G. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. Committee adjourned accordingly.
Thursday, 13th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman stated that Mr. C. E. Button, M.H.R., had informed him that he had received from Mr. John Murray a written statement dealing with the banking legislation, and that he was prepared to hand it in to the Committee at any time. Mr. William Booth attended and made a further statement, which was taken down by the reporter. During Mr. Booth's examination Mr. Hutchison asked Mr. Booth, " You have already referred to the fact of the Bank of New Zealand having purchased £150,000 New Zealand Consols. What was the date of such purchase ? " Mr. Booth replied, " I am advised that I cannot give the particulars asked for by Mr. Hutchison, inasmuch as a demand for such particulars is irrelevant to the present inquiry, and is outside the order of reference." Hon. Mr. Seddon asked, as a point of order, if the question could be put as coming within the order of reference. The Chairman said, "The question standing above seems unimportant, but, as a prelude to others indicated by Mr. Hutchison which I think would not come within the scope of the order of reference, I must rule it to be irrelevant." Hon. Mr. J. McKenzie moved, That the Committee adjourn until to-morrow at 11 o'clock a.m. Mr. Hutchison moved, That the hour be 10.30 a.m. Upon the question being put, That "11 o'clock" stand, a division was called for, and the names were taken down as follow :— Ayes, 5. —Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Mr. Tanner. Noes, 3.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. The Committee adjourned accordingly.
Friday, 14th August, 1896. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed.
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Mr. William Booth attended and made a further statement, which was taken down by the reporter. Mr. Booth handed in further documents, which were marked as Exhibits 28 and 29. Hon. Mr. McKenzie moved, That the Committee do now adjourn until Monday next at 11 o'clock. Mr. Hutchison moved by way of amendment, To strike out " Monday" and insert " tomorrow." Mr. Montgomery desired to strike out " now " and insert " at its rising." The Chairman ruled that Mr. Montgomery's amendment could not be accepted. And the question being put, That the word "Monday" stand, a division was called for, and the names were taken down as follow :— Ayes, 4. —Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery. And, the votes being equal, the Chairman gave his casting vote with the " Noes." So it passed in the Negative. And the question being put, That the word "to-morrow" be inserted, a division was called for, and the names were taken down as follow :— Ayes, 4. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 4.—Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. And, the votes being equal, the Chairman gave his casting vote with the " Ayes." So it was resolved in the affirmative. The Committee adjourned accordingly.
Saturday, 15th August, 1896. Present: Mr. Graham (Chairman), Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Major Steward. Minutes of the previous meeting read and confirmed. . Mr. Win. Booth was in attendance to continue his evidence. Mr. Booth handed in Profit and Loss Account Bank of New Zealand Estates Company, and marked as Exhibit No. 30. Resolved, on the motion of Mr. Hutchison, That as no member of the Committee present is desirous of asking Mr. Booth any further questions, he be relieved from attendance for the time being. Resolved, on the motion of Mr. Hutchison, That the further evidence of Mr. Watson be now taken. Mr. Watson, having presented himself for examination, the Clerk called the Chairman's attention to the fact that a quorum of members were not present. After waiting to see if further members would attend, and it was ascertained no further members were likely to attend, the Chairman asked the clerk to record the names of the members present —namely, Messrs. Graham, Hutchison, Maslin, and Montgomery—and then adjourned the meeting till Monday next, at 10 o'clock a.m.
Monday, 17th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, and Mr. Tanner. The minutes of the previous meeting read and confirmed. Mr. William Watson attended and continued his statement, which was taken down by the reporter. At 1.15. p.m., the Hon. Mr. Seddon moved, That the Committee do adjourn until 11 o'clock to-morrow. Mr. Hutchison moved, by way of amendment, To strike out "11 o'clock," with a view of inserting another hour. Upon the question being put, That the word "Eleven" stand, a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And the question being put, That the Committee do now adjourn until to-morrow at 11 o'clock, a division was called for, and the names were taken down as follow: — Ayes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 3.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Mr. Guinness gave notice to move to-morrow, That the notices of motion be considered at the next meeting, and be the first order of business. The Committee then adjourned until to-morrow at 11 o'clock.
Tuesday, 18th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Sedclon, Hon. Major Steward. Minutes of the previous meeting read and confirmed. v.—l 6.
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Mr. Guinness moved the notice of motion which he had given yesterday, and upon it being put, it was resolved in the affirmative. The notices of motion which were standing over for consideration were then considered. Mr. Guinness moved, That this Committee report to the House, that in its opinion it is desirable that the order of reference suspending Standing Orders Nos. 223 and 229, so as to admit the Press to its proceedings be rescinded. And upon the question being put, it passed in the negative. Mr. McGowan moved, From the evidence disclosed in the balance-sheets from 1888 till 1894, showing an average writing-off from customers' accounts of £114,810 per annum and the payment ■of dividends during that period not earned by the bank, and if the writing-off for 1895 is included the average for these eight years will total nearly £300,000 per annum, this Committee have come to the conclusion that it is against the interests of the Bank of New Zealand and indirectly injurious to the colony to further continue this inquiry. Mr. McGowan asked leave to withdraw the motion. Leave being refused, the question was put, and it passed in the negative. Mr. Montgomery moved, That the following persons are required to attend on Monday next to produce the documents mentioned in their respective subpoenas : Henry Mackenzie, W. B. Vigers, J. M. Butt, G. Todd, W. G. Foster, T. C. Hanna, and G. Buckley. Upon the question being put, it passed in the negative. Resolved, on the motion of Mr. Montgomery, That the Committee appoint Wednesday in each week for the consideration of notices of motion, and that on all other days the taking of evidence precede the consideration of notices of motion. Mr. Hutchison moved, That the resolution of the 21st July, as to order of calling witnesses be rescinded, and that in future witnesses be called in such order as the Committee at the time (and without notice of motion) shall determine. Hon. Mr. Seddon moved, by way of amendment, to insert after the word "rescinded" the words " except as regards the directors of the Bank of New Zealand now in the colony." And the-question being put, " That the words proposed to be inserted be so inserted," a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And the question as amended being put, a division was called for, and the names were taken as follow: — Ayes, 5. —Mr. Graham, Mr. McGowan, Mr. Maslin, Hon. Major Steward, Hon. Mr. Seddon. Noes, 4. —Mr. Guinness, Mr. Hutchison, Hon. Mr. McKenzie, Mr. Montgomery. So it was resolved in the affirmative. Mr. W 7 illiam Watson attended and made a further statement, which was taken down by the reporter. During Mr. Watson's examination Mr. Hutchison asked, " Whether you, as General Inspector of the Colonial Bank would know of the account of Mr. Ward in the Colonial Bank at Invercargill "? Hon. Mr. Seddon asked, as a point of order, whether the question came within the order of reference. The Chairman ruled the question could be put. Further on Mr. Hutchison asked of Mr. Watson, " Do yon remember whether the account of Mr. J. G. Ward was overdrawn at the date of the balance-sheet" ? Hon. Mr. Seddon asked, as a point of order, if the question could be put as coming within the order of reference. The Chairman ruled that the question could be put. Further on Mr. Watson having obtained permission to make an explanation concerning a certain draft of £4,000, some discussion took place as to whether or not Mr. Watson should read the whole of a letter he desired to quote from. After discussion, the question was postponed so that Mr. Watson could ask the parties interested if they had any objection to the whole of the letter being read. Mr. Watson proceeded to make a statement concerning the issue of the draft of £4,000, when Mr. Hutchison objected until the whole of the letter referred to was read. The Chairman ruled, that as Mr. Watson had said he had read the whole of the letter as far as it referred to the transaction in question, he was right to make an explanation. At 1.30, the Hon. Mr. Seddon proposed the Committee do adjourn until 11 o'clock to-morrow. Mr. Hutchison moved, by way of amendment, to strike out " 11," and insert " 10.30." Upon the question being put, That 11 o'clock stand, a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Stewart. Noes, 3.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Mr. Maslin gave notice to move to-morrow, That Mr. C. N. Mackintosh, Church Street, Timaru, be summoned to attend forthwith, and give evidence. Hon. Mr. Seddon gave notice to move to-morrow, That the resolution passed on the 21st July, and varied on the 18th August, be further varied so that Mr. William Evans, of Timaru, be enabled to attend and give evidence, and that Mr. Evans be summoned to attend and give evidence forthwith. The Committee then adjourned till to-morrow at 11 o'clock.
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Wednesday, 19th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Hon. Major Steward gave notice to move on Wednesday next, That Mr. Robert McOwen, for some time manager of the Bank of New Zealand at Invercargill, be ordered to attend as a witness. Hon. Mr. Seddon moved the motion of which he had given notice yesterday. Resolved, on the motion of the Hon. Mr. McKenzie, That the consideration of the motion be postponed until the evidence of the directors of the Bank of New Zealand is concluded. Mr. Maslin moved the motion of which he had given notice yesterday. Resolved, on the motion of Mr. Montgomery, That the consideration of the motion be postponed until the evidence of the directors of the Bank of New Zealand is concluded. Mr. Montgomery raised the question as to what was to be done in reference to the statement forwarded by Mr. John Murray. Resolved, on the motion of Mr. Guinness, That Mr. Button be requested to hand in the sworn evidence of Mr. John Murray, and that it lie upon the table and be available to members of the Committee for perusal. Mr. William Watson attended and continued his statement, which was taken down by the reporter. During the examination of Mr. Watson, Mr. Hutchison asked, " Did the Bank ofNNc r Zealand, as agent for the Colonial Bank, debit the ' C ' list accounts with the sum of £30,000 on the 20th November? " Hon. Mr. Seddon asked, as a point of order, if the question came within the order of reference. The Chairman ruled that as no writings-off were shown the question could not be put. Hon. Major Steward moved, That the Committee do now adjourn until 11 o'clock to-morrow. Mr. Hutchison moved that the hour be 10.30 o'clock. Upon the question being put, " That 11 o'clock stand," a division was called for, and the nameswere taken down as follow :— Ayes, 6. —Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.— Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative, and the Committee adjourned accordingly.
Thursday, 20th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of previous meeting read and confirmed. Mr. William Watson attended and made a further statement, which was taken down by the reporter. Mr. Watson handed in Governor's warrant of appointment, President, Bank of New Zealand, and letter from Colonial Treasurer thereon, and which were marked as Exhibits Nos. 31 and 32. Hon. Mr. Seddon moved, That the Committee do now adjourn till 11 o'clock to-morrow. Mr. Hutchison moved, by way of amendment, the hour be 10.30. And upon the question being put, "That 11 o'clock stand," a division was called for, and the names were taken down as follow :— Ayes, 7.—Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative, and the Committee adjourned accordingly.
Friday, 21st August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. The minutes of the previous meeting were read and confirmed. Mr. William Watson attended and made a further statement, which was taken down by the reporter. Mr. Watson handed in estimate of value of Colonial Bank business to Bank of New Zealand, and percentage of cost of management to gross earnings for half-year 1895-96, and the same were marked as Exhibits Nos. 33 and 34. Hon. Mr. Seddon moved, That the Committee adjourn until Monday next at 10.30. Mr. Hutchison moved, by way of amendment, to strike out "Monday," with a view of inserting " to-morrow." Upon the question being put, "That Monday stand part of the question," a division was called for, and the names were taken down as follow: — Ayes, 5. —Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. Upon the main question being put, it was resolved in the affirmative, and the Committee adjourned accordingly.
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Monday, 24th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. William Watson attended and made a further statement, which was taken down by the xeporter. Mr. Watson handed in a memorandum of counsels' fees, Validation Court proceedings, Gisborne, and the same was marked as Exhibit No. 36. Mr. Hutchison gave notice of motion for Wednesday next as follows : — 1. William Richard Cook, of Dunedin, the official liquidator (appointed 4th August, 1896) of the J. G. Ward Farmers' Association (Limited), to attend to give evidence, and to produce—(l.) Copy of the articles of association and memorandum of incorporation of the association ; (2) the original share-register of the association, and applications for and allotments and transfers of shares ; (3) the original balance-sheets and directors'reports of the association; (4) up to 31st December, 1895, all the original books of account, letter-books, original letters and telegrams (as received), and all other documents, papers, and writings relating to the affairs of the association, including the originals of all bills of exchange, or promissory notes, drafts, and cheques retired or returned ; (5) copy of the articles of association and memorandum of the incorporation of the Ocean Beach Refrigerating Company (Limited), and all the books of account and records of such company, including copies of all circulars issued for or by the company ; (6) copies of income-tax returns of association made in 1893, 1894, and 1895 ; (7) all other books, documents, papers, and writings relating to the matters respectively above mentioned, and now in his possession, custody, or control as such liquidator. 2. To renew motion rejected on Friday, 24th July, for the production by the liquidators of the Colonial Bank of the books and documents relating to the various transactions between the bank and the Ward Association. 3. That members of Committee hand in by Thursday morning such questions as they may desire to have answered by Mr. John Murray, and that on receipt of answers to such questions the same, with the statement already received, be taken into consideration by the Committee, as to whether the whole should be treated as evidence. At 1 p.m. the Hon. Mr. Seddon moved, That the Committee adjourn till 10-30 p.m. tomorrow. Mr. Hutchison moved, by way of amendment, That the Committee adjourn till 2.30 p.m. to-day. Upon the question being put, " That 10.30 to-morrow stand," a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Mr. Tanner. No, 1. —Mr. Hutchison. So it was resolved in the affirmative. The main question was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Tuesday, 25th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. William Watson attended, and continued his statement, and the same was taken down by the reporter. Mr. Watson handed in further statement of counsels' fees paid re Validation Court proceedings, Gisborne, and statement of payment to directors during year ended 31st March, 1896, Bank of New Zealand, and the same were marked as Exhibits Nos. 37 and 38. At 1 p.m. Hon. Mr. Seddon moved, That the Committee do now adjourn until 11 o'clock tomorrow. Mr. Hutchison moved, by way of amendment, That the hour be 10.30. Upon the question being put, " That 11 o'clock stand," a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And the main question being put, it was resolved in the affirmative. The Committee adjourned accordingly.
Wednesday, 26th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. Minutes of the previous meeting read and confirmed. Resolved, on the motion of Hon. Major Steward, That Mr. Robert McOwen, for some time manager of the Bank of New Zealand at Invercargill, be ordered to be in readiness to attend as a witness. Mr. Hutchison moved, That William Richard Cook, of Dunedin, the official liquidator (appointed 4th August, 1896) of the J. G. Ward Farmers' Association (Limited), to attend to give evidence,
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and to produce—(l) Copy of the articles of association and memorandum of incorporation of the association ; (2) the original share-register of the association, and applications for and allotments and transfers of shares; (3) the original balance-sheets and directors' reports of the association; (4) up to the 31st December, 1895, all the original books of account, letter-books, original letters and telegrams (as received), and all other documents, papers, and writings relating to the affairs of the association, including the originals of all bills of exchange, or promissory notes, drafts, and cheques retired or returned ; (5) a copy of the articles of association and memorandum of incorporation of the Ocean Beach Refrigerating Company (Limited), and all books of accounts and records of such company, including copies of all circulars issued for or by the company ; (6) copies of income-tax returns of association made in 1893 and 1894, &c.; (7) all other books, documents, papers, and writings relating to the matters respectively above mentioned and now in his possession, custody, or control as such liquidator. Hon. Mr. Seddon moved, by way of amendment, to strike out all the words after " Dunedin," with a view to inserting other words. During the discussion, Mr. McGowan asked, Is it not in evidence, on the sworn testimony of Mr. Booth and Mr. Watson, a director, and the President oi the Bank of New Zealand, that there was no writing-off in connection with the J. G. Ward Association? The Chairman replied, Both Mr. Booth and Mr. Watson have stated upon oath, and have reiterated the statement, that there have been no writings-off by the Bank of New Zealand in connection with the J. G. Ward Association. Upon the question being put, " That the words proposed to be struck out stand part of the question," a division was called for, and the names were taken down as follow :— Ayes, 2.—Mr. Hutchison, Mr. Montgomery. Noes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Hon. Mr. Seddon moved to insert, in lieu of the words struck out, the words, " be ordered to be in readiness to attend as a witness." ' And the question being put, " That the words proposed to be inserted be so inserted," a division was called for, and the names were taken down as follow : — Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. No, 1. —Mr. Hutchison. So it was resolved in the affirmative. Mr. Montgomery proposed to add, " and to bring with him all documents in any way connected with the subject-matter of the order of reference." And the question being put, " That the words proposed to be added be so added," a division was called for, and the names were taken down as follow :— Ayes, 2.—Mr. Hutchison, Mr. Montgomery. Noes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. The original motion as amended was then put, and it was resolved in the affirmative. Mr. Hutchison moved to renew motion rejected on Friday, 24th July, for the production by the liquidators of the Colonial Bank of the books and documents relating to the various transactions between that bank and the Ward Association. Hon. Mr. Seddon asked, as a point of order, If a member can move a resolution which has been previously negatived ? The Chairman stated that, his attention being called to the matter, he would rule that Mr. Hutchison should first move that the previous resolution of the Committee be rescinded. Mr. Hutchison moved, That members of Committee hand in by Thursday morning such questions, being within the order of reference, as they may desire to have answered by Mr. John Murray; and, on such questions being approved by the Committee, on receipt of answers to such questions as are so approved, the same, together with the statement already received, be taken into consideration by the Committee as to whether the whole should be treated as evidence. Hon. Mr. Seddon moved to strike out " Thursday " and insert " Friday," and to strike out all the words after the word " Committee " last occurring. A discussion ensued. Hon. Mr. McKenzie moved, That the further consideration of the debate be adjourned. And the question being put, "That the debate be adjourned," a division was called for, and the names were taken down as follow : — Ayes, 5. —Mr. Graham, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 3. —Mr. Guinness, Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative, and the debate was adjourned accordingly. Mr. Hutchison gave notice to move next Wednesday, That the motion of the 24th July, as to documents to be produced by Messrs. Keith Ramsay, William Brown Vigers, and William Laurence Simpson, be rescinded, and the above-named persons be summoned to attend to give evidence, and to produce —(1.) Copy deed of settlement of the bank. (2.) The balance-sheets and reports of directors since the Ist January, 1893. (3.) The original share-register of the bank. (4.) The original books of account, reports of bank inspectors, managers, and agents, press-copy letters, original letters and telegrams as received, and all other documents, papers, and writings dealing with or relating to the accounts and affairs of the J. G. Ward Farmers' Association (Limited), and of (since January, 1892) the Hon. Joseph George Ward, including (among other documents com-
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prised in the foregoing requisition)— (a) the original cable (or telegram) as delivered from the-telegraph-office on or about the 28th June, 1895, and referred to in the evidence of William Brown Vigers before the Supreme Court on the sth June, 1896; (b) all other cables (or telegrams) as delivered, and all original letters from London or elsewhere, on the same subject; (c) the code in use by the bank at the time of the receipt of such cables (or telegrams); (d) the draft or bill of exchange for £20,000 drawn by the manager of the J. G. Ward Farmers' Association on or about the 29th June, 1895 ; (c) the warrants given in respect to or in connection with such draft or bill of exchange; (/) the draft for £16,000 afterwards drawn by the Hon. J. G. Ward ; (g) the scrip or shares lodged therewith; and (h) the promissory note for £55,230 (or thereabouts) given by the Hon. J. G. Ward on or about the 19th October, 1895. (5.) All letters and communications as to the deposit by the Colonial Treasurer (in 1894) of £150,000. (6.) The debentures of the Ward Association held for the bank. (7.) All other books, documents, papers, and writings relating to the matters respectively above mentioned, and now in the possession, custody, or control of any one or more of such liquidators. Hon. Mr. Seddon moved, That the Committee adjourn till to-morrow at 11 o'clock a.m. Mr. Hutchison moved, by way of amendment, to strike out "11 o'clock" and insert "10 o'clock." And the question being put, "That' 11 o'clock ' stand," a division was called for, and the names were taken down as follow :— Ayes, 6. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. The motion was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Thursday, 27th August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Mr. McKenzie, Hon. Mr. Seddon, Mr. Tanner. The minutes were read. Mr. Montgomery asked if the question put yesterday by Mr. McGowan, and answered by the Chairman, should appear in the minutes. A discussion ensued. Mr. Maslin moved, That the report of the question put by Mr. McGowan, and the Chairman's answer, be struck out of the minutes. And the question being put, a division was called for, and the names were taken down as follow:— Ayes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, 4.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon. The votes being equal, the Chairman gave his casting-vote with the " Noes." So it passed in the negative. The minutes were then confirmed. A letter was read from Mr. J. C. Hanna, Auckland, asking that his evidence might be taken as soon as possible, as he would be leaving Auckland for an indefinite period. Ordered, That the letter do lie upon the table. A letter, dated the 25th August, 1896, was read from Mr. D. Buddo, M.H.R., referring to certain evidence given by Mr. Watson, relating to the balance-sheet, New Zealand Farmers' Association. Ordered, That the letter do lie upon the table. A letter was read from Mr. Gibbs, accountant, Bank of New Zealand, asking to have a correction made in the statement supplied giving the amount of honorarium to be paid to Mr. Booth. Ordered, That the letter do lie upon the table. Resolved, on the motion of Mr. Hutchison, That the letter be attached to the exhibit to which it refers. Mr. William Watson attended and made a further statement, and the same was taken down by the reporter. Mr. Watson handed in—(1) Memorandum of balances of Profit and Loss Accounts as shown in balance-sheets of Bank of New Zealand Estates Company for years ending 31st March, 1891-96 inclusive ; (2) Bank of New Zealand analysis of deposits on 31st March, 1896 ; (3) transfers registered since 30th June, 1894, on the Colonial Share Register of the Bank of New Zealand, with calls due on shares transferred, paid at date of instrument of transfer ; (4) list of persons who became shareholders in Bank of New Zealand since 30th June, 1894, and who have not paid calls; (5) correspondence re appointment of Messrs. Buller and Litchfield, bank inspectors: and the same were marked as Exhibits Nos. 39, 40, 41, 42, and 43. Hon. Mr. Seddon moved, That the Committee do now adjourn until 11 o'clock a.m. to-morrow. Mr. Hutchison moved to strike out " 11," and insert " 10.30." Upon the question being put, "That 11 o'clock stand," a division was called for, and the names were taken down as follow :— Ayes, 5. —Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative, and the Committee adjourned accordingly.
Monday, 31st August, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner.
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Minutes of the previous meeting were read. Upon the question being put, "That the minutes as read be confirmed," a division was called for, and the names were taken down as follow :— Ayes, 4. —Mr. Graham, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, 4. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. And the votes being equal, the Chairman gave his casting-vote with the "Ayes." So it was resolved in the affirmative. The minutes were then confirmed. Mr. William Watson attended and made a further statement, and the same was taken down by the reporter. Mr. Watson handed in—(1) Memorandum of Trading Concerns held by the Bank of New Zealand Estates Company at 28th August, 1895 ; (2) Transfer of Bank of New Zealand Shares, London Register ; (3) Staff-officers retired —and the same were marked as Exhibits Nos. 45, 46, and 47. During Mr. Watson's examination Hon. Mr. Seddon handed in a statement of assets and liabilities of Bank of New Zealand, 25th June, 1894, in New Zealand and Australia, with covering letter from Mr. John Murray, and the same was marked as Exhibit No. 48. During Mr. Watson's examination Hon. Mr. Seddon desired to ask Mr. Watson a question upon a certain letter, dated the 25th June, 1894, from Mr. John Murray to Hon. the Premier. Mr. Hutchison, as a point of order, asked, " I ask the Chairman to rule as to whether a document handed by the Premier to the witness (understood to be a letter, dated the 25th June, 1894, from Mr. John Murray to the Premier, and of which the witness says there is no record in the bank) can be received in evidence through this witness, instead of being produced by Mr. Murray or by the Premier when giving evidence hefore the Committee." The Chairman said that there can be no objection to the letter being read, and it was read accordingly. Mr. Hutchison objected to a further letter, dated the 29th June, 1894, from Mr. John Murray to Hon. the Premier, being read. The Chairman said that, as the letters were most important, he would rule that they could be admitted. Mr. Hutchison asked if the letters read should form part of the evidence, as he objected unless the whole of the letters on the subject were handed in. The Chairman ruled that the letters read may be treated as evidence. Mr. Montgomery gave notice to move on Wednesday next, That Hon. R. J. Seddon be requested to give evidence, and to produce all letters, papers, and documents in the possession, custody, or control of the Government, relating to matters comprised in the order of reference. At 1.10 p.m. Mr. Hutchison moved, That the Committee do now adjourn until 2 p.m. to-day. Hon. Mr. Seddon moved, by way of amendment, 10.30 o'clock to-morrow. And, the question being put, " That '2 o'clock to-day' stand," a division was called for, and the names were taken down as follow :— Aye, 1. —Mr. Hutchison. Noes, 7. —Mr. Graham, Mr. Guinness, Hon. Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. The amendment was then put as the substantive motion, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Tuesday, Ist September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowam Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. William Watson attended and made a further statement, and the same was taken down by the reporter. Hon. Mr. Seddon desired that a letter dated the 12th September, 1894, Colonial Treasurer to Hon. the Premier, be put in in evidence. Mr. Hutchison objected, unless produced by the writer or the receiver thereof, as a witness. The Chairman said, as the letter had an important bearing upon the matters under inquiry, he would rule that the letter can be handed in. Further on, Hon. Mr. Seddon desired to hand in the following letters: Colonial Treasurer to General Manager Bank of New Zealand, dated the 9th October, 1893; General Manager Bank of New Zealand to Colonial Treasurer, dated the 27th October, 1893; memorandum by Secretary to the Treasury, dated the 4th January, 1894; memorandum thereon by Hon. Mr. Ward, dated the 12th January, 1894. Mr. Hutchison objected, unless the same were handed in by the writers or receivers of the letters in question. Mr. Watson said, as the correspondence was marked "Confidential," he would prefer to consult the board of directors before consenting to the correspondence being handed in, and the matter stood over accordingly. Certain other correspondence between the Government and the Bank of New Zealand was handed in, and marked as Exhibits Nos. 49 to 52 inclusive. Resolved, on the motion of Hon. Mr. Seddon, That the Chairman apply for a further extension of three weeks in which to bring up the Committee's report.
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At 1.15 Hon. Mr. Seddon moved, That the Committee do now adjourn until to-morrow, at, 11 o'clock. Mr. Hutchison moved, That the hour be 10.30 o'clock. Upon the question being put, "That the words '11 o'clock' stand," a division was called for, and the names were taken down as follow :— Ayes, 9.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. No, I.—Mr. Hutchison. The main question was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Wednesday, 2nd September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan,, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. Minutes of the previous meeting read and confirmed. Order of reference, Ist September, read. Letter dated the 26th August, 1896, from Mr. W. G. Foster, General Manager, New Zealand Estates Company, in reference to producing certain documents in connection with the list of globo assets, was read. Ordered, That the letter do lie upon the table. Mr. Hutchison moved, That members of Committee hand in by Thursday morning such questions, being within the order of reference, as they may desire to have answered by Mr. John Murray, and, on such questions being approved by the Committee, on receipt of answers to such questions as are so approved, the same, together with the statement already received, be taken into consideration by the Committee as to whether the whole shall be treated as evidence. Resolved, on motion of Hon. Mr. Seddon, to strike out " Thursday" and insert " Friday." Hon. Mr. Seddon moved to strike out all the words after " Committee" last occurring. Upon the question being put, "That the words proposed to be struck out be retained," a, division was called for, and the names were taken down as follow :— Aye, I.—Mr. Hutchison. Noes, 8. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Words struck out. Upon the question being put, "That the motion as amended be agreed to," a division was called for, and the names were taken down as follow :— Ayes, 8. —Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. No, I.—Mr. Hutchison. So it was resolved in the affirmative. Mr. Hutchison moved the motion standing in his name in reference to summoning the liquidators, Colonial Bank of New Zealand, and their producing papers, &c. And the question being put, a division was called for, and the names were taken down as follow :— Ayes, 2.—Mr. Hutchison, Mr. Montgomery. Noes, 7.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Mr. Montgomery moved a motion standing in his name as to summoning Hon. Mr. Seddon as a witness. And the question being put, a division was called for, and the names were taken down as follow: — Ayes, 2.—Mr. Hutchison, Mr. Montgomery. Noes, 7.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Hon. Mr. Seddon gave notice to move on Wednesday next, That the resolution ordering notices of motion to be taken on Wednesday be rescinded, and that no motion, unless by unanimous leave, be taken into consideration until the Committee have finished taking evidence. Mr. Watson attended and continued his statement, and the same was taken down by the reporter. Mr. Watson handed in (1) List of Names of General Managers and Inspectors, Bank of New Zealand, between 1890, 1894, and 1896; (2) Combined Statement of Assets and Liabilities, Bank of New Zealand, 25th July, 1894, New Zealand, Australia, and Fiji: and the same were marked as Exhibits Nos. 53 and 54. At 1.10 p.m. Hon. Mr. Seddon moved, That the Committee adjourn until 10.30 to-morrow. Mr. Hutchison moved, That the hour be 10 o'clock. And the question being put, " That ' 10.30 ' stand," a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon. No, I.—Mr. Hutchison. So it was resolved in the affirmative. And the main question being put, it was resolved in the affirmative, and the Committee adjourned accordingly.
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Thursday, 3rd September, 1896. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman read a letter from Mr. John Murray, Sydney, dated the 26th August, 1896. Resolved, on the motion of Hon. Mr. Seddon, That the enclosure in the letter be received, read, and held over for consideration. Mr. Watson attended, and made a further statement, and the same was taken down by the reporter. Mr. Watson informed the Committee that the board of directors had consented to remove the word "Confidential" from the papers previously referred to relating to the Bank of New Zealand reserves in 1893, and the same were handed in and marked as Exhibit No. 55. Hon. Mr. Seddon desired to hand in papers relating to the banking legislation of 1894. Mr. Hutchison objected unless they were produced by Mr. Seddon as a witness. The papers were handed in, and marked as Exhibit No. 56. At 1.30 p.m. Hon. Mr. Seddon moved, That the Committee do now adjouru until 11 o'clock to-morrow. Mr. Hutchison moved, by way of amendment, That the hour be 10.30 a.m. And the question being put, " That '11 o'clock' stand," a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Mr. Tanner. No, I.—Mr. Hutchison. So it was resolved in the affirmative. The main question was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Friday, 4th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting were read and confirmed. Resolved, on the motion of Hon. Mr. Seddon, That the questions submitted by members for Mr. John Murray be typewritten or printed, and be circulated among members, and be considered to-morrow. Mr. William Watson attended and continued his statement, and the same was taken down by the reporter. At 1.10 p.m. Hon. Mr. Seddon moved, That the Committee do adjourn until to-morrow, at 10.30 a.m. Mr. Hutchison moved, by way of amendment, to insert " 10 o'clock." Upon the question being put, "That ' 10.30 a.m.' stand," a division was called for, and the names were taken down as follow :— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. No, I.—Mr. Hutchison. So it was resolved in the affirmative. The original question was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Saturday, sth September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The following proposed questions to Mr. John Murray were submitted; — Proposed to be asked by Mr. Montgomery. 1. Please state what has been your connection with the Bank of New Zealand from time to time, giving dates ? The Bank of New Zealand Estates Company. 2. The history of its formation ? How did the company come to take over the properties of the bank at £54,000 in excess of Mr. Hean's valuation ? Was subsection (3) of section sof the New Zealand Bank Act of 1889 inserted at the wish of the Bank of New Zealand ? Do you consider that such legislation is in the interests of sound banking finance, seeing that it permitted the directors to declare dividends when, owing to the position of the Estates Company, the bank was going from bad to worse every year ? 3. Do you consider, from your knowledge of the facts, that the references made to the condition of the Bank of New Zealand Estates Company by the directors of the Bank of New Zealand from 1890 to 1894 were straightforward or misleading, particularly the following statements: — 1891, sth August: Ordinary general meeting at London. The chairman said (inter alia), " As regards the Estates Company, we have every reason to believe that this is a satisfactory asset. The sales of the property as far as they have gone have come out well above the valuation of the late Mr. Hean, and they have consisted almost entirely—-I may say entirely—of properties which return the very smallest revenue. The return was something under 2 per cent., and vi—l. 6.
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we have not yet begun to touch the properties which are returning us a reasonable rate of interest. The revenue of the Estates Company for the past year was not quite up to expectations, but this, you can easily understand, was owing to the very bad season through which the country passed. The prospects for the present year are, we are advised, excellent. Therefore, on the whole, I think it is fair to say that we believe that the shares which we hold in this company are steadily enhancing in value, for we are advised that quite a demand has sprung up for station properties, and generally the tone of things is very much better in the colonies ; and I think that asset may be looked upon as worth a great deal more in the future than it is to-day." In 1892, at the half-yearly general meeting held in London, the chairman said, referring to the proposed sale of a number of the Estates Company's properties in the South Island, " Of course, in the meantime, until they are sold, we shall have the profits which these properties make; and, up to the present time, all the reports are satisfactory." In 1892, at the half-yearly meeting, held in August, the chairman said, " . . . . Now, the next thing I have to come to is the Estates Company. This is the first time we have had a complete year's balance-sheet from the Estates Company, and it is, on the whole, fairly satisfactory. The result shows an improvement on the estimates formed by Mr. Hean, when the properties were handed over to the limited company " In 1893, at the half-yearly general meeting, the chairman said, re. the Estates Company, " We now know that these estates are coming out well, that the liberal expenditure and prudent management which have been exercised are leading to larger profits, while the less desirable properties are being got rid of. Therefore we may say with confidence that the bank has now emerged from its difficulties, and that we can look forward to a future of steady and substantial progress." 4. Did you, when appointed chairman of the Estates Company in 1893, take steps to ascertain the exact position of the company and the value of its properties ? Did you report on the same; and, if so, will you send the Committee a copy of your report? 5. What instructions did you receive from the directors in London with respect to your negotiations resulting in the Share Guarantee Act of 1894 ? Will you send to the Committee all written instructions which you received, and all your correspondence with the directors of the Bank of New Zealand, the Ministry, or any member thereof, or with any other persons, relative to the negotiations of 1894, or to the legislation which took place then and subsequently ? 6. State in detail the history of the negotiations leading up to the banking legislation of 1894, and in particular what interviews you had with the Ministry, or any member of the Ministry, and what took place at such interviews, giving the exact dates ? 7. What information was given to the Ministry, or any member thereof, as to the position of the Bank of New Zealand at or about the time of the banking legislation of 1894 other than that which appears in your letters of the 25th and 29th June, and of the 4th July ? 8. Referring to your letter of the 29th June, 1894, in which you state, " By the measure I have proposed I am absolutely convinced that the State will not lose one penny. . . ." Was your knowledge of the affairs of the Bank of New Zealand so intimate and exact that you could with confidence make such a declaration ? In particular, were you acquainted with the real value of the properties of the Estates Company ? If so, how was your knowledge obtained, and were the Government informed of such values ? Could you have made a reliable declaration without being thoroughly acquainted with the real value of the properties belonging to the Estates Company? 9. Did you at the time of the banking legislation of 1894 anticipate that further provision would subsequently require to be made for the safety of the Bank of New Zealand; and, if so, did you advise the Government to that effect ? 10. Referring to your letter of the 25th June, 1894, to the Colonial Treasurer, in which you state, "As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000; reserve liability, £1,500,000 : total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin." Did you know at the time that if the bank's losses (including the Estates Company) were written off its capital that there would be no capital left, and also that a considerable portion of the reserve liability would also require to be called up and written off? If so, did you inform the Government of the fact? Did you not know that the book-values of the properties of the Estates Company were purely fictitious, and represented over £800,000 more than their actual value ? If so, did you inform the Government ? 11. Had you been aware of the position disclosed to the Committee in 1895, namely : — £ Deficiency in bank ... ... ... ... ... ... 376,900 Contingent ... ... ... .. ... ... ... 200,000 Estates Company— 576,900 Deficiency against which no assets exist ... £467,077 Trading concerns and foreign properties ... 444,601 911,678 Less (cross entry) ... ... ... 148,110 763,568 £1,340,468 Besides the deficiency in the Value of properties handed over to the Realisation Board (altogether over two millions) ? 12. Would you still have made the statement above referred to in your letter of the 25th June ?
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The Colonial Bank Purchase. 13. Will you inform the Committee if you have any knowledge of an alleged proposal for amalgamation between the Colonial Bank and the Bank of New Zealand in 1889. If so, please give the Committee any information in your possession on the subject ? 14. When was an amalgamation between the two banks first proposed in 1894. Was it previous to the passing of the Bank Share Guarantee Act ? 15. When were the Ministry, or any member thereof, first informed of the proposed amalgamation ? 16. Trace the history of the negotiations culminating in the amalgamation agreement of the 11th September, 1894. 17. Were you kept informed of the progress of the negotiations in 1895, previous to your visit to Wellington ? 18. Trace the history of the negotiations for amalgamation or purchase in 1895 so far as you are aware of them. 19. Did you assist in the negotiations for amalgamation or purchase in 1895 ? What was the amount estimated by you as provided by the Bank of New Zealand as consideration for the goodwill of the Colonial Bank, taking into account the value of the guarantee given by the Colonial Bank on certain accounts —in particular, one of £20,000, and another of £5,000 —the sum of £75,000, the nominal value paid, and the probable loss on the landed properties and bank premises of the Colonial Bank ? Is this estimate correct ?— £ Cash 75,000 Loss on bank premises ... ... ... ... ... 30,000 105,000 Less account guaranteed ... ... ... ... 25,000 Should it be more or less in each item ? £80,000 Proposed to be asked by Mr. Hutchison. 1. What are the particulars of the efforts made in London in 1893 or 1894 to raise additional capital, and what was the result, and when was it known in the colony that such additional capital could not be raised ? 2. What were the particulars —the whole of them—submitted by you to the Government before the introduction of the Guarantee Bill? 3. Were the terms or effect of the agreement referred to in Part 111. of the terms of proposed amalgamation communicated or in any way brought to the notice of any one or more members of the Government? 4. What were the terms, or, if you cannot give the terms, what was the effect of that agreement, so far as related to Mr. H. Mackenzie, the general manager of the Colonial Bank? 5. What were the arrangements made as to the investment of part of " the second " million guaranteed by the Act of 1894 in the purchase of New Zealand Consols ?
No. 1 agreed to. No. 2 amended by inserting " subsection 3 of section 5," after " was," line 2. Nos. 1 to 6, inclusive, agreed to. No. 7 agreed to after striking out " those of," line 3, and inserting "of the 25th and 29th June, and of the 4th July," after "letters," line 4, and striking out the remaining words of the clause. Nos. 8, 9, 10, and 11 agreed to. No. 12 added to clause 11. Clauses 13 to 18 agreed to after altering the numbers to 12 to 17. No. 19 altered to No. 18. Resolved, on the motion of Mr. G. Hutchison, to strike out " as " and insert " to be," line 2. Hon. Mr. Seddon moved to strike out "provided," line 2, and insert "given." And the question being put, " That the word ' provided ' stand," a division was called for, and the names were taken down as follow :— Ayes, 3. —Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 5. —Mr. Graham, Mr. Guinness, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. The word " provided " was struck out, and " given " inserted in lieu thereof. Hon. Mr. Seddon moved to strike out the words " taking into account the value of the," line 3, and insert "were you aware of any guarantee given by the Colonial Bank of £25,000; and, if so, was such" in lieu thereof. And the question being put, "That the words proposed to be struck out stand part of the question," a division was called for, and the names were taken down as follow:— Ayes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward.
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Words struck out. Hon. Mr. Seddon's motion was then put, and it was resolved in the affirmative. Hon. Mr. Seddon moved to strike out all the words after " £5,000." And the question being put, " That the words proposed to be struck out stand part of the question," a division was called for, and the names were taken down as follow: —■ Ayes, 4.—Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Words struck out. Resolved, on the motion of Hon. Mr. Seddon, to add the following words : " Did you make an estimate of the value of the Colonial Bank premises? The sum of £125,000 having been paid therefor, what loss, if any, under this head do you estimate will be made? " Resolved, on the motion of Mr. Montgomery, to add as No. 19, "' What was the value of the consideration allowed to the Colonial Bank for their good-will, taking into account the said guarantee accounts (£25,000), and the excess value, if any, paid for the Colonial Bank premises ? " Resolved, on the motion of Hon. Mr. Seddon, to add as No. 20, "In your opinion, is the interest of the bank and the colony sufficiently safeguarded under existing arrangements in respect to the banking business in Australia and Fiji ? Have you any suggestions to make in respect to this matter? " Mr. Hutchison proposed questions. Mr. Hutchison asked leave to withdraw them. Leave refused. Question 1 altered as question 21, and agreed to after inserting " and by whom" after " efforts "in line 1; and the words " for the Bank of New Zealand " after " capital " in line 2. Resolved, on the motion of Hon. Mr. Seddon, to insert as No. 22, " Were balance-sheets and reports prepared at this time so as to enable Messrs. Johnston and Horton to place the position of the bank before London capitalists, and, if so, will you supply copies of same, failing which, supply any information you may possess of such documents ? " Question 2 altered as question 23, and agreed to after inserting after " them," in line 1, the words " in respect to the position of the Bank of New Zealand and Estates Company." Question 3 altered as question 24, and agreed to after striking out "referred to in Part III.," and inserting in lieu thereof the words " mentioned in Clause IV." Question 4 altered as question 25, and agreed to after inserting after " Manager," in line 2, " and other officers," and the words " or the Bank of New Zealand," after " bank." Question 5 altered as question 26, and agreed to. Resolved, on the motion of Hon. Mr. Seddon, That the questions as approved by the Committee be forwarded to Mr. Murray, together with copies of the order of reference, the report of the sub-committee, and the questions approved, also copies of all the Acts passed in reference to banking affairs since 1888; and that Mr. Murray be requested to send his replies by the first return mail. Mr. William Watson attended and continued his statement, and the same was taken down by the reporter. During Mr. Watson's examination Mr. Hutchison wished to ascertain the remuneration received by Mr. Murray, Manager of the Bank of New Zealand, at Auckland, from the German mining syndicate. Hon. Mr. Seddon, as a point of order, objected, as the proper person to ask was Mr. Murray. The Chairman ruled that he would not prevent the question being asked. The witness replied that he " must decline to ascertain the information asked for." At 1 p.m. Hon. Mr. Seddon moved, That the Committee do now adjourn until 11 o'clock on Tuesday next. Mr. Hutchison proposed, as an amendment, to omit " Tuesday," with a view of inserting " Monday." And the question being put, " That ' Tuesday ' be retained," a division was called for, and the names were taken down as follow : — Ayes, 6.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. And the question being put as a whole, it was resolved in the affirmative, and the Committee adjourned accordingly.
Tuesday, Bth September, 1896. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting were read and confirmed. Mr. W. Watson continued his statement, and the same was taken down by the reporter. Mr. Hutchison gave notice to move to-morrow, That the Committee apply to the House for leave to sit during the sitting of the House. At 1.15 p.m. Hon. Mr. Seddon moved, That the Committee do now adjourn until 11 o'clock to-morrow. Mr. Hutchison moved, by way of amendment, That the hour be 10.30 o'clock a.m. And the question being put, "That '11 o'clock' stand," a division was called for, and the names were taken down as follow; —
1.—6
Ayes, 7.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. No, 1. —Mr. Hutchison. So it was resolved in the affirmative. And the question being put, it was resolved in the affirmative, and the Committee adjourned accordingly.
Wednesday, 9th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Resolved, on the motion of Hon. Mr. Seddon, That the resolution ordering motions to be taken on Wednesday be rescinded, and that no motion, unless by unanimous leave, be taken into consideration until the Committee has finished taking the evidence, except in respect of summoning witnesses, which shall be dealt with as such questions arise. Mr. Hutchison moved, That the Committee apply to the House for leave to sit during the sitting of the House. And the question being put, a division was called for, and the names were taken down as follow:— Ayes, 2. —Mr. Hutchison, Mr. Maslin. Noes, 6.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Mr. William Watson attended and concluded his statement of evidence, and the same was taken down by the reporter. Mr. Watson handed in certain documents, and the same were marked as Exhibits Nos. 57, 58, 59, and 60. Mr. Thomas George Macarthy, a director of the Bank of New Zealand, attended, and was sworn, and made a statement, and the same was taken down by the reporter. During Mr. Macarthy's evidence, Hon. Mr. Seddon asked the witness, Would it, in your opinion, be dishonest, or a falsification of the accounts of a company, if bills under discount were not set down under liabilities ? Mr. Montgomery asked, as a point of order, if the question came within the order of reference. The Chairman ruled that the question was within the order of reference, and could be put. Hon. Mr. Seddon handed in memorandum by Mr. J. M. Butt showing figures of contract for sale and purchase of Colonial Bank, and how arrived at, and the same was marked as Exhibit No. 61. At 1 o'clock p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee do now adjourn until 10.30 o'clock to-morrow.
Thursday, 10th September,lB96. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting were read and confirmed. Mr. T. G. Macarthy attended and continued his statement, and the same was taken down by the reporter. At 1.10 p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee adjourn until 11 o'clock a.m. to-morrow.
Friday, 11th September, 1896.' Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting were read and confirmed. Mr. T. G. Macarthy attended and concluded his statement, and the same was taken down by the reporter. At the conclusion of Mr. Macarthy's evidence, Mr. Hutchison moved, that Mr. Vigers be communicated with, with a view to his attending as a witness next week. Hon. Mr. McKenzie moved, by way of amendment, That the Committee at the next meeting deliberate as to what evidence is required. Upon the Hon. Mr. McKenzie's amendment being put, it was resolved in the affirmative, and it was then put as the substantive motion, and it was resolved in the affirmative. At 1.30 p.m. the Hon. Mr. Seddon moved, The Committee do now adjourn till 10.30 a.m. on Monday next. Mr. Hutchison moved to strike out " Monday," and insert " to-morrow." Upon the question being put, that Monday stand, a division was called for, and the names were taken as follow :— Ayes, 4.—-Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And upon being put as the substantive motion, it was resolved in the affirmative, and the Committee adjourned accordingly.
Monday, 14th September, 1896. Present : Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner.
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The minutes of the previous meeting were read and confirmed. Strangers then withdrew, and the Committee deliberated. Hon. Mr. J. McKenzie moved, That, in addition to Mr. Butt, Mr. Foster, and Hon. Mr. W. W. Johnston, the following witnesses be summoned to attend, viz. : Mr. William Brown Vigers, Hon. Mr. Ward, Hon. Mr. George McLean, Hon. Mr. W. D. Stewart, and Mr. Henry Mackenzie. Mr. G. Hutchison moved, by way of amendment, to add the name of Mr. W. R. Cook, official liquidator in the Ward Association. Upon Mr. G. Hutchison's amendment being put, a division was called for, and the names were taken down as follow :— Ayes, 2.—Mr. G. Hutchison, Mr. Montgomery. Noes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Mr. Tanner. So it passed in the negative. Hon. Mr. J. McKenzie's motion was then put, and it was resolved in the affirmative. The strangers were then readmitted. Mr. John Marten Butt, Colonial Auditor, Bank of New Zealand, attended and was sworn, and made a statement, and the same was taken down by the reporter. At 1.15 p.m. Hon. Mr. Seddon moved, That the Committee do now adjourn until to-morrow at 10.30 a.m. Mr. G. Hutchison moved, by way of amendment, 2.30 p.m. this day. Upon the question being put, That 10.30 to-morrow stand, a division was called for, and the names taken down as follow :— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. No, I.—Mr. G. Hutchison. So it was resolved in the affirmative. The original question was then put, and it was resolved in the affirmative, and the Committee adjourned accordingly.
Tuesday, 15th September, 1896. Present: Mr. Graham (Chairman, Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting were read and confirmed. Mr. John Marten Butt attended and continued his statement, which was taken down by the reporter. At 1.10 p.m, Resolved, on the motion of Hon. Mr. Seddon, That the Committee adjourn until to-morrow at 10.30 o'clock.
Wednesday, 16th September, 1896. Present: Mr. Graham (Chairman), Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr Montgomery, Hon. Mr. Seddon, Major Steward, Mr. Tanner. The minutes of the previous meeting were read and confirmed. Mr. J. M. Butt attended and concluded his statement, and the same was taken down by the reporter. Hon. Mr. Seddon handed in agreement between Colonial Bank and Bank of New Zealand, B. 27, 1895, and the same was marked as Exhibit No. 49a. Mr. Butt handed in summary of lists 1, 2, 3 and 4, and other assets, and the same was marked as Exhibit No. 63. Mr. Hutchison handed in copy of deed between Mr. Thomas Russell and Bank of New Zealand, dated 30th August, 1887, and the same was marked as Exhibit No. 64 ; and letter to President, Board of Directors, Bank of New Zealand, from Messrs. Tolhurst, Buller, and Andrews, dated 9th March, 1889, and the same was marked as Exhibit No. 65. At 1.10 p.m., Resolved, on the motion of Mr. Seddon, That the Committee adjourn until to-morrow at 11 o'clock a.m.
Thursday, 17th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Mr. Walter George Foster, Manager .New Zealand Estates Company, attended and was sworn, and made a statement, which was taken down by the reporter. Mr. Foster handed in a statement, showing the area, value, &c, of stations, profit and loss accounts, 1895-96, and the same was marked as Exhibit No. 66. At 1.10 p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee do adjourn until to-morrow at 10.30 o'clock a.m.
Friday, 18th September, 1896. Present: Mr. Graham (Chairman), Mr Guinness, Mr. Hutchison, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. Resolved, on motion of Mr. Montgomery, That notice be given to Mr. James Hanna to attend and give evidence.
XLVII
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Mr. Walter George Foster attended and concluded his statement, and the same was taken down by the reporter. Mr. Foster handed in statement re New Zealand Thames Valley Land Company, incorporated 6th July, 1882, and the same was marked Exhibit No. 67. Letter from Mr. Foster to the Chairman, Banking Committee, dated 14th July, 1896, and the same was marked Exhibit No. 68. Minutes of meeting, valuation of live stock, extracts, and circulars, and the same was marked Exhibit No. 69.. Hon. Joseph George Ward attended, and was sworn, and made a statement, and the same was taken down by the reporter. At 1 o'clock, on motion of Hon. Mr. Seddon, Committee adjourned till 2.30 p.m. to-morrow.
Saturday, 19th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. Minutes of the previous meeting were read and confirmed. Hon. Mr. J. G. Ward attended, and made a further statement; and the same was taken down by the reporter. At 5.40 p.m. the Committee adjourned until 7.30 p.m. On resuming at 7.30 p.m., Hon. Mr. Ward continued his statement. During Hon. Mr. Ward's examination, Hon. Mr. Seddon handed in correspondence between the Government and the Agent-General as to appointment of President, and the same was marked as Exhibit No. 71. Confidential papers relating to the legislation in 1895, on behalf of the Bank of New Zealand, and the same was marked Exhibit No. 70. During the examination, Mr. Montgomery desired to ask the witness, " You were personally prejudiced by the position in which you were place in the lists ?" Hon. Mr. Seddon objected to the question as not coming within the order of reference. The Chairman ruled that the question could not be put as not coming within the order of reference. Mr. Hutchison asked the witness, " Were you in 1894 managing director of the J. G. Ward Association ? " Hon. Mr. Seddon objected to the question as not coming within the order of reference. The Chairman ruled the question out of order, as not coming within the order of reference. Mr. Hutchison proceeded to ask the witness several questions of a similar bearing as the one above recorded. Hon. Mr. Seddon objected to the questions being recorded after the Chairman had ruled such questions were not in order. The Chairman ruled that the first question should be recorded, together with the ruling thereon, but not the remainder of the questions. At 11.15 p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee adjourn until Monday next, at 11 o'clock, a.m.
Monday, 21st September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Minutes of the previous meeting read. Upon the question being put, That the minutes be confirmed, a division was called for, and the names were taken down as follow:— Ayes, 6. —Mr. Graham, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. No, I.—Mr. Hutchison. So it was resolved in the affirmative. The minutes were then confirmed. William Brown Vigers, one of the liquidators of the Colonial Bank of New Zealand, attended and was sworn, and made a statement, which was taken down by the reporter. During Mr. Vigers' evidence, Mr. Montgomery desired to ask, How many accounts were on the "C" list? Hon. Mr. Seddon objected to the question as not coming within the order of reference. The Chairman ruled that the question could not be put, as not coming within the order of reference. Mr. Hutchison asked a question in reference to a certain affidavit filed by the witness in the Supreme Court at Dunedin. Hon. Mr. Seddon objected to the question as not coming within the order of reference. The Chairman ruled that the question could not be put, seeing the affidavit referred to an account, and that in reference to the same no writings-off had been shown. Mr. Hutchison proceeded to ask other questions of the witness. Objection being taken to them and to their being recorded, the Chairman ruled that they could not be put, nor should they be recorded, as they were of a similar character to others already ruled out of order, At 1.40 p.m., Hon. Mr. Seddon moved, That the Committee adjourn until to-morrow at 10.30. Mr. Hutchison moved by way of amendment, 2.30 this afternoon.
1.—6.
XLVIII
Upon the question being put, That 10.30 to-morrow stand, a division was called for, and the names were taken down as follow :— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. No, I.—Mr. Hutchison. So it was resolved in the affirmative, and the main question being put it passed in the affirmative, and the Committee adjourned accordingly.
Tuesday, 22nd September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting were read. Hon. Mr. Seddon moved to expunge the question as set out, as asked by Mr. Hutchison of Mr. Vigers, the objection of the Hon. Mr. Seddon thereto, and the Chairman's ruling thereon. Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 4.—Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. Noes, s.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. So it passed in the negative. Mr. Guinness then moved to strike out of the question all the words after " asked," and insert in lieu thereof, " a question in reference to a certain affidavit filed by the witness in the Supreme Court at Dunedin." And the question being put, That the words proposed to be struck out stand part of the question, a division was called for, and the names were taken down as follow : — Ayes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon. So it passed in the negative. Words struck out. And the question being put, That the words proposed to be inserted by Mr. Guinness be so inserted, a division was called for, and the names were taken down as follow : — Ayes, 7. —Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. McGowan, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, 3.—Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it was resolved in the affirmative. Words inserted. Resolved, on motion of Hon. Mr. Seddon, To strike out from the Chairman's ruling the words, " unless writings-off were shown," and insert in lieu thereof, "seeing the affidavit referred to an account, and that in reference to the same no writings-off had been shown." Hon. Mr. Seddon moved to strike out from the minutes the last two paragraphs. And the question being put, that the paragraphs stand, a division was called for, and the names were taken down as follow :— Ayes, 7. —Mr. Graham, Mr. McGowan, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 3.- —Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. Paragraphs retained. Upon the question being put, That the minutes as amended be confirmed, a division was called for, and the names were taken down as follow : — Ayes, 6. —Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 4.—Mr. McGowan, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon. So it was resolved in the affirmative. The minutes were then confirmed. Hon. William Downie Stewart, M.L.C., attended and was sworn, and made a statement, and the same was taken down by the reporter. Resolved, on the motion of Hon. Mr. Seddon, That Mr. Butt be recalled to give further evidence. Resolved, on the motion of Hon. Mr. Seddon, That Mr. Rhind, Inspector Bank of New South Wales, be summoned to attend as a witness. Resolved, on motion of Hon. Mr. Seddon, That the Chairman apply for ten days' further time in which to bring up the report of the Committee. At 1.15 p.m., Resolved, on motion of Hon. Mr. Seddon, That the Committee adjourn until to-morrow at 11 o'clock.
Wednesday, 23ed September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. J. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting read and confirmed. Order of reference of the 22nd September, 1896, read. Letter from Mr. John Murray, Sydney, dated the 18th September, 1896, received and read, and ordered to lie upon the table. Hon. Mr. W. D. Stewart attended, and concluded his statement, and the same was taken down by the reporter.
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Mr. J. M. Butt attended and made a further statement, and the same was taken down by the reporter. Hon. Mr. Walter Woods Johnston, a director of the Bank of New Zealand, attended, and was sworn, and made a statement, and the same was taken down by the reporter. ■■: At 1.30 p.m., Resolved, on the motion of the Hon. Mr. Seddon, To adjourn until to-morrow at 10.30 a.m.
Thursday, 24th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. Montr gomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of previous meeting read and confirmed. Mr. J. C. Hanna asked to be excused from attendance till to-morrow. Resolved, on the motion of Hon. Mr. Seddon, That Mr. Hanna be excused from attendance till 10.30 to-morrow. The Chairman read a memorandum of papers and documents that Mr. Hanna desired to peruse, and which are in the possession of the New Zealand Estates Company. Resolved, on the motion of Hon. Mr. Seddon, That Mr. Hanna's memorandum be received. That a copy of Mr. Hanna's memorandum in respect to his having access to certain reports, documents, &c, now in possession by the Estates Company, the Bank of New Zealand, and the Assets Realization Board, be forwarded to the Colonial Manager of the Estates Company, the President, Bank of New Zealand, and the General Manager of the Estates Company, with a request that Mr. Hanna be allowed to see the said reports, papers, and documents, and that every facility be given to Mr. Hanna to enable him to place before the Committee full and reliable information. Hon. George McLean, M.L.C., attended, and was sworn and made a statement, and the same was taken down by the reporter. At 1.10 p.m. Resolved, on the motion of Mr. Maslin, that the Committee adjourn until to-morrow at 10.30 a.m.
Saturday, 26th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Stewart, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman stated he had received a letter from Mr. W. G. Foster giving further details which the Committee required. Resolved, That the letter be considered later on. Hon. George McLean, M.L.C., attended and concluded his statement, and the same was taken down by the reporter. Mr. Hutchison asked the Hon. Mr. McLean certain questions in reference to the J. G. Ward Association, which were ruled out of order as not being within the order of reference, and which were directed by the Chairman not to be taken down by the reporter. Mr. William Graham Rhind, Inspector Bank of New South Wales, attended, was sworn, and made a statement, and the same was taken down by the reporter. Mr. James Crawford Hanna, Inspector New Zealand Insurance Fire and Marine Company, attended and made a statement, and the same was taken down by the reporter. At 1.15 p.m. Mr. McGowan moved, That the Committee do now adjourn until 10.30 o'clock on Monday. The Chairman moved, by way of amendment, 2.30 this afternoon. Upon the question being put that 10.30 o'clock on Monday stand, a division was called for, and the names were taken down as follow:— Ayes, 5. —Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Major Stewart, Hon. Mr. Seddon. Noes, 3.—Mr. Graham, Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. And the question as a whole being put, it was resolved in the affirmative, and the Committee adjourned accordingly.
Monday, 28th September, 1896. Present: Mr. Graham (Chairman), Mr. McGowan, Mr. Guinness, Mr. Hutchison, Hon. MrMcKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read. Mr. Hutchison moved to add to the minutes, after the paragraph referring to the Hon. George McLean giving evidence, the following: Mr. Hutchison asked Mr. McLean certain questions in reference to the J. G. Ward Association, which were ruled out of order as not being within the order of reference, and which were directed by the Chairman not to be taken down by the reporter. Upon the question being put a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. Montgomery, Mr. Tanner, Noes, 2.—Mr. McGowan, Hon. Mr. McKenzie. So it was resolved in the affirmative, The minutes were then confirmed. The Chairman read a letter, dated the 28th September, 1896, from a number of flour-millers, asking to be allowed to attend and give evidence. Resolved, on the motion of Mr. Montgomery, That Messrs. Thomas Meek, William Evans, and D. H. Brown be requested to attend to give evidence, vii.—l. 6.
L
Mr. J. C. Hanna attended and concluded his statement, and the same was taken down by the reporter. : During Mr. Hanna's evidence, Mr. Montgomery desired, as a question, to quote a report from Mr. Hanna to Mr. John Murray, dated 9th June, 1894 (pp. 291-93), of Legislative Council Report No. 2, 1896. Hon. Mr. Seddon, as a point of order, asked if it could be put in and recorded as a question, or if it should not be put in as an exhibit. The Chairman ruled that it could be handed in, and it would be taken as an exhibit. Mr. Montgomery desired to put in a letter from Mr. J. C. Hanna to Mr. J. Murray, dated the Bth August, 1894, page 293, Legislative Council Report, 1596, No. 2. Hon. Mr. Seddon asked if the letter relates to private business; and, if so, could it be put'ih unless writtings-off were shown. Mr. Montgomery then asked if he could put the letter in without the names of the persons' relating to private business. The Chairman ruled that, as Mr. Cooper, counsel for the Bank of New Zealand, objected to the letter being put in, as it relates to private accounts and persons, the letter could not be put in. Mr. Montgomery then desired to put in several other letters from the Legislative Council's Report. Hon. Mr. Seddon asked, as a point of order, if the letters could be taken into consideration which had been dealt with in another place. The Chairman ruled that any documents which might be handed in should be handed in by the witness, Mr. Hanna, and not as received from another place. Resolved, on the motion of Hon. Mr. Seddon, That Messrs. Meek, Evans, and Brown be requested to attend at 11 o'clock to-morrow. Resolved, on the motion of Mr. Hutchison, That Mr. Henry Mackenzie be requested to attend to-morrow to give evidence. Resolved, on the motion of Mr. Montgomery, That a cablegram be sent to Mr. John Murray, asking him (1.) Whether he received a confidential communication on or about the 9th June, 1894, from Mr. Hanha giving information as to the position of the Estates Company, and suggesting a Government guarantee? (2.) Whether he communicated particulars of such information to the Ministry prior to the 30th June, 1894 ? At 1.30 p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee adjourn until to-morrow at 11 o'clock.
Tuesday, 29th September, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Montgomery, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman read a letter dated 28th September, 1896, from Mr. J. M. Butt, as to evidence given by him on the 23rd instant. Resolved, on motion of the Hon. Mr. Seddon, That the letter be returned to Mr. Butt with an intimation that if he desired to give his evidence, he should do so by attending personally before the Committee. Thomas Meek, flour-miller, Oamaru, attended, and was sworn, and made a statement, and the same was taken down by the reporter. William Evans, flour-miller, Timaru, attended, and was sworn, and made a statement, and the same was taken dowu by the reporter. David Hastings Brown, flour-miller, Christchurch, attended, and was sworn, and made a statement, and the same was taken down by the reporter. Walter George Foster recalled, and made a further statement, and the same was taken down by the reporter. Resolved, on the motion of Hon. Mr. Seddon, That Mr. G. E. Tolhurst, Inspector-in-Chief for New Zealand of the Union Bank of Australia, be summoned to attend to-morrow to give evidence. At 1.10 p.m., Resolved, on the motion of Hon. Mr. Seddon, That the Committee do now adjourn until 10.30 o'clock to-morrow.
Wednesday, 30th September, 1896. Present: Mr. Graham (Chairman), Mr. Hutchison, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of the previous meeting read and confirmed. The Chairman read the following cablegram as received from Mr. Murray : " Have no recollection such statement, or of seeing it among my papers. Did not communicate particulars to Government." George Edmeades Tolhurst, Inspector-in-Chief, Union Bank of Australia, attended, and was sworn, and made a statement, and the same was taken down by the reporter. Henry Mackenzie, General Manager, Bank of New Zealand, attended and was sworn, and made a statement, and the same was taken down by the reporter. The Chairman announced that the takiug of evidence was now closed. Hon. Mr. Seddon moved, That the taking of evidence, with exception c>[ deliberating and deciding on Mr. Murray's replies, and admitting of papers promised, having been completed, this Committee proceed to-morrow to elect a sub-committee, for the purpose of preparing a draft report.
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Mr. Hutchison moved, by way of amendment, To strike out all the words after " That," with a view of inserting " the Committee report the evidence and minutes of proceedings to the House without any opinions expressed by the Committee." Upon the question being put, " That the words proposed to be struck out stand part of the question," a division was called for, and the names were taken down as follow : — Ayes, 6.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Mr. Montgomery, Mr. Tanner, Hon. Mr. Seddon. No, I.—Mr. Hutchison. So it was resolved in the affirmative. The question was then put, and it was resolved in the affirmative. Hon. Mr. Seddon gave notice to move to-morrow : (1.) That an interim report be presented to the House, intimating that the Committee has completed the taking of evidence, that an extension of time for seven days be asked for, in which to prepare and bring down the report. (2.) That the Chairman, Mr. Montgomery, Mr, McGowan, Mr. Maslin, and the mover, be appointed to prepare and bring up a draft report. At 1.15, Resolved, on the motion of Hon. Mr. Seddon, That the Committee adjourn till 11 o'clock to-morrow.
Thursday, Ist October, 1896. Present: Mr. Graham (Chairman), Mr. McGowan, Mr. Hutchison, Hon. Mr. McKenzie, Hon. Mr. Seddon. The minutes of the previous meeting were read and confirmed. The Manager, Assets Realisation Board, wrote forwarding further particulars of sales of properties up to 18th September, 1896, and stating with regard to provision for depreciation of machinery, plant, &c, by trading concerns, that the managers make such appropriations from profits as appear to them sufficient for the purpose. Resolved, on the motion of Hon. Mr. Seddon, That an interim report be presented to the House, intimating that the Committee have completed the taking of evidence, that an extension of time for seven days be asked, in. which to prepare and bring down the report. Hon. Mr. Seddon moved, That the Chairman, Mr. Montgomery, Mr. McGowan, Mr. Maslin, and the mover, be appointed to prepare and bring up a draft report. Mr. McGowan moved, by way of amendment, to omit from the motion the names of Mr. Maslin and Mr. McGowan. And upon the question being put, That the words proposed to be omitted be so omitted, it was resolved in the affirmative. The motion as amended was then put, and it was resolved in the affirmative. Resolved, on the motion of Hon. Mr. Seddon, That the letters, statements, and correspondence, including answers to questions, received from Mr. John Murray, be printed. The Committee then adjourned until Tuesday next.
Thursday, Bth October, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Minutes of previous meeting were read and confirmed. Order of reference, Ist October, read. Mr. Montgomery moved, That the Committee deliberate. Upon the question being put, a division was called for, and the names were taken down as follow : — Ayes, 9.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, I.—Mr. Hutchison. So it was resolved in the affirmative. Strangers withdrew, and the Committee proceeded to deliberate. The Chairman brought up the following report of the sub-committee: — EEPOET. The Committee appointed to examine and report into the affairs of the Bank of New Zealand, th e Bank of New Zealand Estates Company (Limited), the Auckland Agricultural Company (Limited)) the Colonial Bank of New Zealand, the banking legislation of 1893 and 1894 and 1895, and what led to such legislation, and the several matters set out in the order of reference, have made a searching and exhaustive inquiry, extending over three months, into the several matters submitted to them, and have the honour to report thereon as follows : — RETROSPECT. 1888. In the year 1888 a crisis occurred in the affairs of the Bank of New Zealand. The directors, at a meeting held on the 26th April, recommended that a dividend should be declared at the rate of 7 per cent, on the original capital, but at the same time advised that a shareholders' committee should be appointed to inquire into the affairs of the bank. A committee was appointed for this purpose, and reported on the 3rd October, inter alia, that— " Our examination disclosed a mass of securities, taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover or which had become obviously inadequate, altogether involving losses which the directors had
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not faced, but which, upon a rigorous examination, we feel convinced will absorb not only the whole of the Reserve Fund, but also nearly one-third of the paid-up capital of the bank, say, £800,000 in all. ," You will naturally and properly expect from us something in elucidation of a state of things so 'startling, and which we had so little right to expect. "It is obvious to us that for years past the bank has been paying a rate of dividend it ought not to have paid. Securities have been held and accounts kept going in the vain hope of a recovery of the values placed upon them in what was, in fact, a period of inflation ; and supervening upon this, within the last two or three years, heavy losses in Australia brought matters to the climax which we are now under the unpleasant necessity of facing. " Finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000; while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." These losses were met by writing off £300,000 from the bank capital (and also the whole of the Reserve Fund, £500,000). Dividends at the rate of 7 per cent, were paid during the year, amounting to £59,500. The writings off accounts for the year amounted to £216,885. 1889. In 1889 the share capital was increased by the issue of 25,000 new shares of £10 each, £10 paid up, and 25,000 shares of £10 each, £7 paid up. This, together with the then share capital, £700,000, brought up the capital to £1,124,824. Dividends at the rate of 7 per cent, were paid during the year, amounting to £72,438. The writings off accounts amounted to £109,565. 1890. In 1890 the capital stood at £1,125,000. No dividend was paid during the year. The writings off the accounts, consequent on the losses revealed to the shareholders' committee, amounted to the unprecedented sum of £1,169,555, of which £1,088,795 was written off the Consolidated Properties Account." 1891. In 1891 the capital was written down by £227,167, leaving £897,833. Dividends were paid amounting to £43,750. The writings off the accounts amounted to £18,949, and £10,000 was placed to the credit of a new Reserve Fund. 1892. In 1892 the capital of the bank was £900,000, the increase, £2,167, being due to the payment of calls in arrear. Dividends at the rate of 5 per cent., amounting to £45,000, were paid during the year, and the Reserve Fund was increased to £35,000. The writings off accounts amounted to £20,198." 1893. In 1893 the bank's capital remained at £900,000. Dividends were paid amounting to £45,000, and the Reserve Fund was increased to £45,000. The writings off accounts amounted to £13,532. 1894. In the beginning of this year, 1894, the capital stood at £900,000. No dividends were declared, and the Reserve Fund stood at £45,000. Towards the end of this year the £2,000,000 "A " guaranteed stock was created. The writings-off accounts amounted to £15,164. 1895. In 1895 the capital stood at £3,059,745, being £ Old capital ... ... ... ... ... 900,000 "A" guaranteed stock ... ... ... ...2,000,000 Proceeds of first call ... ... ... ... ... 159,745 £3,059,745 No dividends were paid. During this and the following year £1,531,951 was written off, which was allocated as follows :— £ s. d. £ £ a d. Capital ... ... ... 900,000 0 0 Call, 1895, to Estates Reserve Fund ... ... 45,000 0 0 Company Share AcCall, 1895, received to 13th count ... 441,206 July, 1896 ... ... 441,206 0 0 Share capital to Profits ... ... ... 7,031 10 5 Estates Company Profits ... ...£49,470 Share Account ...323,100 And from Suspense ——— Accounts ... 4,723 To Estates Company ... 764,306 0 0 54,193 0 0 Contingency Fund ... 171,136 General Contingency Account 62,480 18 8 Bad debts written off 542,316 Interest Suspense Account ... 3,720 5 10 Further, for March, Recoveries ... ... 105 6 3 1896 ... ... 54,193 Consolidated Properties Account... ... ... 4110 10 To bank ... ... ... 767,645 0 0 Reserved Profit Account ... 17,968 8 0 Bad Debt Suspense Account 204 0 0 £1,531,951 0 0 £1,531,951 0 0
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1896. On 31st March, 1896, the capital stood at £2,570,841, composed of : — Guaranteed stock .. ... ... ... ... ... £2,000,000 Preference shares ... ... ... ... ... ... 500,000 Proceeds to date of second call ... . . ... ... 47,423 Reserve Fund (premium on "A " stock) ... ... ... 23,418 £2,570,841 No dividends were paid. LOSSES AND WRITINGS-OFF. It will thus be seen that since the year 1888 no less a sum than £3,095,799 has been writtten off accounts owing to losses. From this, however, should be deducted the sum of £171,136 now standing to the credit of the Contingency Fund Account, thus leaving £2,924,663. The Committee, however, are of the opinion that, in addition to this, the following losses will be required to be provided for :— Estimated deficiency in properties transferred to Realisation Board (1895) ... ... ... ~.. ... ... £855,000 Estimated additional deficiency ... ... ... ... 45,000 Contingency Fund (the whole will be required) ... ... ... 171,136 Ascertained losses in 1896 ... ... ... ... ... 45,000 £1,116,136 To this add the above-mentioned sum ... ... ... 2,924,663 Making a total of ascertained and estimated losses ... ... £4,040,799 Besides this there may be losses in the trading concerns remaining in the hands of the Estates Company; .of these, however, the Committee have been unable to form any reliable estimate. During the period in which these losses were made no less than £265,688 was paid away by the directors in dividends. These figures tell the story of the past management of the bank. THE BANK OF NEW ZEALAND ESTATES COMPANY. This company was formed in 1890 to take over the " Globo assets " of the Bank of New Zealand. These consisted of real estate, trading concerns, and other properties of various kinds which had fallen into the hands of the bank. They had been administered since 1889 in a special department separate from the bank's other business. These assets were valued in the bank's books at £4,250,269 in 1888 ; but at the instance of the shareholders' committee in that year they were were written down by £800,000, the net book-value then being £3,450,269. They were valued by Mr. Hean in 1890, and further reduced by £342,276, leaving a net value of £3,107,993. To this sum, for some unexplained reason, £54,507 was added by the London Board, and the properties were taken over by the Estates Company from the bank at £3,162,500, being paid for by— Debentures ... ..." ... ... ... ... £1,312,500 Shares in the Estates Company ... ... ... ... 1,850,000 £3,162,500 The debentures were redeemable in 1910 at 103, or before that date at 105. These debentures were redeemed as follows : £750,000 on 30th May, 1895, and £750,000 on 24th November, 1895. The loss on the Estates Company's debenture operations amounted to no less than £305,286, besides the loss occasioned by the high interest paid (5-J per cent.) and large office expenses. The Committee are of opinion, viewing the matter in the light of subsequent events, that it would have been the more prudent course not to have formed the Estates Company, but to have called up the reserve liability of the shareholders, and thus provided the bank with the necessary working capital. The separation of the Estates Company from the Bank of New Zealand was in name only, the Bank being practically the only shareholder, and the company's separate existence seems to have been purely nominal. The effect has been, through the operation of the Act of 1889, to enable a misleading item to appear on the bank's balance-sheets (the shares of the Estates Company), and to allow dividends to be paid when the bank was actually going from bad to worse every year. The following table shows the gross revenue, 1891-96 : — * Gross Revenue from Stations and other Properties. tlB9l. 1892. 1893. 1894. 1895. {1896. Stations .. .. .. £16,265 £72,991 £39,998 £35,918 £9,883 £58,493 44,858 Other Assets .. .. 52,608 48,863 41,250 44,226 25,302 53,201 Totals .. .. £68,873 £121,854 £126,106 £80,139 £35,185 £111,694 Average—£96,672 per annum.
* " Gross Revenue " means the revenue less the expenses of working the stations and trading concerns, including rates and taxes, but not including office management or interest on capital. f Seven months and a half. | The properties belonging to the Estates Company were divided into two portions as from the 31st March, 1895. In the previous years, though the revenue of the stations is shown separately from the other assets, both the itations and the trading ooncerns were managed by the Estates Company.
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During the years subsequent to 1890, owing to the fall in agricultural produce, in wool, and in frozen meat, the Estates Company's properties steadily depreciated in value, until they were no longer able to pay interest on the debentures which had been created. They thus became a heavy burden on the bank, and at the 31st March, 1895, the pro forma combined balance-sheets of the Estates Company and the Auckland Agricultural Company showed a deficiency, after writing down the book-value of the properties to the level of the latest valuation received, of no less than £1,764,383. By the legislation of 1895 the Estates Company's properties (£4,026,162 book-value) were divided into two parts. Properties of the book-value of £2,731,706 were transferred to the Realisation Board. The trading concerns, freeholds beyond New Zealand (£53,174 book-value), shares (£214,080), and sundry other assets, amounting in all to £1,294,456 were retained by the bank. Since that time realisations to the amount of £90,497 have already taken place ; the deficiency on the latest ascertained value being £2,332. In addition to that, there are uncompleted sales to the Government Land-purchase Board of property valued at £99,028; the deficiency on the latest valuation of these properties will be £23,801. The trading concerns retained by the bank have, during the year ending 31st March, 1896, paid 6-56 per cent, on their book-cost (£451,242), and 9-11 per cent, on their latest ascertained value (£317,820). The Committee consider it undesirable that the bank should engage in commerce, and recommend that the trading concerns should be realised as soon as possible. To effect this the directors estimate from two to three years will be required. The Committee have carefully inquired into the properties now held by the Realisation Board, and the evidence brought before them shows that the realisation will probably not fall far short of the estimates placed before the Joint Committee in 1895. On the other hand, it seems unlikely that these properties will all be realised within the eight years now remaining. The Committee consider that the speedy realisation of these properties is in the interest of the bank and the colony, and have no doubt that the Board appointed are doing their utmost to bring this about. AUCKLAND AGRICULTURAL COMPANY. The Auckland Agricultural Company was formed in 1881, its nominal capital being £800,000. The Bank of New Zealand held shares in this company, but transferred its interest to the Estates Company, although, for book-keeping purposes, the Auckland Agricultural Company continued as a separate entity. Its assets, amounting to £636,162 on. the 31st March of that year; were handed over to the Realisation Board under the legislation of 1895. Most of the properties were in the Auckland District. Its debentures outstanding were directed to be paid off by debentures issued by the Assets Realisation Board under the legislation of 1895. This was done on the 15th May, 1896. The Committee have been unable to obtain details of the present values of the Auckland Agricultural Company's properties. The Committee recommend that these properties should be realised as soon as possible. ADJUSTMENT OF STATION ACCOUNTS. The Committee have taken evidence in respect to the adjustment of station accounts as between the Realisation Board and the Estates Company, provided for by clause 16 of " The Bank of New Zealand and Banking Act, 1895." The Government Auditor gave his certificate authorising the issue of debentures to the amount of £2,810,000 ; the Colonial Treasurer refused to approve. Messrs. Kember and Smith were instructed to investigate, and reported that the issue of debentures should not exceed £2,593,819. Further investigation took place, and resulted in the Government Auditor by a second certificate authorising the issue of debentures for £2,680,000. Owing to these difficulties, delay has taken place in the issue of the debentures authorised by the legislation of 1895. The Committee find also that the sum of £42,000, liabilities of stations on overdrafts and otherwise to the bank, was not taken into account by the Committee of 1895 in forming their estimate of the deficiency in the Estates Company. Against this, however, there are assets amounting to £30,000. The Committee recommend that the debentures be issued as soon as possible, in accordance with the Government Auditor's latest certificate. BANKING LEGISLATION. 1889. During the session of 1889 a private Bill, " The New Zealand Bank Act 1861 Amendment Act, 1889," was passed with the assistance of the Government of the day. Your Committee deem it advisable to call attention to its provisions, since by subsection (3) of section 5 of this Act the Bank of New Zealand was permitted to pay dividends without provision being made for losses on its estates. Section 6 was restrospective, and validated the payments of dividends, and'anything which was done by the Bank or Board, from October, 1888, to August, 1889. 1893. During the session of 1893 the Government, at the request of the Bank of New Zealand, introduced the Bank-note Issue Bill, which subsequently became law. This Act authorised the Governor to guarantee, under certain circumstances, the note-issue of any bank doing business in New Zealand. Previous to its introduction a conference was held, at which representatives of all the banks doing business in the colony were present. They agreed that it would be prudent to pass the Bill, in view of the danger of the Australian banking crisis extending to New Zealand. On the 9th of October, 1893, the Colonial Treasurer (the Hon. Mr. Ward), having noticed that the Bank of New Zealand coin reserve was below the legal limit, called the attention of the bank authorities to the matter, The General Manager contended that the law had been complied with. The Colonial Treasurer, although not accepting the bank's view of the law, did not,
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under the critical circumstances existing at the time, deem it advisable to insist upon the coin reserve being increased, but gave instructions that the position of the bank should be carefully watched. 1894. On the 24th June Mr. John Murray saw the Colonial Treasurer, and disclosed to him the fact that the bank was in a serious position. On the following morning an interview took place between the Premier, the Treasurer, and Mr. Murray, at which Mr. Murray stated that, unless the colony came to the rescue, the Bank of New Zealand must close its doors in the course of a few 7 days. He presented a cable from the directors in London empowering him to act on their behalf. The bank balance-sheet of the 31st March and the quarterly Gazette returns were produced, and Mr. Murray admitted that, notwithstanding the apparently sound position of the bank as therein shown, there was no hope of it being able to carry on beyond the following Monday (2nd July). He asserted that, since the 31st March issue of the balance-sheet, the position had become so impaired that the directors, in preparing the balance-sheet for the August meeting, found themselves again unable to declare a dividend; that losses had been discovered in the bank; that there were no receipts on account of a large portion of the shares held by the bank in the Estates Company ; that the bank had been obliged to pay a large portion of the interest on the company's debentures; and that these combined circumstances rendered it impossible for the bank to further carry on business. As a result of this interview, Mr. Murray was requested to place the position of the bank before the Government by letter, and to meet the whole of the Ministers the following day. On the afternoon of the same flay (25th June) Mr. Murray wrote the following letter : — Sir, — Bank of New Zealand, Wellington, 25th June, 1894. I have the honoui to inform you that I have been commissioned by the directors of this bank to communicate with the Government regarding its affairs, and to say that, owing to low prices, bad seasons, and other circumstances, the directors find that it will be quite impossible to declare a dividend to shareholders at the approaching annual meeting, the certain result of which must be the closing of the bank ; because even now, notwithstanding efforts to collect resources, the executive find the utmost difficulty in maintaining the gold reserve prescribed by law. The very low price of the bank shares in the market is itself evidence of distrust which may at any moment develop into panic. That the closing of the Bank of New Zealand would be a calamity to the colony of the first magnitude can be questioned by no one. Its business relations in New Zealand are larger and more important in proportion to the population and resources of the country than are those of any bank in any other colony. This will appear more strikingly when the following figures are considered : The bank has within New Zealand ninety-five branches or agencies. At these there are kept 25,000 current accounts, with an aggregate on deposit of £1,600,000; 12,000 fixed deposits, £2,800,000; which means, after allowing for cases of persons holding more than one fixed deposit, say, 35,000 separate depositors, with a total of £4,400,000 on deposit. On the other hand, there is afforded accommodation by way of overdraft to 4,600 persons to the total amount of £2 550,000; and there are, besides, 950 discount accounts, representing a large number of traders' acceptances, the aggregate amount being £600,000. That many of these persons would find accommodation elsewhere is no doubt true, but these would be the better off, large numbers of well-doing but not rich men would be ruined, promising enterprises crushed, and the industries of the colony would suffer damage from which it would take years to recover. That the lock-up of the money of 35,000 depositors would cause immense dislocation of business, inconvenience, and loss goes without saying. Among these depositors there is the Auckland Savings-Bank, with, say, £60,000 at its credit in the Bank of New Zealand. You are aware that a run on it took place last year. There is also the Government of New Zealand, with about £800,000, between actual deposits and drafts of the bank held. This large sum is in addition to the liabilities to the public detailed above. There are, say, £1,500,000 of London deposits which, as quickly as the money could be collected in the colony, would be withdrawn from use there. I will only add that the bank has 1,300 shareholders in New Zealand, who, besides the capital they have at stake, are liable for £720,000. It is not my place to allude to other banks, but I think I only echo a general opinion when I say that the trouble would not stop short with the Bank of New Zealand. On this point recent Australian experience is suggestive. Finally, it is clear that the evil would be intensified by the depression admittedly now existing in the colony, or would greatly intensify it. Employment, already scarce, would become scarcer, and the finding of work for the unemployed would strain the resources of the Government, and unavoidably involve much waste of these; while, as a matter of course, the public revenue would suffer seriously. He would be a bold man who would permit such a calamity to overtake New Zealand if he could prevent it, and I am firmly persuaded it may be prevented if the Government will meet the crisis wisely, boldly, and in good time. The business of the bank is as yet practically intact — distrust has not to any material extent reached depositors; and it only needs that the bank be put upon a stable footing to avert the mischief which as yet, happily, is only imminent. But I must respectfully warn the Government that it is imminent, and, if they determine to adopt any measures to deal with the situation, these would need to be taken at once to be effective. To do this two things are required : (1) That the bank be placed in possession of increased capital resources, partly to fortify its cash reserves, partly to enable it to extend to its customers the accommodation they require in the second half of the year in anticipation of their wool-clips and crops of the ensuing season; (2) and that this be done to an amount which will suffice to
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maintain confidence in the bank's stability, even if no dividend be paid for a time on its existing capital. The directors hoped to have been able themselves to have issued the required amount of preference capital, but this has been found impracticable. I have therefore to propose to the Government that the colonial guarantee be given to an issue of two millions in preference shares, bearing not exceeding 4 per cent, interest, the period to be ten years ; such issue to be then replaced by a fresh issue of ordinary shares or otherwise, and the State relieved of its guarantee. No dividend to be in the meantime paid on the present capital till the Estates Company assets be disposed of, and the business of the bank declared by an auditor of the Government's appointing to be clean and sound. In seeking the interposition of the State, I have no idea of the bank shareholders being relieved of one penny of the loss which may fall upon them at the expense of the taxpayer. As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000; reserve liability, £1,500,000: total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin. Of the proposed two millions, one to be at the disposal of the bank in its ordinary business, the other million to be held in reserve, and invested only in such manner as the Colonial Treasurer may approve. I have verbally suggested to you precautions which the Government might take to secure itself and to guard against a recurrence of the state of things which calls for such exceptional treatment ; but it is for the Government to impose conditions. I need not, therefore, dwell on that aspect of the matter herein. I will only ask permission to add that, apart from preventing so terrible a misfortune to the colony, such arrangements as I have suggested (including State supervision and public audit) would have the effect of placing and maintaining the banking business of the colony fundamentally on a sound footing. The want of a great bank, the true position of which was known to the Government by independent audit of its own appointee, and through which the financial assistance of the State could in time of monetary crisis be extended to the community without hesitation, was severely and even disastrously felt recently in Australia. The gr.eat nations of the Old World have each their national banks in more or less intimate relations to the State. It is felt that these banks have, in case of need, the State behind them; and on their stability the immense fabric of banking, currency, and credit rests. In entering upon such relations, the Government of New Zealand would only be following the highest examples. I have, &c, The Hon. the Premier. John Murray. The following day a conference was held, all the Ministers and Mr. Murray being present. The position of the bank and the Estates Company was discussed, Detailed information was given in respect to the position of the bank in New Zealand. With respect to the Estates Company, however, no detailed information seems to have been given, although asked for, beyond Mr. Murray's statement that "there was a big hole to fill." Mr. Murray stated that, in respect to the Bank of New Zealand, he was satisfied that if the Government guaranteed an issue of £2,000,000 share capital it would be ample to meet every emergency. He was asked to obtain, as early as possible, a balance-sheet showing the position of the Bank of New Zealand in the colonies, Fiji, and London. In respect to the position of the bank in London, he stated there would be a difficulty in obtaining details by cable and no details were obtained. After carefully considering the matter, the Government decided to ask Parliament to guarantee the £2,000,000. The Bank of New Zealand Share Guarantee Bill was accordingly prepared. On the 29th June Mr. Murray wrote to the Premier as follows : —■ Sir, — Bank of New Zealand, Wellington, 29th June, 1894. I have the honour to hand you a copy of the balance-sheet of the Bank of New Zealand. Since that balance-sheet was issued the position has become impaired, and, indeed, seriously compromised, by causes set out in my letter to you of the 25th instant; but this does not imply that any heavy losses in the bank's business have been made. To the best of my knowledge and belief no such losses have been made. The difficulty arises rather out of the circumstances stated in my letter. As a banker of forty-five years' standing—thirty years of which have been spent in New Zealand —and having occupied a prominent position during much of that time, and being in no way personally interested (some shares in the bank standing in my name do not directly or indirectly belong to me), I wish to be permitted to give my honourable assurance, —(1) That the occasion is one of the gravest public urgency ; (2) that by the measure I have proposed I am absolutely convinced that the State will not lose one penny, but will, on the contrary, avert great loss to itself as well as to the community; (3) that by this measure the banking affairs of the colony will be placed on a greatly-improved footing for the future; and (4) that if the Government finally determine to go on with the measure it should be put through to-day. I have, &c, The Hon. the Premier. John Murray. During the day the Premier conferred with the leader of the Opposition (Captain Russell), the Hon. Sir R. Stout, and the Hon. Mr. Mitchelson; and the Colonial Treasurer conferred with the Hon. Mr. McLean, the Hon. Sir R. Stout, and Mr. Bell. The Bill was introduced as an urgent measure, passed the House of Representatives, and was sent to the Legislative Council. The Council appointed a Select Committee to investigate and report. The Committee took the evidence of the Premier, the Colonial Treasurer, and Mr. John Murray. No information in respect to the Estates Company was obtained further than that previously given to the Government by Mr. Murray. The Committee, however, recommended that the Bill should be allowed to proceed, and it was passed on the 30th June. This Act provided that the colony should guarantee the issue of £2,000,000 shares of the Bank of New Zealand for ten years ; that the head office should
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be removed from London to Wellington, and authorised the calling-up of £500,000 of the shareholders' reserve liability. The Government were also empowered to appoint the President, with a power of veto, and the Auditor. An amendment Act was passed later in the session authorising stock to be issued instead of shares. Mr. Hanna, in his evidence before this Committee, stated that he furnished a report to Mr. Murray on the 9th June, 1894, giving in detail the position, pointing out that the deficiencies in the Estates Company, including the deficiencies in the London balance-sheet (£200,000), amounted to £1,175,561, and recommending that application should be made for Government assistance. Mr. Murray, however, states that he does not recollect having received this memorandum. Beyond the assurance that there was " a big hole to fill," the Government did not obtain information as to the financial position of the Estates Company, and, seeing the important bearing it had in respect to the Bank of New Zealand, the Committee are of the opinion that it was essential that information should have been insisted on by the Government and the Committee of the Legislative Council, and that the withholding of this information, if intentional, was reprehensible. Had, however, fuller information been obtained at the time, it would not have been sufficient reason for the Government to refuse to assist the bank. From detailed information now in possession of the Committee, they have no doubt that the action taken in assisting the Bank of New Zealand in 1894 was a prudent one, and that by so doing a national disaster was averted. It was not then practicable, in the short time at the disposal of Parliament, to pass legislation finally dealing with a subject so intricate and so difficult as the separation of the Estates Company from the bank. 1895. In consequence of discoveries made at the end of the previous year by the President and directors of the bank, assisted by the Government Auditor, Mr. Butt, it became apparent that the position of the bank was even worse than had been previously represented, and the directors deemed it necessary to bring the matter under the notice of the Government. On the 23rd July the President wrote to the Colonial Treasurer as follows :— Sir,— Bank of New Zealand, Wellington, 23rd July, 1895. I have the honour to hand you herewith balance-sheets of the Bank of New Zealand, the Bank of New Zealand Estates Company, and the Auckland Agricultural Company, as of 31st March, 1895. You are aware that the Bank of New Zealand Estates Company is entirely owned by the Bank of New Zealand, and the £750,000 debentures of the Estates Company guaranteed by the bank. In like manner the Auckland Agricultural Company is owned by the Estates Company, and the debentures of the Agricultural Company guaranteed by the bank. In the remainder of this letter, therefore, the term "Estates Company" will include the Auckland Agricultural Company. I have also, with much regret, to enclose a letter, dated yesterday, which I have received from the Government Auditor of the bank for the colonies, and to state, with the concurrence of the other directors, the true position of the bank, involved as it is with the affairs of the Estates Company. In the bank itself there are £3,085,296 represented as assets which are entirely unremunerative, £1,850,000 of this amount being shares of the Estates Company, and £1,235,296 consisting of other debts, of which £376,898 are irrecoverable, and others are of so doubtful a character that the board consider provision to the extent of £200,000 should be made for them to place the bank in a thoroughly sound position. In the Estates Company there is a deficiency of £472,938, which sum is not represented by assets at all, and is altogether apart from the book-values of the properties and other assets. Besides the amount of £3,085,296 above mentioned, there is amongst the debts due to the bank at 31st March the large sum of £1,442,000 due by the Estates Company, on whose debit balances it has hitherto been the custom to charge interest at the rate of 5 per cent. —a charge which, owing to the recurring yearly deficits accruing from the working of the Estates Company, the board do not feel justified in continuing any longer. The severest economies have been introduced into both the bank and Estates Company — economies which, with other adjunctive measures instituted, are calculated to produce, without impairing efficiency, no less than £85,000 annually to better the results of the two concerns ; but, whilst the magnificent portion of the business which is sound might enable the bank to stagger along under its load, the entanglement with the Estates Company is such that, without severance from it, the bank can no longer carry on. The board of the bank have given lengthy and careful consideration to the whole matter, and, in view of the report which they will have to present to shareholders at the annual general meeting in August, have decided to request the Government to take steps to prevent disaster. In the opinion of the board it is imperatively necessary that action should be taken by the Government by way of further legislation, to be declared before the shareholders' meeting takes place; otherwise the necessary disclosures would imperil the existence of the bank and the safety to the colony of the £2,000,000 stock guaranteed by the Government, besides rendering any subsequent efforts to save the bank and the good-will of its really valuable business very problematical. The board consider it their duty to point out to you the widespread ruin and disaster which, by deterioration of values and impossibility of sales, would be caused to kindred institutions and all classes of the community, let alone numerous shareholders of the bank, if the business and assets of the bank and the Estates Company should be exposed to immediate or even protracted liquidation. Such a calamity, they think, would result as has never yet been experienced by any British colony, and such they are convinced that prompt and judicious legislation would now avert and render altogether unnecessary. To this end I and the other directors are anxious to confer with viii—l. 6.
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the Government on the matter, and beg to request that you will arrange for a conference at the earliest possible time which will be convenient to the- Government, and inform me, so that the board may duly attend. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President. [Note. —The balance-sheets enclosed appear in Exhibit No. 49.] Parliament being then in session, on the recommendation of the Government, and with the approval of the bank, a Joint Committee of both Houses was appointed to inquire into the position of the bank and the Estates Company. This Committee reported on the 28th August, 1895 : — "There is a deficiency in the bank of £376,900, and a contingent dependency of £200,000. " There is a deficiency of £467,077 in the Estates Company, against which no assets exist, and a further deficiency of £444,601 in trading concerns, and properties outside New Zealand. These altogether amount to £1,488,578. Of this sum, £148,110, though shown as a liability, is really a debt due by the Agricultural Company, and represented by assets. Deducting this from the aforesaid sum of £1,488,578, there remains £1,340,468. This is provided for as follows : — £ Capital, bank ... ... ... ... ... ... 900,000 Estimated amount of call made ... ... ... ... 450,000 £1,350,000 leaving a balance of £9,532, which goes to a dependency account." They recommended that " the colony should render such assistance to the bank as will restore confidence, insure stability, and enable it to carry on its business in a satisfactory and profitable manner." To carry this recommendation into effect, they advised that legislation should be introduced to transfer the whole of the freeholds, leaseholds, stations, stock, and implements belonging to the Estates Company to a Realisation Board to be established for that purpose ; that the Board should be authorised to issue debentures for £2,734,000, bearing 3J per cent, interest. Such-debentures were to be handed over to the Bank of New Zealand, and the deficiency, if any, thereon, after realisation of the Estates Company's properties, guaranteed by the colony to the bank. Further important recommendations were made by the Committee to protect the interests of the colony, these are contained in the Committee's report (Appendix, 1895, 1.-6). The Bank of New Zealand and Banking Act, passed on the 4th September, 1895, gave legislative effect to the Committee's recommendation. THE PURCHASE OF THE COLONIAL BANK. Some negotiations for amalgamation of the Bank of New Zealand with the Colonial Bank took place as early as 1889. Nothing, however, was then done, and the subject seems to have dropped till 1894, when the National Bank was approached by Mr. John Murray on behalf of the Bank of New Zealand. His proposals were not favourably considered by the National Bank, and the negotiations fell through. Mr. Murray then turned his attention to the Colonial Bank. The Hon. G. McLean, chairman of directors of the Colonial Bank, appears for some years past to have advocated the amalgamation of the businesses of several New Zealand banks, so as to form one strong bank for the colony. When consulted on the subject of the proposed Share Guarantee Act of 1894, he advised the Government not to uphold the Bank of New Zealand, but to take the Colonial Bank as the bank for the colony, and through its agency to liquidate the Bank of New Zealand. This proposal was not adopted. Shortly after the banking legislation of 1894, negotiations for the amalgamation of the Colonial Bank and the Bank of New Zealand began in earnest. These culminated in an agreement, which was forwarded to the Colonial Treasurer on the 11th September, 1894, and subsequently laid on the table of the House. These proposals contemplated an amalgamation between the two banks, but not the purchase of one by the other. On receipt of this agreement the Treasurer wrote the following letter : — Colonial Treasurer's Office, Wellington, The Hon. the Premier. 12th September, 1894. I received last night the attached proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. Since the colony guaranteed £2,000,000 to the Bank of New Zealand the whole matter has given me the greatest concern and anxiety, not so much on account of the guarantee to the bank proper, but on account of the position of the Bank of New Zealand Estates Company. Attached to the bank as it now is, it will, in my opinion, render it impossible for the bank to extricate itself, even with the colony's guarantee, and must, if not now dealt with, call in the future for further substantial aid from the colony. If the Estates Company is left under the same control as the bank itself, the duties of the President, Auditor, and Colonial Treasurer will be greatly interfered with, —and, indeed, I may add that, in my humble opinion, the Treasurer's life would not be worth living. To insure himself against the possibilities of disaster in the guarding of the £2,000,000, he would require to know almost every detail of the way in which the two concerns —namely, the Estates Company and the bank itself—were operated upon, otherwise the possibility of a loss in either of being transferred or even absorbed by the other would be not only easy to do, but exceedingly difficult over so huge a concern to detect. No President or Treasurer would feel safe (where two large businesses, conducted ostensibly as two establishments, but in reality one) in assenting to the investment of the funds guaranteed by the State. I recognised at the time, and stated so in the House, that the Government would take steps this session to separate the Estates Company from the bank. How to effect this has been the difficulty to solve, and day by day since the House passed the bank legislation it has engaged my
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attention. The result of the considerations that have occupied the attention of the executive of the bank and myself are embodied in the attached proposals. They are, — 1. An amalgamation between the Bank of New Zealand and the Colonial Bank. 2. The clearing of both of all bad or doubtful accounts, 3. Each proprietary to be held responsible for and to provide for any losses made on any accounts now held by either. 4. The capital of the combined banks to be £3,600,000. 5. All profits after certain provisions named in the proposal hereto to be paid to liquidate the Assets Company. 6. The Estates Company to be separated from the bank, the colony undertaking, should any deficiency ultimately arise, to make good such. This is virtually the position now. 7. The collateral securities against the Assets Company to be held by the Government to be £2,100,000. The profits from the bank to be paid into the Assets Company estimated to realise at least another £500,000. Total, £2,600,000. I am of opinion that, to guard the interests of the colony, the Agent-General should be appointed to the London board ; not if the Estates Company remains attached to the bank. The colony, with a clean and sound bank, would gain by having such a representative on the London board. There should also be a small advising board in Melbourne or Sydney to control and advise upon the Australian business. The policy in each of the Australian Colonies should be to reduce business gradually, and to confine the business of the bank there entirely to one of a liquid character. Advances there on property or real estate should generally be avoided. The Government to control the Estates Company by the appointing of a president or chairman to it, and also two directors. The bank shareholders, who would be liable for £1,500,000, also to appoint two directors. The Government Bank of New Zealand Auditor also to be auditor of the Estates Company. The name of the Estates Company to be changed by the excision of the words "Bank " and " New. Zealand." It would be well, in my opinion, to completely change its name. The past odium attaching to it would thus not continue to live daily in the history of the bank, and the colony could well afford not to have its name attached to it either. The position is both a difficult and a serious one. In the absence of the proposal now under consideration being adopted, the next best course, and one which could be adopted, would be to separate the Estates Company from the bank, and guarantee its outcome, holding the uncalled capital of the Bank of New Zealand against any loss that might arise. In the event of this course being adopted, the colony should control the Estates Company as suggested under the amalgamation scheme. If this course is thought to be preferable to an amalgamation, it will be essential to retire the £1,500,000 of s|--per-cent. Estates Company debentures, and to do this an issue of 3-|-per-cent. Government stock would be necessary. So far as my opinion is worth anything, the latter scheme has much less to recommend it than an amalgamation. The whole matter, however, requires the most careful consideration of all the Ministers, Wellington, 12th September, 1894. J. G. Ward. These proposals were considered by the Government, and certain conditions insisted upon, which the banks were not disposed to accept. Nothing was done to give practical effect to this agreement during the session of 1894; and on the 23rd October a clause was inserted in the Bank-note Issue Act prohibiting amalgamation of the Bank of New Zealand with any other bank without the consent of Parliament. It was, however, clearly contemplated that amalgamation would at some time take place between the Bank of New Zealand and the Colonial Bank; and, with this object in view, the Government Auditor, Mr. Butt, during the recess, made a preliminary investigation into the business of the Colonial Bank. During the session of 1895 negotiations were renewed, the basis of the proposals being the purchase by the Bank of New Zealand of the good business of the Colonial Bank instead of amalgamation as before proposed. The Joint Committee of 1895 took evidence from the directors of both institutions and others with respect to the proposed purchase, and came to the conclusion that the purchase by the Bank of New Zealand of some other banking business was desirable for the purpose of increasing its earning-power. During the session protracted negotiations took place between the directors of the two banks. For the purpose of ascertaining the position of the Colonial Bank, its accounts were minutely investigated by Messrs. Litchfield and Buller, inspectors of the Bank of New Zealand. These gentlemen appear to have treated the accounts severely, and to have been most careful in guarding the interests of the Bank of New Zealand. Their view of the Colonial Bank's accounts was less sanguine than those of the general manager of that bank and the President of the Bank of New Zealand. The directors of the Bank of New Zealand preferred to take the advice of their inspectors, and the evidence adduced before this Committee shows that, under the stringent system of liquidation adopted, their estimates have proved more correct. These inspectors were subsequently given appointments for three years to make their position in the bank assured. After the Colonial Bank had been completely "taken to pieces" three lists were made of its accounts. These were subsequently increased to four—the "B " list being divided into two. The "A" list (£926,197) consisted of accounts considered good. The "B" list (£604,695) contained doubtful accounts, against which cover was taken amounting to £272,072. The "C" list contained accounts in respect to which the Bank of New Zealand directors required time to consider whether
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they would take them over. For this list cover was taken amounting to £55,233. The cover taken for the " B " and " G " lists (£327,205) was a general or" umbrella " cover —that is, the deficiencies on some accounts could be made up from the surpluses on others. The witnesses are all agreed that the cover provided will be sufficient. The "D " list (£102,274) contained accounts which were inoperative, and could not be taken over by the Bank of New Zealand. Considerable difficulty arose as to the amount of cover necessary for the accounts in the "B " and "C" lists, and at one time negotiations were in consequence completely broken off. They were, however, resumed, and a final agreement was arrived at on the 18th October, 1895. This provided that the accounts in the " A " list should be taken over without cover ; that the accounts in the "B" list should be managed, realised, and adjusted, under the supervision of the selling bank, by the purchasing bank for two years (subject to extension of time by mutual arrangement). At the end of that time the selling bank might resume control of the accounts, receiving at the same time the cover and securities held against them. Although not expressly stated, it appears that the Bank of New Zealand can take over any account in the "B " list, but, if it does so, the cover provided for such account is thereby relinquished ; but at the end of the two years, failing arrangement to the contrary, the Bank of New Zealand must take over all the accounts in the " B " list, receiving, however, the whole of the cover provided. With respect to the accounts in the " C " list, the purchasing bank had three months in which to take them over, with the cover provided, or to reject them. The directors subsequently decided not to take them over. The consideration for the transfer of the business of the selling bank is somewhat complicated. The amount agreed to be paid for good-will was £75,000. The book-value of the Colonial Bank premises was £125,000, and they were taken over at that price; but it was estimated that there would be a loss on realisation of from £30,000 to £35,000. This amount has therefore to be added to the £75,000. On the other hand, the Colonial Bank guaranteed the Bank of New Zealand against contingent losses in respect of an advance made by them of £20,000, and on another account of £5,000. The advance of the first-named amount so guaranteed was recommended by the President of the Bank of New Zealand, and, upon representations made by him, was agreed to by the directors. It has, however, been stated in evidence that these representations were incorrect, Mr. Watson having been oversanguine at the time ; and, as the Colonial Bank was interested in the account, it was deemed advisable to obtain their guarantee. This was done. These sums have since been paid to the Bank of New Zealand. The sum of £5,000 represented advances made on certain bills of exchange which were met at maturity, but concerning which a difficulty arose after the payment of the draft, for which the Colonial Bank considered the Bank of New Zealand responsible, but finally withdrew its objection and guaranteed the amount. As the Committee is precluded from inquiring into private accounts, fuller information on this subject could not be obtained, and they therefore are unable to form any accurate estimate of the value of the guarantee or its influence on the amount paid for good-will. On the 25th October, 1895, the agreement received legislative sanction, and the House recommended that legislation should be introduced to remedy any defect which might exist in the contract. In accordance with this resolution, an amending Act was passed on the 31st October, 1895, ratifying the purchase agreement, and rendering it unnecessary to lay any of the lists on the table of the House, or to produce them in Court. This Bill originated with the bank, and was submitted to the Premier, who, since 1894, had charge of the banking question. He handed it to the Law Draftsman. The only instructions given were to make it as complete as possible, and it was with this object that the Law Draftsman inserted the clauses dispensing with the production of the lists. The Hon. Mr. Ward in no way promoted this legislation, but merely moved the second reading of the Bill, the details of which were furnished to him by the Law Draftsman. Members of the Ministry were informed from time to time that negotiations were proceeding for the purchase of the Colonial Bank; but the evidence shows that no member of the Government took any part in the negotiations, or was informed of the contents of any of the lists. Your Committee have made careful inquiry into the results of the purchase of the Colonial Bank by the Bank of New Zealand. The evidence all goes to show that the purchase was a desirable one, and that the Bank of New Zealand made a very good bargain. The Committee have carefully inquired into the increased earning-power of the bank obtained by the purchase, and, although it is somewhat early to speak with certainty, the evidence supports the estimate given to the Joint Committee in 1895 by the President. Whilst the purchase is satisfactory to the Bank of New Zealand, it has proved disastrous to those clients of the Colonial Bank whose accounts are in the " B " and " C " lists, and the liquidation under the Companies Act has entailed loss on the shareholders of the Colonial Bank. The evidence, without exception, is unanimously in favour of additional power being given to the liquidators, so as to enable them to compromise and nurse the accounts. The evidence goes to show that it would be advisable for the directors of the Bank of New Zealand and the liquidators of the Colonial 'Bank to arrange for the taking over of accounts, the cover being determined by arrangement. Your Committee are of opinion that if the suggestions of witnesses to give power to permit the present liquidators to continue the liquidation, as provided by the deed of settlement of the Colonial Bank, instead of being restricted by the provisions of the Companies Act, are to be given effect to, such power should be only given subject to the approval of the shareholders of the bank. Beyond this your Committee have no recommendation to make on this subject.
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The Colonial Bank. The balance-sheets of the Colonial Bank, and the conduct of its directors and officers, are included among the subjects mentioned in the order of reference. On these points, however, the Committee have not made a detailed enquiry, but from the evidence brought before them are of the opinion that the balance-sheet dated the 31st August, 1895, did not fully disclose the position of the Colonial Bank. This will be apparent when it is mentioned that the whole of the accounts which subsequently figured in the " A," " B," " C," and " D " lists, were put down in it as good assets. The Committee consider that the position of the Colonial Bank, as disclosed in the examination which preceded the purchase agreement, shows that mismanagement must have taken place, the responsibility for which rests upon the directors and officers of that institution. Directors and Officers of the Bank of New Zealand. The Committee are of the opinion that the crisis in the bank's history in 1888 was directly traceable to the errors of judgment and gross mismanagement of the directors and officers of the bank. That the directors were not warranted in recommending a dividend on the 26th April, 1888, or in paying dividends at any time subsequently, if the real losses of the bank had been deducted from the profits made; that neither in their balance-sheets nor in their statements to the shareholders did they disclose the real position of the bank, but based their estimates of value, not upon the current market prices of the time, but upon an imaginary rise in the value of land and produce which they apparently expected to take place. The system of maintaining a fictitious book-value of property whose real value had decreased year by year is one which your Committee cannot toostrongly condemn. The above remarks do not apply to the present directors, who, since their appointment, appear to have been anxious to discover the bed-rock value of the properties and accounts of the bank. Your Committee are of opinion that no overdrafts should be allowed to any directors or officers of the bank. The President and General Manager. •The Presidency was first offered to Mr. Watson, the Chief Inspector of the Colonial Bank, on the 25th September, 1894. He declined, considering the salary insufficient. It was then offered to Mr. Coates, the General Manager of the National Bank of New Zealand, but was not accepted by him, as his directors would not release him from his previous engagement. It was again offered to Mr. Watson on the 6th October, 1894, at an increased salary of £2,250 per annum, and accepted by him. The Government do not appear to have been specially anxious to appoint Mr. Watson, but were chiefly desirous of obtaining a competent man to fill the position. The present General Manager (Mr. Henry Mackenzie, formerly General Manager of the Colonial Bank) was appointed on the 25th day of November, 1895. Several of the directors were opposed to this appointment, on the ground that it was undesirable that the two chief officers of the Bank of New Zealand should be chosen from the staff of a bank the management of which they considered had been far from satisfactory. On the other hand, several directors favoured the appointment of Mr. Mackenzie, on the ground that it would give confidence to the customers of the Colonial Bank, and that there would be less risk of losing the good accounts, and thus it would be for the benefit of the Bank of New Zealand. The Premier was consulted, and refused to advise, but suggested that Mr. Mackenzie should be temporarily appointed. This the majority of the directors agreed to, though Mr. Booth recorded his dissent, and Mr. Mackenzie was appointed, subject to three months' notice. In the opinion of your Committee it is essential for the success of the Bank of New Zealand, and to inspire and maintain confidence in that institution, that an important alteration in the management should be made. Your Committee therefore recommend that a reorganization should take place : The office of President should be abolished ; a new General Manager should be appointed ; the Directors should be increased to seven, and should consist of the three now representing the shareholders, and three to be appointed by the Governor in Council, in addition to the present Government representative. The Chairman to have the power of veto and to be selected by the Governor in Council. Balance-sheets. From the investigations made by the Committee it has been shown that a large percentage of balance-sheets of public companies have failed to show bills under discount as liabilities, and, in some cases, even as contingent liabilities. They are of opinion that the present law is insufficient to compel banks and companies to state the exact position of their affairs in their balance-sheets, and that legislation should be introduced to further protect shareholders and the public. Agreement with Bank Officials. (President and Government Auditor.) Shortly after the appointment of the President and Government Auditor, the salary of the former was secured by deed during the term of his engagement, and an agreement was made with the latter that, in the event of his losing his position as Auditor, he would be reinstated in the service of the bank. These agreements were entered into without the knowledge or consent of the Government. Your Committee are of opinion that they should not have been made without the approval of the Government, and that Mr. Butt's agreement should be cancelled, arrangements being made that he should not be prejudiced thereby. Private Accounts. Your Committee were unable to make any investigation into private accounts. At the commencement of the inquiry, questions were asked of the President with this object, but he declined
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to give any information in respect to the accounts of clients of the bank, asserting that to do so would injure the institution. Your Committee reported the matter to the House, with the result that the President was fined £500. Other witnesses took the same course as Mr. Watson; but your Committee, considering it would delay the inquiry, deferred bringing the matter again before the House until presenting their final report. Present Position and Prospects of the Bank of New Zealand. Your Committee have carefully inquired into the present position of the bank. They find that, in addition to the deficiency estimated by the Joint Committee in 1895, further losses had been made before the 31st March, 1896, amounting to £54,193, mainly upon Australian securities. During the course of this inquiry, evidence was adduced showing that another deficiency on one account had recently come to light, estimated at between £45,000 and £50,000. The evidence, however, points to the fact that the true position of the bank has now been placed before the Committee. Your Committee consider that in New Zealand its business is now sound, but recommend that it should be confined, as far as possible, to this colony, except for the purpose of exchange. Your Committee are of opinion that, if the outlook for our commerce and agricultural products continues as satisfactory as it is at the present time, and if competent, expert, and reliable management is assured, the bank will ultimately be able to meet all its engagements. John Graham, 9th October, 1896. Chairman. Resolved, on the motion of Hon. Mr. Seddon, That the report be received and read, and afterwards considered section by section. The Chairman read the report of the sub-committee. At 1 o'clock p.m. the Committee adjourned until 5 o'clock p.m. The Committee reassembed at 5 o'clock p.m. Mr. Maslin moved, That the paragraph of the report headed " Retrospect," pages 3 and 4, be agreed to. Hon. Mr. McKenzie moved, by way of amendment, to insert after the sth paragraph the following : " The following passage taken from the Banking Record as having been stated by Mr. George Buckley at the meeting of shareholders held on the 29th April, 1889, and borne out by the deed between the bank and Mr. Russell, shows the character of some of the transactions : ' An advance had been made to the Hon. Thomas Russell of £20,000 in London and secret from the board, and under a deed which debarred the bank from making any demand for the £20,000, or if demand made Mr. Russell had only to say he had lost all the money, or had only £5,000 left, and the bank would be bound to take that in full of all demands.' " Upon the amendment being put, it passed in the negative. Resolved, on the motion of Mr. Montgomery, to insert, after paragraph 5, the following : " The nature of some of these transactions can be judged by reference to Mr. Buckley's speech at the meeting of shareholders on the 24th October, 1889 (page 23, Extracts from Banking Records appended hereto)." Mr. Maslin's motion was then put and agreed to. Losses and Writings-off. Mr. Tanner moved to insert, before the paragraph commencing " besides this," the following : " Some proportion of this sum, not ascertainable by your Committee, consists of accumulated interest and advances." Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 4.—Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. Tanner. Noes, 6.—Mr. Graham, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward. And so it passed in the negative. Bank of New Zealand Estates Company. Hon. Mr. Seddon moved, and it was resolved, to insert after the word "table," paragraph 3, the following : " furnished by Mr. Foster and Mr. Cuff purports to show gross revenues for years ending 31st March, 1891, to 31st March, 1896." Resolved, on the motion of Mr. Montgomery, to add the following as an explanatory note of the sum of £44,858 —viz. : This amount represented unexhausted improvements, which the directors considered should have been credited to profit in previous years." Section as amended agreed to. Auckland Agricultural Company. Section agreed to. Adjustment of Station Accounts. Resolved, on the motion of the Hon. Mr. McKenzie, to insert, at the end of the first paragraph, the following : "being £130,000 less than his first certificate." Banking Legislation. 1889 and 1893 agreed to. 1894 agreed to, after inserting in line 1, after the word "him," "for the first time"; and, in the last paragraph, striking out " a " and " one," line two, 1895 agreed to,
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The Purchase of the Colonial Bank. Resolved, on the motion of Mr. Guinness, to insert " the General Manager of the" before the word " National," line 3 ; and striking out all the words after the word " favourably " to the end of the sentence and inserting the word "entertained" in lieu thereof; and striking out the word " take," line 2, page 10, and inserting the word "appoint " in lieu thereof; and striking out the word " to" before the word " liquidate "; and striking out the last word of the paragraph, " letter," and inserting "memorandum." Mr. Montgomery moved to strike out, after the word " conditions," at the end of the page," all the remaining words of the paragraph, with the view of inserting the following words in lieu thereof : " which are set out in the evidence given by the Hon. J. G. Ward." Hon. Mr. Seddon moved, by way of amendment, to strike out all the words after " Government," and to insert in lieu thereof " and the following letter was forwarded by the Hon. J. G. Ward to Mr. John Murray and the Hon. George McLean, viz. : — " The Hon. the Colonial Treasurer to John Murray, Pjsq., and the Hon. George McLean, Wellington. " Gentlemen, — Colonial Treasurer's Office, Wellington, 22nd September, 1894. " I have the honour to acknowledge the receeipt of your joint letter of the 11th instant, covering proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. " In reply, I have to state that the matter has received the careful consideration of the Government. " Without in any way committing the Government to any fixed course or approval of the proposals, it will be necessary— " 1. If any legislation is undertaken by the Government, that it shall be of a permissive character, to enable the Government to be satisfied, before assenting to an amalgamation, that the general interests of the colony are conserved and protected. " 2. That, in addition to the scrutiny which is proposed in the memorandum of agreement, the Government to appoint a special representative or representatives, independent of either bank, to examine and report to the Government on the various accounts and assets proposed to be dealt with. "3. The shareholders of each bank to be responsible for and to make good all losses on existing business that is not passed by the colony's valuers. " 4. That, upon the expiration of ten years, the profits of the combined bank shall still continue to be paid to the Estates Company, until any deficit in the winding-up of the Estates Company is liquidated. The Government lien upon the interests of the shareholders in the Bank of New Zealand to be continuous until all liability to the colony is at end. " 5. The Government to nominate a chairman and two directors of the Estates Company, and the shareholders of the Bank of New Zealand to nominate two directors to the same, the said Board to have full control over the uncalled capital of £1,500,000 of the Bank of New Zealand shareholders. "6. In addition to the appointment of a president and auditor to the Bank of New Zealand, the Government to appoint one director to the combined bank. " I should like to have your reply to the foregoing before noon on Monday. The Government will then further consider the matter, and decide what course they deem it desirable to take. " I have, &c, "J. G. Ward, " Colonial Treasurer. "John Murray, Esq., and the Hon. George McLean, Wellington." Upon the question being put, " That the words proposed by Mr. Montgomery to be struck out be retained," a division was called for, and the names were taken down as follow :—■ Ayes, 3. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery. Noes, 7. —Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. And so it passed in the Negative. Hon. Mr. Seddon's amendment was then put, and it was resolved in the affirmative. Resolved, on the motion of Hon. Mr. Seddon, That the letter be inserted. Resolved, on the motion of Hon. Mr. Seddon, to insert, at the commencement of page 11, the following words : " the banks declined to acquiese in these conditions, and " ; and to strike out, in line 1, the words " this agreement," and to insert, before the word " nothing," the words " during the session of 1894," and to insert, after the word "done," the following: " to give effect to the proposals for amalgamation submitted by Messrs. Murray and McLean." Paragraphs 2 and 3 agreed to. On motion of Mr. Guinness, paragraph 4 amended by striking out all the words after " evidence " to the end of the line, agreed to. Paragraphs 5, 6, 7, and 8 agreed to. Paragraph 9. Resolved, on the motion of Mr. Guinness, to strike out the words "although not expressly stated," and insert "from the evidence taken." On the motion of Mr. Montgomery, Resolved, to strike out "is thereby relinquished," and insert "remains as security for the other accounts in such list," and also to strike out the words " failing arrangements to the contrary," and inserting "in the absence of any arrangement as to any extension of time," and to strike out "must take over all," and insert "may proceed to liquidate all or any of," and striking out all the words of the sentence after " list." Paragraph, as amended, agreed to.
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LXIV
Paragraph 10. Agreed to after striking out the word " subsequently," line 2. Paragraph 11. Agreed to. Paragraph 12. Resolved, on the motion of Hon. Major Steward, to strike out the words " the sums have," and insert " the sum of £20,000 has." Moved by Mr. Maslin, to insert after " £20,000" the words "on certain debentures." And upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, 6.—Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. And so it passed in the negative. Paragraph 13. Resolved, on motion of Mr. Guinness, to strike out the words " advances made on certain bills of exchange which were," and insert in lieu thereof, "a certain bill of exchange which was purchased by the Bank of New Zealand and was." Resolved, on motion of Hon. Mr. Seddon, to strike out all the words from "as the Committee " down to the word " are " inclusive, and insert " the Committee have been." Paragraph as amended agreed to. Paragraph 14 agreed to. Paragraph 15 and 16 agreed to. Paragraph 17. On motion of Mr. Montgomery, Resolved, to strike out the word " very " before " good bargain." Mr. Maslin moved to strike out the last sentence of the paragraph. Upon the question being put, " That the words proposed to be struck out be retained," a division was called for, and the names were taken down as follow :— Ayes, 5 : Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon. Noes, 4: Mr. Hutchison, Mr. Maslin, Hon. Major Steward, Mr. Tanner. And so it was resolved in the affirmative. Mr. Montgomery moved to insert at the end of the paragraph the following new sentence : " It should be mentioned, however, that the evidence taken on this subject was solely that of officials of the selling and purchasing bank." On the question being put that the words proposed to be added be so added, a division was called for, and the names were taken down as follow :— Ayes, 4.—Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Beddon, Hon. Major Steward. So it passed in the negative. Paragraph as amended agreed to. Paragraph 18. Resolved, That the motion of Mr. Tanner to strike out the word " those," in line 2, and insert " some." Mr. Montgomery moved to strike out the words " as entailed," line 3, and insert " may entail." On the question being put that the words proposed to be struck out be retained, a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner. So it was resolved in the affirmative. Words retained. Resolved, on the motion of Mr. Montgomery, to insert the word "some" before the word " lost," in line 3. On the question being put, that the paragraph as amended be agreed to, a division was called for, and the names were taken down as follow : — Ayes, 7.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 2.—Mr. Hutchison, Mr. Maslin. So it was resolved in the affirmative. Paragraph agreed to. Paragraph 19.— Resolved, on the motion of the Hon. Major Steward, to strike out " without exception is unanimously," in line 1, before the word "in." Resolved, on the motion of Mr. Montgomery, to insert the word " is" after the word " evidence." Hon. Major Steward moved, to insert the word " entirely " after the word " is." On the question being put, a division was called for, and the names were taken down as follow: — Ayes, 4.—Mr. Guinness, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 6.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Mr. Tanner. So it passed in the negative. Hon. Major Steward moved, In the second line, between " compromise" and "nurse," to strike out " and " and insert "or." On the question being put, a division was called for, and the names were taken down as follow:— Ayes, 6.— Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, 4. —Mr. Hutchison, Mr. Maslin, Mr. Montgomery, Mr. Tanner.
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So it was resolved in the affirmative. On the motion of Mr. Guinness, Resolved, to insert, after "Companies Act," the words "which requires the liquidators to obtain an order from the Supreme Court before they can compromise any account." Moved by Mr. Guinness, To strike out the last sentence. Upon the question being put, it passed in the negative. Upon the question, "That the paragraph as amended be agreed to," a division was called for, and the names were taken down as follow :— Ayes, s.—Mr. Graham, Mr. Guinness, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. Noes, s.—Mr. Hutchison, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Mr. Tanner. The votes being equal, the Chairman gave his casting-vote with the Ayes. So it was resolved in the affirmative. Paragraph agreed to. Colonial Bank. Paragraph 1 agreed to. Paragraph 2. Mr. Guinness moved to strike out the paragraph. On the question being put, " That the words proposed to be struck out be retained," a division was called for, and the names were taken down as follow: — Ayes, s.—Mr. Graham, Mr. Maslin, Mr. McGowan, Mr. Montgomery, Mr. Tanner. Noes, s.—Mr. Guinness, Mr. G. Hutchison, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. The votes being equal, the Chairman gave his casting vote with the Ayes. And so it was resolved in the affirmative. Paragraph agreed to. Directors and Officers, Bank of New Zealand. Mr. Tanner moved to insert after "bank," in third line, the words "whose conduct at that time ought to have been made the subject of criminal proceedings in the interests of that institution." The question being put that the word " whose " be inserted, a division was called for, and the names were taken down as follow:— Ayes, 4.— Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Hon. Mr. Seddon, Noes, 6.—Mr. Graham, Mr. G. Hutchison, Mr. McGowan, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Mr. Montgomery moved to insert the word "directors' " before the word "conduct," in Mr. Tanner's motion. The Chairman ruled it could not be put. The remainder of Mr. Tanner's motion was then put and agreed to. On the motion of the Hon. Major Steward, Resolved, to strike out " whose," in ninth line, and insert the word " the " in lieu thereof, and after the word " value " insert the words " of which." Hon. Mr. McKenzie moved, and it was Resolved, To insert, after the word "condemn," the words " and that it should be a direction to the board of directors that the officers responsible should not be continued in the service of the bank." On the motion of Mr. Montgomery, Resolved, to strike out the words " the above remarks do not apply to " and " who," in tenth line. Resolved, on the motion of Mr. Montgomery, to strike out all the words after " that" in the last sentence, with a view of inserting the words, " the law preventing directors from having overdrafts in the bank should be extended to officers." Resolved, on the motion of the Hon. Mr. McKenzie, to add to the foregoing the following words : " and to companies the directors of which are also directors of the Bank of New Zealand." Paragraph recommitted with the view of inserting, before the words of the motion of Mr. Tanner, "conduct, &c," the words, "the Committee are further of the opinion that the," and, after the word " conduct," the words "of the directors." Agreed to. Hon. Mr. McKenzie moved to insert, after " directors," the words " and the executive officers," and upon the question being put a division was called for, and the names were taken down as follow :— Ayes, B.—Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. No, I.—Mr. Hutchison. So it was resolved in the affirmative. Mr. Montgomery moved to strike out the words "made the subject of criminal proceedings," with a view to inserting "inquired into with a view to criminal proceedings." On the question being put, " That the words proposed to be struck out remain part of the question," a division was called for, and the names were taken down as follow:— Ayes, 7. —'Mr. Graham, Mr. Guinness, Mr. Maslin, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 2.—Mr. Hutchison, Mr. Montgomery. So it was resolved in the affirmative. Words retained ; paragraph as amended agreed to. ix—l. 6.
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LXVI
President and General Manager. Paragraph 1. Agreed to. Hon. Mr. McKenzie moved, to strike out the words, " office of President should be abolished," in the 2nd paragraph. On the question being put that the words proposed to be struck out be retained, a division was called for, and the names were taken down as follow :— Ayes, 6.—Mr. Graham, Mr. Maslin, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3. —Mr. Guinness, Mr. Hutchison, Mr. McKenzie. So it was resolved in the affirmative. Mr. Montgomery moved, To insert the words, "amount of compensation to be paid the present holder to be determined by arbitration." On the question being put, a division was called for, and the names were taken down as follow:— Ayes, 2.—Mr. Montgomery, Mr. Tanner. Noes, 7. —Mr. Graham, Mr. Guinness, Mr. G. Hutchison, Mr. Maslin, Hon. Mr. J. McKenzie, Hon. Mr. Seddon, Hon. Major Steward. So it passed in the negative. Hon. Mr. J. McKenzie moved to amend the paragraph as follows : To strike out the word " seven" and insert the word " nine," and strike out the word " three" and insert the word " four," and "one to be elected by the House of Representatives and one by the Legislative Council." On the question being put, That the word " seven" be retained, a division was called for, and the names were taken down as follow:— Ayes, 4.—Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. Noes, 5. —Mr. Graham, Mr. Guinness, Mr. G. Hutchison, Hon. Mr. J. McKenzie, Hon. Mr. Seddon. So it passed in the negative. Hon. Mr. McKenzie moved, That the word " nine" be inserted, and on the question being put, a division was called for, and the names were taken down as follow: — Ayes, 4.—Mr. Graham, Mr. Guinness, Hon. Mr. J. McKenzie, Hon. Mr. Seddon. Noes, s.—Mr. G. Hutchison, Mr. Maslin, Mr. Montgomery, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Resolved, on the motion of the Hon. Mr. McKenzie, That the word " eight " be inserted in lieu of " seven." Resolved, on the motion of the Hon. Major Steward, To strike out the words "the" and " now " before and after the word " three." Resolved, on the motion of the Hon. Mr. McKenzie, to strike out the words "in addition to the present Government representatives," and insert "one to be elected by the House of Representatives and one by the Legislative Council." Paragraph as amended agreed to. Paragraph recommitted. Resolved, on the motion of Hon. Mr. Seddon, To add at the end the words, " That as far as practicable the chief commercial centres of the colony should be represented on the board of directors." Balance-sheets. Moved by Mr. Montgomery, To omit the words after the word "show" to the end of the sentence, and insert the words " true position of the affairs." After discussion, leave was given Mr. Montgomery to withdraw his motion. Moved by Mr. Montgomery, To omit the first sentence. And the question being put, that the paragraph as printed be retained, a division was called for and the names were taken down as follow :— Ayes, 7 : Mr. Graham, Mr. Guinness, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. Noes, 3 : Mr. Hutchison, Mr. Maslin, Mr. Montgomery. So it was resolved in the affirmative. Paragraph retained. Resolved, on the motion of the Hon. Mr. Seddon, To strike out the word "from," in the first line, and also " it has been," and insert " have," in line 1, and, in line 4, strike out " to compel," and insert the words "to provide for," and strike out the words "to state " and the word " showing." Agreement with Bank Officials. Hon. Mr. McKenzie moved to strike out the words, " arrangements being made that he should not be prejudiced thereby," at the end of the paragraph. And the question being put, " That the words proposed to be retained be retained," a division was called for, and the names were taken down as follow : — Ayes, 2.—Mr. Guinness, Mr. Montgomery. Noes, B.—Mr. Graham, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it passed in the negative. Words struck out. '
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Mr. Maslin moved to insert the following words : " Your Committee were also desirous of obtaining full information respecting the investment of £150,000 by the Bank of New Zealand in New Zealand Consols and the placing of this sum with the Colonial Bank on fixed deposit. The investigation of these accounts was ruled out of order and objected to as an inquiry into private accounts." Upon the question being put, a division was called for, and the names were taken down as follow :— Ayes, 2. —Mr. Maslin, Mr. Montgomery. Noes, B.—Mr. Graham, Mr. Guinness, Mr. Hutchison, Mr. McGowan, Hon. Mr. McKenzie, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. So it was passed in the negative. Paragraph as amended agreed to. Private Accounts. Agreed to. Present Position and Prospects of the Bank of New Zealand. Agreed to. Hon. Mr. McKenzie moved, That the report be adopted. Mr. Hutchison moved, by way of amendment, to strike out all the words after the word " that," with a view to inserting other words which he read. Hon. Mr. Seddon raised as a point of order that the amendment moved by Mr. Hutchison was inadmissable. The Chairman ruled that Mr. Hutchison's amendment was out of order. The question being put that the report as amended be adopted, a division was called for, and the names were taken down as follow: — Ayes, 9.—Mr. Graham, Mr. Guinness, Mr. Maslin, Mr. McGowan, Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. No, I.—Mr. Hutchison. So it was resolved in the affirmative. Resolved, on the motion of the Hon. Mr. Seddon, That the report be presented to the House to-day, and that the minutes of evidence, proceedings, and exhibits be presented as soon after as possible. Resolved, on the motion of the Hon. Mr. Seddon, That the thanks of the Committee be tendered to the Chairman and be recorded on the minutes of proceedings for the able, painstaking, and conscientious manner in which he has performed the duties of Chairman of this Committee. Mr. Graham suitably replied. The Committee, at 3.30 a.m. on Friday morning, the 9th day of October, adjourned.
Saturday, 10th October, 1896. Present: Mr. Graham (Chairman), Mr. Guinness, Mr. Hutchison, Mr. Maslin, Mr. McGowan, Hon. Mr. McKenzie, Mr. Montgomery, Hon. Mr. Seddon, Hon. Major Steward, Mr. Tanner. The minutes of the previous meeting were read and confirmed. Resolved, on the motion of Mr. Guinness, That the Committee record its appreciation of the able manner in which the Clerk (Mr. E. W. Kane) has performed his arduous duties, and recommends that he be paid extra for his services.
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MINUTES OF EVIDENCE.
Thursday, 16th July, 1896.—(John Graham, Esq., Chairman.) William Watson, President of the Bank of New Zealand, sworn and examined. Formal question (and answer) put to Mr. Watson before being sworn : — The Chairman.'] The Bank Committee have asked that you should be present for the purpose of giving evidence and information such as is required by them. That is their object in asking you to be present. A resolution has been passed that all evidence shall be given either on oath or affirmation. I have to ask you whether you are willing to give such evidence as is required ?—Yes, sir, quite willing. [The oath was then administered to witness.] 1. The Chairman.] Are you or the institution you represent represented by counsel, or do you wish to be ?—I wish the bank to be represented by counsel. 2. Have you your counsel here? —Yes; Mr. Theo. Cooper represents the bank. Mr. Cooper: lam here on behalf of the Bank of New Zealand —representing the bank. 3. The Chairman (to Mr. Watson)]. Have you all the documents with you, asked of you yesterday by the Committee ? —The time has been very short, as I only got the notice at 4 o'clock, and a great deal is required. I brought everything I could in the time allowed me. 4. State what documents you do produce? —I have got the balance-sheets of the bank from the Ist January, 1888, up to the latest laid before the House, for the 31st March, 1896. I would like to state in connection with these balance-sheets that it was not always the practice to issue half-yearly balance-sheets, especially since the bank went Home to London, and it would be impossible now to get these balance-sheets. They never were in the colony. The colonial ones went Home to London to the head office, and in the colony we never knew what they did in London,'and-never saw the half-yearly balance-sheets; but the yearly balance-sheets are here, which, I think, should be all the Committee requires. 5. How many half-yearly balance-sheets will be short? You have a considerable portion?— I have got the balance-sheet for the 31st March, 1888, including that from the London office to 31st January. The next is the 31st July, 1888. 6. How does that come to be the next half-yearly balance—four months afterwards ? —lt is the aggregate balance-sheet to the 29th September, 1888, including the London office. The next is the 30th March, 1889, including the London office to 31st January, 1889. 7. Have you got that of September, 1889 ?—Yes. 8. And March, 1890?— Yes. The next I have is 31st March, 1891. The office had gone over in 1891. 9. You have not got that of September?—No; the next is the 31st March, 1892. 10. And the next ?—March, 1893; March, 1894 ; March, 1895 ; and March, 1896. 11. Then, they are half-yearly from 1888 to 1890, and yearly balance-sheets up to the present date ?—Yes. [Exhibit No. 1 handed in by Mr. Watson.] 12. Hon. Mr. Seddon.] What does the first balance-sheet, of 1888, disclose?—l should like you to understand that lam not responsible for the correctness of all these—l have had to get them from the officers; but I believe they are correct. 13. You have the first balance-sheet in your hand?— Yes. 14. Who was the chairman of directors, and who the directors, at the time of that balancesheet ? —The balance-sheet is only signed by the auditors. 15. Who were the auditors ? —G. P. Pearce and J. L. Wilson. The directors were —I am speaking from information given to me at the bank—Messrs. J. Williamson, G. B. Owen, J. M. Clark, Sir Frederick Whitaker, W. I. Taylor, W. S. Wilson, and Samuel Browning. 16. Who was the general manager?— Mr. D. L. Murdock. 17. Who were the inspectors ?—I have not that information here, but Mr. Murray was chief inspector. 18. Who else ?—There were several assistant inspectors. 19. Will you get the names for the Committee by to-morrow?— Yes. 20. What is the position of the bank as disclosed by the balance-sheet at that date?— The assets amounted to £14,520,447 Bs. 2d., the paid-up capital amounted to £1,000,000, and the Reserve Fund, £500,000. 21. What is the total liability?— Apart from capital, reserve fund, and undivided profits, £12,959,585 19s. lid. 22. How much assets over liabilities?— The assets over liabilities amounted to £1,000,000 of capital, and £500,000 Reserve Fund, and there was £60,861 Bs. 3d. to credit of Profit and Loss Account. 23. What is the t0ta1?—£1,560,861 Bs. 3d.' 24. What is the date of that ?—3lst March, 1888, including London office at 31st January. 25. Are there any writings-off at that time, and what amount? —There was £218,972 written off in 1888. 26. That was at 31st March, or during the year ? —During the year. Subsequent to the balance-sheet, I think. 27. What are the amounts and the names of the persons or corporations for whom these writings-off were done ? —Having regard to the terms of my appointment and the declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present; and lam acting according to the advice of the bank's counsel. Further, it is my duty to the bank and the colony to decline to give such information. *I—l. 6.
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28. The Chairman.] You decline to answer the Premier's question? —Yes, sir. 29. Have you any objection to tell the Committee what was the nature of the oath or declaration you signed ?—I signed a declaration in connection with all the banks I have been in. The bank's officers and every one connected with the bank have to sign a declaration that they will not divulge anything in connection with the bank's accounts. I lay more stress on the fact that I have been appointed to conserve the interests of the shareholders of the bank, and the interests of the colony as well; and it would be against the interests of the shareholders and against the interests of the colony to divulge it, and it is my duty not to divulge it. Mr. Cooper : I have advised the directors and President of the bank to refuse to give any information with regard to the past and present accounts of customers of the bank, and, concerning the past and present accounts, of any portion of the business of the Colonial Bank now being administered by the Bank of New Zealand. They are acting under my advice, and at the proper time and in the proper place I am prepared to give reasons.
Friday, 17th July, 1896. William Watson, President of the Bank of New Zealand, recalled. • 1. The Chairman.] You remember that you are now under the oath you took yesterday when you were before this Committee—you understand that?— Yes. 2. You were asked a question by the Premier as to the writings-off of the Bank of New Zealand in 1888?— Yes. 3. Your answer was this: that the writings-off were, for that year, £218,972? —Yes; I have only got the pounds. 4. The Premier then put a further question, which you declined to answer on account of the declaration you had made to the institution which you were serving ?—Yes ; and on account of the terms of my appointment, and duty to the bank. 5.. The Committee desire to repeat their question and give you an opportunity of giving a deliberate answer, and I have been asked to put this question again to you. lam asked to put the question, " What are the names of the persons and corporations in whose favour such writingsoff took place, and the amount in each case so written off?"—I regret that I have to repeat my former answer. 6. Will you repeat your answer, please, to the question. Your answer, as we have taken it down, is, "Having regard to the terms of my appointment and declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present; and lam acting according to the advice of the bank's counsel." Is that your answer? —Yes, sir. 7. If you have anything further to say, you can give it?— Further, I said I considered it my duty to the bank and the colony to decline to give such information. 8. Your answer would read as follows : " Having regard to the terms of my appointment and declaration of secrecy, I must decline to give any information regarding individual accounts whatever, either past or present; and lam acting according to the advice of the bank's counsel. Further, it is my duty to the bank and the colony to decline to give such information" ?—Yes, that is correct. 9. Either as regards the several amounts going to make up the total you have given us, or the names ?—No, I have no objection to give the gross amounts for the year. Ido not wish to add anything to my answer. Shall Ibe wanted again this afternoon? The Chairman : Not to-day. The Premier : It is very likely that when we want you you will be sent for.
Tuesday, 21st July, 1896. William Booth, Director of the Bank of New Zealand, sworn and examined. 1. Hon. Mr. Seddon.] I would ask, Mr. Chairman, that the witness be supplied with the balancesheets, as I intend to ask about the balance-sheet of 1888. There will be no objection to the President of the bank being alongside of him. [To witness.] Mr. Booth, you are a director of the Bank of New Zealand?—l am, Sir. 2. How long have you been a director of that institution ? —Since the end of 1894. 3. You are also an attorney of the Estates Company ? —I am, Sir. 4. How long have you been an attorney of that company ?—Nearly as long. 5. You have the balance-sheet of the Bank of New Zealand for the year 1888 ?—There is a balance-sheet here with that date on it. 6. What was the position of the bank at that time—take it shortly, the assets over liabilities?— I have no knowledge of these balance-sheets. I have never seen them before. 7. Look at the balance-sheets, and tell us from them what is the position of the bank at that date?— The capital here is £1,000,000, and the reserve fund £500,000, with a balance to profit and loss amounting to £60,861 Bs. 3d. 8. What is the value given there of assets over liabilities for that year?— That will be £1,560,861 Bs. 3d. 9. It was that to the good on that date as represented by that balance-sheet ?—Yes. 10. What are the losses given by way of writings-off for that year ?— [Mr. Watson.] I wish to explain that, on the last occasion I had to give evidence, I had given to me by the accountant a list of bad debts, which were put down at £218,972. I find now, on further examination, that the books have been kept in a curious way, and that the amount should be £216,885. That is the writing-off for 1888.
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11. Hon. Mr. Seddon (to Mr. Booth).] Of course, of your own knowledge, you cannot tell; you were not a director at the time, and cannot tell us what led to the writing-off ?—I have no knowledge. 12. Who is the balance-sheet signed by ? —G. P. Pierce and J. L. Wilson, auditors. 13. Are those auditors in the bank now ? —Not to my knowledge. Mr. Pierce is dead. 14. And Mr. Wilson?—l do not know him. 15. You cannot say anything as regards the accuracy of the balance-sheet submitted. Will you give us the balance-sheet of 1889 ?—I have got the 1889 balance-sheet, which includes the London office up to the 31st January. 16. What was the position of the bank in the year 1889 as disclosed by that balance-sheet ?— The capital here is £1,124,824, and the balance to profit and loss is £84,449 12s. 7d. 17. What are the assets there shown as valued over liabilities?—£l,2l3,273 12s. 7d. 18. What was the paid-up capital at that date?—£1,124,824. 19. And the reserve fund ?—The reserve fund seems to have disappeared. 20. What was the reserve fund in 1888 ?—£500,000. 21. And the reserve fund the next year has disappeared. That would mean that between 1888 and 1889, with the sum of £216,885 written off in 1888, and the reserve fund of £500,000 which has disappeared, a total of £716,885 was lost in two years as shown by the balance-sheet. What you have shown now shows an increase of capital. How do you account for that ? Was any new capital called up or new shares issued ? —25,000 shares of £10 each were issued, of which £7 was paid up. 22. That accounts for the increase in capital?— Yes. 23. What was the amount realised by way of new capital?—£l74,B24. 24. What was the amount (if any) which was written off in 1889 ?—There appears to have been £109,565 written off for that year. 25. That would show, with £500,000 of the reserve fund, £216,000 for 1888, and £109,000 written off for 1889, a total written off within twelve months of £825,000. I want to be clear about the £500,000 which disappeared—the reserve fund ?—That appears to have been used between 1889 and 1890, and carried forward to reserve in 1890, and then written off with the other provision made for bad debts, because the amount of 1890 was £1,169,555. 26. Was there any writing down in 1888 and 1889 ? —I do not see from these figures here. 27. What is shown there is £826,450. In 1890, what was the capital of the bank ?—£1,125,000 in 1890. 28. What are the assets shown over liabilities ?—£1,224,783 lis. sd. 29. Is there any share-capital increase that year ?—No; there does not appear to be any increase. 30. Was the share-capital written down? —No; there is none. 31. There is no writing down of share-capital ? —-No. 32. And no reserve fund written down ?—No; there is no reserve fund at all. 33. There is no reserve fund created? —No. 34. What are the writings-off in 1890, if any ?—£1,169,555. 35. That makes the totals of writings-off, together with the lost reserve fund of £500,000, of £1,996,005? —You are adding the reserve fund? 36. Yes? —I expect the reserve fund is in this £1,169,000. 37. How do you account for it disappearing, if not written off till 1890, from the balance-sheet in the year previous?—lt would probably be kept in the suspense account. These figures are supplied by Mr. Gibbs, the accountant, and he says he has had some difficulty in tracing the arrangement of accounts up to 1894. Since 1894 he has attended to them himself, and is perfectly clear about them. There is an explanation here which the Committee can have up to 1894. It is quite clear the reserve fund has disappeared in this amount of £1,169,000. 38. But if the £500,000 is not shown in the reserve fund of the balance-sheet of 1889, it should be shown in the suspense account. Now, will you give the suspense account for 1888 and 1889 ? —There is no trace of it in these balance-sheets. 39. Half a million disappears and there is no trace of it ?—There is no trace of it as a separate item. It will no doubt make an error to the extent of that £500,000 reserve fund. No doubt it is there. The auditors who signed both those balance-sheets—Mr. Wilson, Mr. Scott, and Mr. Brown —are all alive at the present time, and could be summoned to give an explanation of it to the Committee. Mr. Wilson is in Auckland. I believe that £500,000 is in that million which disappeared in the balance-sheet of 1889. 40. We will now come to the year 1891. What is the position of the bank as disclosed by the balance-sheet at that date ?—The capital is £897,833, and the balance to profit and loss £59,522 Is. 3d. There is a new reserve fund comes up in this balance-sheet of £20,000; that is taken out of the £59,522, There is an amount carried to the reserve fund of £20,000, and a dividend paid at the rate of 5 per cent., and that leaves a balance carried forward of £18,272. Provision was made in 1891 for writing off £18,949. 41. Come back to 1888,1889,1890. What was the dividend declared in 1888 ?—ln March, 1888, a dividend was paid at the rate of 7 per cent., absorbing £35,000. 42. In March, 1889 ?—A dividend was paid at the rate of 7 per cent., which absorbed £33,063. 43. And 1890?— There was no dividend paid in 1890. 44. In 1891 ?—Five per cent.; the amount absorbed being £21,250. 45. What was the writing-off in 1891?—£18,949 in 1891. 46. What was the capital reduced by between 1890 and 1891 ?—£227,167. 47. Where did the difference go between these amounts; there is a loss of capital there of £200,000? —It is quite evident that it has been absorbed in that large sum written off in 1890. It is in 1891 that it disappeared from the balance-sheet.
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48. You say there is a reserve fund which springs into existence of £20,000 ?—Yes, £20,000 ; i arises from profit and loss. 49. By whom was the balance-sheet signed?— Edward Waterhouse and G. Sneath, at the head office, London. 50. When was the head office removed to London ?—ln a statement I have here, which is supplied from the bank, I find this : "The head office of the bank was transferred to London on the 22nd July, 1890." 51. I do not think I have asked you yet what the assets over liabilities were for 1891?— £957,355 Is. 3d., less the amount of dividend paid, £21,250; that would leave £936,105. 52. In 1890 you gave the assets as being valued over liabilities at £1,224,783 ; there is only a difference in the assets of £288,678 ?—There is no doubt in the writing-off in 1890 it disappeared before the balance-sheet of 1891. 53. You think that would be in the £1,100,000 written off?— Yes. 54. Before we leave 1891, is there any Suspense Account shown there?—No; there is none. 55. Come now to 1892. What was the position of the bank in 1892?— The position is that there is a capital of £900,000 in 1892. It would be as well to call attention to the fact that for the first time there comes up in the balance-sheet an interim dividend paid on the 30th September, 1891, but, as that is subsequent to the figures at the present time, it will be sufficient if the matter is taken account of now. 56. Five per cent, was paid on the 31st March, 1891 ?—Yes. 57. Then, in 1892 ? —There was an interim dividend paid in September of 1891. 58. What was the dividend then ?—The position for 1892 is : capital, £900,000 ; and profit and loss for the year, £78,330 18s. sd. Then an interim dividend for September, 1891, £22,500. 59. Was the interim dividend 5 per cent, or 10 per cent. ?—-5 per cent. 60. For 1891 the year's dividend was 5 per cent., so if this was for the half-year it would be 10 per cent, for the year ? —lt was at the rate of 5 per cent, for the year ending March, 1892. 61. What are the assets over liabilities for that year?—£93B,33o. There is another item that is left after the dividends have been paid, and there is an addition also made to the reserve fund of £15,000, that being raised from £20,000 to £35,000. That would make £953,330. 62. The Chairman.] That amount, then, is assets over liabilities ?—Yes. 63. Hon. Mr. Seddon.] What are the writings-off for 1892 ?—According to the figures here the writings-off for 1892 are given as £20,198. 64. Was there any further dividend in 1892 beyond that paid in September ?—There were two half-yearly dividends paid in that year—in 1892—that is, ending March, 1892; the first was the half-yearly dividend in September, 1891, and the next in March, 1892, the date of this balancesheet. The September dividend was £22,500, and the same amount was paid in March. 65. That would be 5 per cent., of course? —Yes ; one half-yearly the previous year, and these two half-yearly dividends. 66. Tell us who signed the balance-sheet of 1892?— The same gentlemen as before—Mr. Edward Waterhouse and Mr. George Sneath, of Gresham Street, London. The position in the balance-sheet of 1893 is : capital remaining the same, £900,000, and the reserve fund is increased from £35,000 to £45,000, and there is a balance carried forward, after providing a dividend of 5 per cent., of £19,161, making a total of £964,161. • 67. Now, the assets over liabilities—the t0ta1?—£964,161. Of course, you understand that that includes the capital of £960,000. 68. Now, the profit and loss account?— The amount to credit is £74,161, and that was taking the dividend in September, and a further dividend in March of £22,500 each; and £10,000 was added to the reserve fund, making it £45,000; thus making the total I have given you of £964,161. 69. What was the amount written off that year? —£13,532. 70. By whom is the balance-sheet signed? —The same auditors—Edward Waterhouse and G. Sneath. 71. Could you give the names of the general managers each year for 1888, 1889, 1890, 1891, 1892, and 1893?— The general manager, according to this memorandum, in 1888 was Mr. D. L. Murdoch. That was on the Ist January, but on the sth June there was a change, and Mr. John Murray became general manager, and his appointment was confirmed on the 23rd October, 1888; so that practically from the sth June, 1888, Mr. John Murray was general manager. There is also a note here that on the 20th November, 1888, Mr. G. E. Tolhurst, then manager at Wellington, went to Auckland to assist in the general management. He was appointed to be active general manager on the 18th January, 1889. Mr. Murray resigned the management on the 23rd October, 1889. Mr. Tolhurst retired from the general management, and Mr. J. M. Butt took up the duties of the position on the 25th March, 1890. On the 22nd July, 1890, as you already know, the head office was transferred to London. I think it would perhaps prevent misunderstanding if Igoon to say that, while Mr. Butt took up the duties of general manager on the 25th March, 1890, the head office of the bank was transferred in July, but Messrs. W. H. Colbeck, Arthur Bull, J. Murray, and W. S. Wilson were appointed attorneys to look after the management at the time Mr. Butt was in charge, and Mr. Butt, with these gentlemen, appears to have remained in charge until Mr. Holmes was appointed in London general manager, and arrived in Auckland in March, 1891, with full power of attorney to cancel the power given to Messrs. Colbeck, Murray, Bull, and Wilson; and then, in 1894, Messrs. Butt and Michie were associated, from the 7th June, 1894. The head office was transferred from London to Wellington, and the new Board now in office elected on the 26th September, 1894, the new Board comprising Messrs. Johnston, Macarthy, Booth, and Kennedy. The President was appointed by the Government on the 12th November of that year —1894.
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72. Will you give us the names of the directors in 1888 ?—-Messrs. J. Williamson, G. B. Owen, J. M. Clark, Sir Frederick Whitaker, W. I. Taylor, W. S. Wilson, and S. Browning. 73. And in 1889 ?—ln 1889 the directors were Messrs. W. H. Colbeck (president), W. I. Taylor, W. S. Wilson, F. Nelson George, Arthur Bull, John Murray, and Thomas Peacock. There was a London board also—the Right Hon. Sir J. Fergusson and Right Hon. A. J. Mundella (both members of Parliament), Sydney Carr Glyn, Sir Hercules Robinson, and Messrs. John Alexander Ewen and David Murray. Mr. T. M. Stewart was manager of the London office at that time. 74. Now, the next—directors of 1890?— We have no record beyond this : that, the head office being transferred to London, the management appears to have been entirely with the gentlemen whose names you have already —Messrs. Colbeck, Bull, Murray, and Wilson, directors. They appear to have acted as directors with the London board up to the balance-sheet of 1891. The London board of 1891 are : Mr. Richard H. Glyn, president; Colonel Robert Baring, Mr. J. A. Ewen, Sir James Fergusson, Mr. E. H. Fison, the Right Honourable A. J. Mundella, and Mr. Thomas M. Stewart. The London manager was Henry B. McNab. 75. And the directors for 1892?—1n 1892 there is no change. They are exactly as in 1891. In 1893 they were : Mr. Richard H. Glyn, president; Colonel R. Baring, Mr. J. A. Ewen, Sir James Fergusson, and Mr. E. H. Fison; the manager being the same —Henry B. McNab. 76. In 1894 ?—The same as in 1893 ; but the manager was changed from Henry B. McNab to C. G. Tegetmeier. 77. Did I get a change in the Christian name of Glyn ?—Richard H. Glyn. The other Glyn was Sydney Carr Glyn. 78. Which of these two is connected with the firm of Glyn, the celebrated bankers of London ? —I understand that Mr. Sydney Carr Glyn is the gentleman who belongs to the firm of Glyn, Mills, and Co. 79. There is a change in the Glyns, then. What year does that take place in?— Sydney Carr Glyn is on the board in 1888 and 1889. In 1891 Richard H. Glyn comes on the board; in 1890 it was the gentleman who held the power of attorney, and in 1891 Mr. R. H. Glyn comes on the board. . 80. Now, we will go back to the balance-sheet of 1894 ?—-On the 31st March, 1894, the capital remains at £900,000. In 1894 there was only one half-yearly dividend paid; there is £982,740 17s. Id.; then, there is £45,000 of reserve fund, which has had no increase from the year before, and after paying the dividend in September—£22,soo—there is £982,740. 81. Is that assets over liabilities?— Yes. The Committee understands that in this year ending 31st March, 1894, there was one dividend for the first half-year paid. 82. What is the profit and loss? —For the year, £60,240, after which a dividend was paid, and the balance carried forward. 83. What are the writings-off in 1894?—£15,164. 84. Was there a statement prepared—on the 31st March you have your position of the bankhave you a statement prepared showing the position of the bank in June—a statement submitted to the Government in 1894 ?—The next document I have got is the 1895 balance-sheet, showing the condition of the bank at the 31st March, 1895. 85. We had better stop here and get a statement of the position of the bank when it came to the Government in June, and I will take it in proper order and sequence to show the position of the bank in the same way. Did Mr. Murray prepare and submit a balance-sheet in 1894 ? The position is this : You show by balance-sheet the position of the bank in 1894. Well, in June the bank came to the colony for assistance, and it was stated that the bank was in such a serious position that, unless immediate help was granted, it would have to put up its shutters. I have no doubt you will be able to find in the bank a record of the statements submitted by Mr. Murray to the Government ? —I think there must be some private papers based on information supplied from London to Mr. Murray. There is nothing in the bank from which we can get any knowledge except from London in 1894, and whatever the position it must have been communicated to Mr, Murray by cable. He must have knowledge which we have not. 86. Was there no record of a statement prepared by Mr. Murray in June ? —No. He must have been acting on instructions from London, and his information must have been supplied from London. 87. The Committee will want you again to-morrow, and in the meantime I want you to search the records and see if there is no record prepared by Mr. Hanna, manager of the Estates Company in Auckland, in June, 1894. There is also a statement of the Agricultural Company for the same year ? —Were the statements left with the Government by Mr. Murray, or did he take them away ? 88. I am asking you to search diligently for these statements and to bring them to-morrow if you can? —Very well; we have no knowledge of their existence at present. We will search and see. 89. There may be some other papers also in existence—reports which conflict with the balancesheets at the time of the transfer of the accounts to London. We intend to ask you about them to-morrow.
Wednesday, 22nd July, 1896. Examination of William Booth, Director of the Bank of New Zealand— continued. 1. Hon. Mr. Seddon.] I would ask you, Mr. Booth, whether there is any balance-sheet or statement of the position of the bank prepared at the time Mr. Murray approached the Government —that would be in June, 1894 ?—We have no record in the bank so far as we can discover. 2. Is there any record in the hands of the Bank as to Mr. Murray being authorised to approach the Government at that date?—l could not answer that question, Sir. The head office was in' London, and I suppose his instructions would come from there.
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3. You can only give us the position of the bank as disclosed by the balance-sheet of the 31st March, 1894 ?—That is so, Sir. 4. That being the case, we proceed to the balance-sheet of 1895. What was the position of the bank on the 31st March, 1895 ?—The capital was £3,059,745 9s. 2d. 5. What is the amount of assets over liabilities? —£3,105,129 os. 3d. 6. How do you arrive at that; the figures are not given in the printed balance-sheet ?—The guaranteed stock is £2,000,000. Then, there are 100,000 shares of £5 ss. each, £525,000; and 50,000 at £7 10s., £375,000; and calls of 1895 account, £159,745 9s. 2d. And, then, there is the reserve fund of £45,000; and the balance of profit and loss, £383 lis. Id. That makes the £3,105,129 os. 3d. 7. The Chairman.] What, then, do you state are the assets over liabilities ? —£3,105,129 os. 3d. Of course, it appears on the balance-sheet that a considerable amount of assets are not given as assets. That is the balance according to the statement here. In this list of assets you have here, are the Bank of New Zealand Estates Company shares taken at par value, and bad and doubtful debts amounting to £422,281. Of course, it is well known to the Committee that they were the subject of subsequent arrangement with Parliament and the bank. 8. Hon. Mr. Seddon.] Were there any writings-off between 1894 and 1895 ?—The writings-off of 1894 the Committee had yesterday, £15,164. The next writings-off provide for the two years 1895-96, £1,531,951. 9. This, then, Mr. Booth, with what you have given us from previous balance-sheets from 1888, brings the total writings-off to £3,095,799 ?—That is right, Sir. 10. That is exclusive of losses in connection with the Estates Company?— That is so. 11. Can you give us now the losses in connection with the Estates Company from 1888, taking the various changes from the Globo Assets Company and the Estates Company?— That is wrong, Sir. That will include the writing-off for the Estates Company too, but it does not cover the estimate of deficiency, £800,000, but short of that it will include the whole of the writing-off for the two companies. 12. Wih.you separate the amounts in the list, £1,531,951 ? Will you separate what the bank has written off and what the Estates Company has written off, so that we may keep the two separate ? —That makes the amount £767,645. 13. The Chairman.] You have given us the total writings-off—£l,s3l,9sl—for 1895-96. Mr. Seddon wants to know the amounts written off the bank and the Estates Company separately. First of all, what is the amount written off in connection with the bank ?—From the bank the figures will be £767,645. 14. And from the Estates Company?— From the Estates Company, £764,306. 15. Hon. Mr. Seddon.] Are these correct figures now, as showing the writings-off from the Bank of New Zealand from the Ist January, 1888, to the 31st March, 1896—£2,335,622 ? You gave us up to yesterday £1,563,848. Now you give us £767,645. Add these two together and you have £2,331,493? —-It should be understood that the writing-off from the bank leaves us in possession of nearly £200,000 of contingent reserves. We have that still available. 16. Divide that by eight, Mr. Booth, will you?— That makes an average of £291,436 per annum. 17. That is a writing-off of £291,436 since the Ist January, 1888, from the bank alone?— Yes. 18. That would show a loss of £2,335,622. Will you give me the dividends that have been paid while you have been making that loss ? —I think it ought to be mentioned that, while this is the average loss, the writings-off cover a good deal that has been written off from 1888. 19. You are stating what is outside the balance-sheet ?—Yes; the balance-sheets from 1888. They take account of all these accumulations going on for some preceding years. 20. What you remark will refer to losses in the Estates Company as well ?—Yes. 21. We have not touched those yet. At all events, you have paid how much in dividends during the eight years in which you have had losses ? 22. The Chairman.] What is the total amount of the dividends you gave yesterday ?—The total would be what was paid away in dividends from 1888 to 1893—£243,188. 23. Was there no dividend in 1894 ?—We had no dividend in 1894. 24. Hon. Mr. Seddon.] I have got them here. 1888—£35,000 ; September, £24,500; 1889— March, £33,063; September, £39,335 ; 1890, no dividend; 1891, £21,250, £22,500, £22,500; 1892— March, £22,500; September, £22,500; 1893, September, £22,500; 1894, March, £22,500 ?—There has been one dividend omitted. That would make the amount £265,688. 25. I will quote from the Chairman's statement in 1891 (sth August) in reference to your saying that there was a continuation in these statements of losses prior to 1888 : "The directors beg to submit the following statement of accounts for the year ended the 31st March last. The net profits, after making provision for bad and doubtful debts, amount to £59,522 Is. 3d., out of which the directors have placed £20,000 to a reserve fund, and have invested the same in Consols. They recommend that the balance, £39,522 Is. 3d., should be appropriated as follows: To payment of a dividend at the rate of 5 per cent, per annum for the half-year ended the 31st March, £21,250; to be carried forward to profit and loss new account, £18,272 Is. 3d. . . . The Chairman, Mr. Glyn, said: . . " I now come to the balance of profit and loss with which we have to deal to-day, £59,522 ; and here I may say that proper provision has been made for rebate on bills discounted, amounting to a little over £8,000; but of this £59,500 the directors, as you have been informed, have taken £20,000 and invested it in Consols to form the nucleus of a reserve fund, and of the prudence of that action I take it there can be no two opinions. As regards the balance of £39,522, lam aware that the shareholders are not entirely unanimous. Some shareholders have expressed the opinion that at this early stage it is very important to make the bank as strong as possible, and that it would have been more prudent to have carried the whole amount of £39,500 forward and not paid any dividend at the present time. That, no doubt, would be a very
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conservative course. The views of the shareholders have been very carefully considered by the board, but we had to take into consideration the fact that it is a long time since the shareholders of this bank received any dividend, and, as there are amongst us a good many to whom some return upon their capital is of considerable importance, especially in these evil days, and looking at the fact that there seems every hope that we may now be able to commence paying regular dividends—although, perhaps, of a moderate amount—we feel ourselves justified in recommending you to take the small distribution which is mentioned in the report, and that, I hope, will meet with the approval of the shareholders. If you approve of that distribution it will leave us £18,272 to carry forward. ... As regards the Estates Company, we have every reason to believe that this is a satisfactory asset. The sales of the property, as far as they have gone, have come out well above the valuation made by the late Mr. Hean, and they have consisted almost entirely—l may say entirely—of properties which return the very smallest revenue." In the face of that, it is contradictory to your assertion that included in the list you have given now—over £2,000,000 —was included ascertained losses prior to 1888?— Yes ;I am not able to understand that statement of the directors. 26. I will ask Mr. Booth, also on this head, another question. This is the circular by Mr. Buckley, intended for circulation in London : " The report of Mr. Hean, as representing the London board, now published, is so far satisfactory in corroborating my statement of the bank's affairs at the meeting in October last that I will only briefly review it, as the figures are cleverly put to mislead. My remarks at the meeting were made as a member of the shareholders' committee, appointed at Auckland in 1888, and then referred only to the affairs of the bank as affecting the committee's report of the 3rd October, 1888. The inference, of course, was that the accounts submitted to them were faulty and inaccurate to such an extent that otherwise this report would never have been made. . . . The Globo assets account should be treated separately, and cannot be mixed up with current business in terms of the last Bank Act. Mr. Hean states the additional loss on the Globo assets account to December last as £349,000. The total of the details given by me was £354,000. Against this is placed surplus of the bank's premises, £150,000, which means, 1 suppose, difference in estimated valuation and the amount they stand at in bank's books. This item was, however, fully considered and allowed for by the committee when estimating £800,000 as required to cover all losses, and should not be dragged in now to be made use of a second time. £ " Undivided profit to the 31st March last ... ... ... ... 100,000 " Sundry suspense accounts ... ... ... ... ... 16,000 £116,000 " Less— " Losses in current business to the 24th February last ... ... ... ... ... £54,000 1 ' Sydney defalcations ... ... ... ... 28,000 82,000 "Balance ... ... ... ... ... £34,000." In the face of that, do you still think the amounts were included in the losses to the bank prior to 1888 ? —They were not ascertained at that time, but it is quite evident that the bank properties on which those estimates were given were overvalued. 27. This is from Price, Waterhouse, and Co. to the London board of directors of the Bank of New Zealand: "If the valuations of Mr. Hean are adopted, the balance-sheet for the 31st March, as received from Auckland, requires amendment by writing down the ' Globo ' assets by the sum of £349,000; thus bringing the assets to a figure corresponding with Mr. Hean's valuation of £3,107,993 for the 30th December, 1889; by writing off the loss on current business, £54,000; and the amount of the Sydney defalcations, with the costs relating to the same, £34,000 : a total of £437,000. Against this total may be set off the present balance of profit and loss, £99,783 lis. 5d., and sundry reserves and suspense accounts now standing on the books, £16,000 —£115,783 lis. sd.— leaving a net deficiency of £321,216 Bs. 7d." That is taken from the year 1890. I again ask this question : Seeing the statement by the balance-sheet and report as sent to London as against your statement, do you think they are still in the losses in the amount submitted to the committee by you ?—I think so. lam satisfied that for the years before 1888 the properties were over-valued. 28. Were you a party in preparing this report submitted at the ordinary general meeting of the shareholders, held in London on the 27th August, 1894: " The directors have to submit to the shareholders the annexed balance-sheet for the year ended the 31st March last. The net profits, after making provision for bad and doubtful debts, amount to £41,078 17s. Id., to which has to be added £19,161, brought forward from last year. . . . There are certain accounts in the bank's books for which, in the opinion of the board, it is probable provision may later on have to be made." This is an extract from the chairman's (Mr. Glyn's) speech at the same meeting : " Now, the purely banking business of the concern has been good—it has been distinctly good, I may say. We have not only been able to pay what I admit is not an exhorbitant dividend of 5 per cent., but we have also written off something like £60,000 bad debts, and we have put £45,000 into Consols, which are there still in the name of the Bank of New Zealand. But we have not been so fortunate with this huge lock-up in the Estates Company, and there are a great many reasons for it. We started well. For the first two years we thought we should be able to turn it within a reasonable time into an agricultural estate; but things have gone very much against us within the last two years, and especially within the last year. First of all, there has been the land policy of the Government, which, with high taxation, low prices of produce, and bad trade generally, have very much affected the returns from the Estates Company. . . . Now, just consider for one moment what a load this lock-up in the Estates Company has been upon the bank—£l,Bso,ooo in this
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balance-sheet, on which, had it been liquid, we could easily have earned 6 per cent. ; but we never get more than 1-| per cent, as dividend from the Estates Company, so the bank has always been working with a loss of profit of from £75,000 to £80,000. Had this asset been a liquid one, the bank could easily have earned 10 per cent., if not a little more. Of course, with so much money locked up, the bank, as I have remarked before, has been much dependent for its dividends on what it has got out of the Estates Company. I have told you before how slow trade has been, but this year it has been worse than ever; so that instead of getting a dividend, we have to find money to pay the debenture interest, and the company has been worked at a loss. This is an exceptional year, and I do not suppose the same thing will occur for a long time; but, as a matter of fact, the bank has put its hands into its pockets and paid the interest for the Estates Company. Now, I have extracted some figures from the New Zealand Herald —a well-informed newspaper—which will give some idea as to the reasons a concern of this sort could not pay a dividend. The New Zealand Herald says, five years ago, the value of the wool-clip was twenty-one millions sterling. Between 1889 and 1894 the increase in the number of sheep was estimated at 24,000,000, still the market value of the present clip is not so much now as it was then. With regard to the agricultural interests for 1891 to 1892, the wheat crops of New Zealand were £4 7s. 6d. per acre, in 1893 they were £2 10s. per acre, and in 1894 they were only £1 10s. lid. per acre, and the yield per acre has been the smallest on record. These, I think, are good enough reasons why the Estates Company were not able to pay any dividend this year. . . . And I venture to think that the Government not only acted in a statesman-like but also in a business-like way. In the first place, they avoided what might have been a most serious panic, and, on the other hand, in guaranteeing the preference stock of the bank, I fail to see that there is any chance that the Government can lose any money under ordinary business circumstances ; and therefore, I think, it was a statesman-like and business-like proceeding. . . The bank is now in a strong position. Certainly there is no bank south of the equator stronger than this bank, and, as far as we shareholders are concerned, we are in a very much better position. . . ." That is on the 27th August, 1894. I ask you, Mr. Booth, whether you took any part in framing the report sent to the shareholders in London on the 27th August, 1894 ?—I had nothing to do with the bank at that time. 29. At what date did you come into the bank ? —I think it was September, 1894—the end of September. 30. The Chairman.] You became a director on that date ?—Yes, Sir. 31. Hon. Mr. Seddon.] After going into the bank, did you find things as stated here by Mr. Glyn —that the bank was in a strong position, and able to pay dividends, and the £60,000 would pay all bad debts ? —No. 32. You did not ?—No. 33. When was the first balance-sheet submitted or prepared by you, or your co-directors after your election in 1894 ? —That is the balance-sheet we have been considering a short time ago—■ 31st March, 1895. 34. What did you consider should be written off at that time, exclusive of the losses in the Estates Company, in your balance-sheet of 1895 ?—The Committee had the full particulars in 1895. . 35. What did you consider bad and doubtful debts ? —£376,900 in the bank, and besides that we found it desirable to keep £200,000 as a contingency fund. 36. Then, between the 27th August, 1894, when Mr. Glyn made this speech, and the balancesheet of 1895, on examination made by you, when you presented your balance-sheet of 1895, you found that Mr. Glyn was out by over half a million?— Well, that is our estimate of the position of the bank. That is what we believed. How he arrived at his estimate Ido not know. 37. But you had, I presume, gone very carefully into the position after assuming office, and gave this balance-sheet ?—We did as far as possible. We went to the bottom of it. 38. The Chairman.] Is this the answer you intend to convey: that the present directors, in March, 1895, upon investigation, came to the conclusion that the bank was more than half a million in a worse position than that stated by Mr. Glyn in August, 1894 ?—You see, our knowledge of the condition of the bank was a growth during the whole of that time. We did not know fully in March, but during the subsequent three or four months that was the result we arrived at, that this £376,900 should be written off, and that it was prudent for us to take another £200,000 as a contingent reserve. 39. That that sum must be written off, and £200,000 more must be provided as a contingent fund ? —Yes; that is so. 40. Hon. Mr. Seddon.] Is that the position you put to the Government in June, 1895, when you came for Government assistance the second time? —Yes; the Government had the fullest information on this point placed before them. 41. Will you produce, then, to the Committee what you put to the Government? Did you not put a detailed statement and balance-sheet to the Government showing the position of the bank in June,, 1895, prior to the Committee being set up ? Will you produce that ?—We had no request to produce that, but we can bring a copy of the balance-sheet presented. 42. It will be sufficient for you to say that you did submit to the Government a statement ■showing the position of the bank when you asked the colony to come to the rescue of the bank?— We did. We showed fully the position of the bank—the worst as well as the best. 43. Can you explain the difference you have given us ? You have given us £767,645 as between 1894 and 1895 and 1896. You now say it is £376,900. Are we to take it that the £767,645 is the year previous ? —Some of the writing-off was done before the legislation in the latter part of 1895, and within this sum is also included the writing-off of 1896, some of which was made provision for beyond what we asked Parliament to provide; an amount of £56,502 was written off this year out of profits, and the most of that was for losses, which it was intended should be provided, or might be provided, out of the contingency fund. But instead of taking the amounts out of that fund we took them out of the year's profits.
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44. You have given us £376,900 as on the 31st March, 1895. Now, I want to know when the other losses, which make up the difference between that amount and the £767,645, occurred ? —ln the £767,645 there were some secret reserves held by the bank absorbed. They were all absorbed and wiped out by the writing-off which is represented in the £767,645. 45. What was the amount of the secret reserves? —I could not give the figures; but this £376,900 was the balance required after the bank had made the utmost provision possible after absorbing the reserves of interest and other sums which it had in suspense. The particulars could be got from Mr. Butt, the Government Auditor. The £376,900 odd was the balance after we had absorbed everything. 46. Am I to understand that you had secret reserves of £400,000 ? There are £400,000 not accounted for ?—There was a reserve fund in the balance-sheet of £45,000. That was absorbed. Then, we had £200,000, of which £171,000 is remaining. We have remaining a contingency fund of £171,136 available to-day. 47. When was the secret reserve first created ?—They are such reserves as are usually held by the banks, and carried on for a number of years—interest charges. I could not give you particulars. Mr. Butt, the Auditor, will be able to give the origin and amount of them. 48. What source is the reserve provided from?— Suspended interest, which is charged and not taken to profit—not taken into account in the profit and loss account. 49. Have you got any of that now ?—A small sum is accumulating. I have no knowledge of it. 50. Was this secret reserve disclosed in the statement of the bank's affairs when put to the Government ?—They were disclosed in this way : that everything the bank had was used, and then the position shown to the Government indicated what was still further necessary to be provided. 51. The secret reserve had been utilised before you came to the Government ?—Yes. 52. It is unnecessary to ask the question, but have any dividends been paid since you came into office ?—No, Sir. 53. We will now turn to the balance-sheet of 1896. What was the position of the bank on the 31st March, 1896 ? 54.- The Chairman.] What were the assets of the bank over liabilities at that date ? —The total is £2,623,417 13s. Bd., without taking into account the reserved liability of £500,000. 55. Hon. Mr. Seddon.] Will you give us separately the amounts that make up that?— There are £2,000,000 4-per-cent. guaranteed stock, preference shares subscribed by the Government of £500,000, an amount paid in advance of uncalled capital in possession of the bank, £47,423; there is a balance to profit and loss of £52,576 2s. Id., and there is a reserve fund of £23,418 4s. lid.; that is all. The reserved liability at that time, as you will see by the balance-sheet, is the £500,000, and the balance of calls payable up to the 31st December, 1897, amounted to £452,567 13s. 4d. So that, in addition to the £2,623,417, there is available in capital called up, but not paid, of £952,576 13s. 4d. 56. What is the amount, if any, you have written off since the balance-sheet of 1895-96? — Written off in this balance-sheet, Sir ? 57. Yes ?—£52,000. I cannot give you the exact amount. 58. That is the actual writing-off?— The actual writing-off from profits of the year. 59. What amount, if any, have you set apart without any actual writing-off taking place ? Have you set anything aside to meet writings-off which you deem necessary to make the accounts safe? —We have nothing beyond the amount held in the contingency fund, which remains at £171,000, which we expect to be quite ample for all our requirements. 60. How much of the contingency fund have you absorbed in the writings-off?—The difference between £171,000 and £200,000—about £29,000. 61. Where have you got the balance of the £29,000; where does the other £1,000 come from ? —We took it out of profit and loss for the year. We took the whole of the £56,502 out of the profits this year. But what was taken from the contingent fund, reducing it from £200,000 to £171,000, was over and above the £56,502. The actual money we took from the banking profits of this year in writing-off bad and doubtful debts was £56,502, without interfering with the contingent fund. 62. Then, in that case, suppose you do not pay the interest on the £500,000 you have to pay the Government out of profits —the contribution—you have been saving your own contingent fund, and taking money which ought to go for that purpose from profits?—We had left, after making that provision, enough to pay the Assets Board, except some £400 or £500. 63. Do you not know that the law says that out of profits you have to pay £50,000 contribution to the Realisation Board, that next out of profits for the year you have to get 5 per cent, for the shareholders on the amount contributed, and then the balance goes back to the Realisation Board. There is the interest also on the preferred shares ? —We understand that we have, first of all, to make ample provision for bad and doubtful debts. Then we have £50,000 for the Assets Board ; then we must pay 5 per cent, on the second call from the shareholders, and then what remains over must still go the Assets Realisation Board. 64. Do you admit that you have £170,000 more than you think is necessary ?—No ; we expect we shall require that. We may or may not. We find it necessary to keep that as a precaution. 65. You still think you want that £171,000 ?—We think we must keep it for the present— probably for three years, at any rate. 66. I want an answer, Yes or No. Do you think from the accounts not disclosed by your books that the £171,000 will be required?—l think it will. 67. You think this will be required to meet deficiencies. Is that since you have come into office or prior? —Before we came into office ; and the £56,502 written-off this year was, as to most of it, lost before we came into office. *2—l. 6.
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68. Can you give me separately the writings-off for the Colony of New Zealand, and the writings-off for the Australian branches, and the writings-off for losses in Fiji ? —We can easily give that if you ask it. 69. We can get that?— Yes. 70. The Chairman.] I should like to make clear the writings-off. You said that for 1895-96 they were £1,531,951 ?—Yes. 71. Subsequently you said that for 1896 they were £52,000 odd?— That is since then ; that is for this balance-sheet. 72. What I want to know is whether the amount written off for 1896 is included in the £1,531,951 ?—Yes, it is included. 73. Hon. Mr. Seddon.] Have you seen the report of the special committee of 1888, what is called the shareholders' committee ? —No; I have never seen any report of 1888. 74. You have the report, have you not?—l understand the report is in the possession of the bank. I have not seen it. 75. Bearing on that question again, I wish you to make yourself clear to the Committee in respect of going back beyond 1888. We cannot by our order of reference go back, and I want to remove all doubt. This is an extract from the report I refer to, on 11th October, 1888 : " Our examination discloses a mass of securities taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover for which has become obviously inadequate, although involving losses which the directors had not faced, but which, upon a rigorous examination, we feel convinced, will absorb not only the whole of the reserve fund, but also nearly one-third of the paid-up capital of the bank— say, £800,000 in all. You will naturally and properly expect from us something in elucidation of a state of things so startling, and which we had so little right to expect. It is obvious to us that for years past the bank has been paying a rate of dividend which ought not to have been paid. Securities have been held and accounts kept going in the vain hope of a recovery of the values placed upon them in what was, in fact, a period of inflation ; and supervening on this, within the last two or three years; heavy losses in Australia brought matters to the climax which we are now under the unpleasant necessity of facing. North Island, New Zealand :In Auckland we regret to find that, though the head office of the hank is there, and its affairs under the immediate eye of the directors, the general character of much of the business carried on has been most objectionable, and the policy pursued open to censure. Inflated schemes or proposals coming from, or influenced by, certain persons appear to have met with ready support by lavish advances to companies and individuals without adequate security, or warrantable prospect of advantage, or even safety to the bank. Such advances not only account for more than half the whole loss now disclosed, but the securities held, being more or less unproductive, curtail the earning-power of the bank pending their realisation. South Island, New Zealand : In the south of New Zealand heavy losses in the past, incurred to a large extent through rash or dishonest managemant, have been so far previously written off and provided for; but securities, in themselves of a sound enough character, have been held without adequate allowance for fall in values, and the deficiency has now to be recognised. And finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." Do you know of these things ?—No ; I have no knowledge of them. 76. Could you produce, then, to-morrow or the next day the report of the meeting of the 11th October, 1888, when the " chairman said a report dealing with details would be too long, and therefore only totals were given. The loss made in Auckland was £500,000, very little loss having been made in any other part of the Island. In the South Island the loss had been about £250,000, and the other £250,000 was about equally divided between Adelaide and Sydney." That is an extract from the balance-sheet of the 29th September, 1888. Will you produce that balancesheet? —It is the second balance-sheet on the printed list. 77. Does that show £1,000,000 written off, according to the report of the chairman—£soo,ooo in the North Island, £250,000 in the South Island, and £250,000 in Adelaide and Sydney ? 78. The Chairman.] How are these writtings-off shown or accounted for in the balance-sheet ? —There is £800,000 which has disappeared from the 31st March to the 29th December, 1888 ; there is £500,000 reserve fund disappeared, and £300,000 of capital written off. 79. Hon. Mr. Seddon.] But yesterday you told us this £500,000 was in this £1,850,000. lam just bringing you back to show you that it was not there at all ? —Tt will be in that amount given for 1890 of £1,890,000. 80. Here is the amount in the balance-sheet: Reserve fund, amount transferred to bad and doubtful debt account, £500,000. There were £800,000 bad debts written off, according to your own balance of 1888. It was not put in the Estates Company; it was a bad and doubtful debt for 1888. That left £200,000 still carried over, and, according to the report, is represented by the North Island, the South Island, and Adelaide and Sydney. They wrote off these debts. That is where the £500,000 disappeared, according to your own balance-sheet. So it does not go forward in the Estates Company. I want to know whether it went to write off bad and doubtful debts of 1888, or whether it was carried forward in the amounts against the Assets Company, and was written off later on ?—The appropriation, no doubt, of that £500,000 and £300,000 took place in 1890. There is a bad and doubtful debt account, to which these amounts were credited, and then at a certain time these writings-off take place. Later on, you have in this £1,800,000 the £500,000 and the £300,000. I did not know it was understood yesterday that this went to the Assets Company. These amounts given to-day are simply the bank's writings-off, except what is in this £1,590,000. 81. Have you Mr. Buckley's statement and report showing the deficits on the 16th November, 1888 ?—I have not got them. I have never seen them.
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82. Have you seen Mr. Buckley's speech delivered at the half-yearly meeting of the proprietors of the bank in October, 1889?— I have not seen it. 83. Mr. Buckley says, " The total deficits come to something under £750,000. Anything in addition must come out of capital; they took a margin of £50,000, making a total of £800,000. Accounts turned out to be so unreliable and misleading, as well as certificates being worthless to authenticate and support the several estimates, that the committee would need to have taken a margin of at least £250,000, or just one-third more than the bank accounts themselves show." Was that the course as stated in the balance sheet itself by the officers of the bank ? He then further says, " He had given merely some of the larger items, but he was quite sure he was not far out of the estimate when he put New Zealand down at £30,000, and Australia and Fiji at £30,000 more. That would make £60,000. If they would add it all up they would find that it amounted to £354,000, so that he thought he made an under-estimate when he said, that at the very least there was to be accounted for, at the present moment, some £300,000 on those accounts, which, in the meantime, was so much capital lost." That simply agrees with what has been given as from the balance-sheet of the bank—a difference of £50,000. Now, from what has come under your own notice, after going carefully into the business of the bank, do you think the directors were justified in paying those dividends you have given to us in the years which have been mentioned—do you think it was honest in face of the matters disclosed to you since you have been a director ?—I do not think I have got sufficient information to warrant me in saying more than this : that, in view of the position we found the bank in, the paying of any of the dividends referred to is a very extraordinary thing to me. I can say nothing more. 84. Would you say these balance-sheets you have given to the Committee disclosed a true state of the position of the Bank of New Zealand, judging simply from what has come under your own notice since you have become a director ?—I can only say that their estimate of the position was very different from the estimate which, I think, I should have formed of it. 85. Do you think the writings-off which you have quoted were sufficient to have met fairly the bad and doubtful debts ?—We found when we took over the bank that the writings-off had not made sufficient provision 86. The Chairman.] For all the bad and doubtful debts ?—No. 87. Hon. Mr. Seddon.] W T hat you recommended to be written off was the difference—what you thought would have been a fair position to the Bank —and what you found it ?—That is the measure of difference. 88. £771,000 practically?— Yes. 89. Are the same officers in the bank now that were in the bank at the time these writingsoff took place, previous to your going into office ?—Some of them are still in the bank. 90. Are the same officers that would be responsible for recommending and giving to the previous directors and boards the position of the bank—-are the same officers there now as then —the principal officers ? —I think not. 91. Have you, as a director, come across any recommendations of officers to previous boards of directors recommending writings-off which have been ignored by directors, and in place of these writings-off dividends have been declared ?—I have not. 92. Is the estimate of the writings-off necessary to place the bank in a safe position £771,000 —is that in accordance with the recommendations of the officers of the bank?—lt is in accordance with the recommendations of the present officers. 93. Who is the principal officer?— The President of the bank, Mr. Watson. 94. Who are the chief inspectors ? —The inspectors who have most supervision of the bank outside are Mr. Litchfield, Mr. Buller, and Mr. Dignan; there are three. These are the three inspectors for the colony. The present inspector in Australia is Mr. Parfitt. 95. Now, previously, in the change of management by boards and managers, who would make the recommendations for writings-off and put them before the directors ?—I should think the general manager. 96. And who was the general manager in 1891, 1892, and 1893—that is, immediately before they came to Parliament?— Mr. Holmes was appointed general manager in March, 1891, and he remained in charge until June, 1894. 97. We had better take the time of the balances—say, the balance-sheet of March, 1894. Who was the general manager then?— Mr. W. T. Holmes. 98. Who was manager in March, 1895 ?—Mr. Andrews was acting general manager, but he was home in London at the time, and Mr. Watson had practically charge of the bank. 99. For the year 1888, I think, you gave us Mr. Murdoch ?—Mr. D. L. Murdoch. 100. In 1889 Mr. Murray ?—For a short time, on the sth June, Mr. John Murray became general manager. 101. I want to know who is responsible as general manager for the times—commence with 31st March, 1888?— Mr. Murdoch. 102. The Chairman.] In September, 1888, was Mr. Murdoch still general manager?-—No; Mr. John Murray was appointed on the sth June. 103. Hon. Mr. Seddon.] Then, at the next balance-sheet, 31st March, 1889, who was general manager? —Mr. John Murray. 104. And September, 1889?— He was assisted by Mr. G. E. Tolhurst in March and September, 1889. 105. In March, 1890, who was manager then?— Mr. Butt was acting as general manager at that time, and Mr. Hean was investigating the affairs of the bank at the same time. 106. Mr. Butt was acting general manager then?— Yes. 107. Who was general manager in March, 1891? —Mr. Holmes took office on the 4th March, 1891. 108. He was manager at the time of this balance-sheet ? —Yes,
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109. And on the 31st March, 1892?— Mr. Holmes still. 110. In March, 1893 ?—Mr. Holmes still. 111. March, 1894?— Mr. Holmes. 112. In March, 1895, Mr. Watson, I think you say, had charge?—We sent the acting general manager to London to find out what the actual position of matters was there, and Mr. Watson took charge.
Tuesday, 28th July, 1896. Examination of William Booth, Director of the Bank of New Zealand— continued. 1. Hon. Mr. Seddon.] When you last gave evidence, Mr. Booth, I asked you to produce the statement showing the amounts respectively written off by the Bank of New Zealand in the Colonies of New Zealand, South Australia, Victoria, and New South Wales, also of Fiji. [Mr. Maslin here objected to Mr. Cooper, counsel for the bank, prompting the witness. Mr. Cooper explained.] 2. I intimated to you, Mr. Booth, that I should want these figures, showing how the £2,335,622 was distributed in the various colonies and Fiji ?—lt is quite true that you gave me that intimation at the close of the last examination, but I also understood subsequently that a formal requisition would be sent for information on that and other subjects. I inquired at the bank yesterday and to-day, and found that no intimation had been sent as to the particular information required this morning. The information is, however, being prepared, and when it is ready I shall be in a position to give it. 3. Can you say how much of the £771,774 has been written off by you and your directors, and what proportion does that bear to the amounts written off in Australia, New Zealand and Fiji ? —I am not prepared at present to answer the question. 4. The Chairman.] The information is being prepared? —It is in course of preparation. 5. Hon. Mr. Seddon.] Could you tell us in round numbers what is the highest sum written off for any person or corporation since you have been a director?—l could not give you that information from memory. .6. .Could you say whether it was £5 or £50,000; lam only asking approximately ? —I could not give you the information. 7. Would the £2,335,623, if that amount has been written off, include these accounts, and have the persons and corporations been released from all liabilities to the bank in respect of that amount written off ?—To a large extent a release has been given, but there is a very considerable sum held in suspense, and it is available for writing off. 8. Could you give us an idea of the amount held in suspense, approximately ?—I do not think I could without looking into the matter. It would not be less, I think, than £200,000. 9. Can you tell us this : Of the £771,000 which you, as director with the present directors, have written off, how much of that is held in suspense, and how much in actual release has been given ? —I should think about £500,000 of it in actual release has been given. 10. Will you give to the Committee the process in respect cf this writing-off; many of us are uninitiated, and would like to have the process described as to how it was done ? —I do not think I could give you that, Sir. 11. Have the directors any information before them upon which they act in writing off ; is it done on the application of the person ? —Reports come in from the various branches of the bank. They are dealt with by the inspectors, and subsequently by the directors, and provision is made from time to time for any bad and doubtful debts that are made from time to time. The provision to which reference is made now by your question is provision that is required for the accumulation of bad and doubtful debts which has been going on for a very considerable period, with the details of which I am not familiar. 12. I am to understand that this process of writing off commences from the reports made to the bank by the bank's officers ?—That is so. 13. Now, in respect to the £771,000, I will only ask you this question in reference to the writings-off which have taken place since you have been a director: Has the whole of the £771,000 been written off on the advice and on the reports of the inspectors of the bank ?—I think so. 14. Who would be the officers who would make such reports ?—The officer who reported to us at the time the proposals were made by the directors to the Government last year is Mr. Butt. 15. Were these reports and writings-off before the 3.lst March, 1895, or at the 31st March, 1895 ? —Almost exclusively they were up to that date —March, 1895. 16. But the actual writing-off itself did not take place until after the banking legislation ?—That is so. 17. Was it in consequence of these recommendations, and this large sum written off, that you and your co-directors approached the Government and Parliament for financial aid ? —lt was because of the necessity we found that this writing-off should be done. 18. It was on account of this that you felt yourself compelled to approach the Government and Parliament for assistance ?—That is so. 19. And that was on the 31st March, 1895 —that is your reply? —That is so. 20. Are the persons whose accounts have been written off informed at the time that this writing-off has taken place ?—No ; for the most part, they have no knowledge of it. Of course, if an account is utterly bad, and disappears altogether from the books, they know that the amount has been written off, because there is an end to their connection with the bank ; but, for the most part, the amounts are held more or less in reserve, and are used from time to time as accounts become altogether hopeless. 21. Then, from what you say, it is possible that your directors of the bank have declared a man insolvent without his knowing it ?—lt is frequently the case that the bank is obliged to; it is forced to the conclusion that the man is insolvent at the time, and it makes provision accordingly,
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and it might not deem it prudent at the time that he should know of it, for reasons which the Committee will understand. Probably the knowledge might precipitate his bankruptcy, whereas, if he were permitted time, the bankruptcy might be escaped. 22. At the same time, is not the bank in permitting a person—say it is a trading concern—is it not permitting that trading concern to go on and be upon the world in a false position ? —Not necessarily so. It is often a very difficult and dangerous conclusion to come to, as to whether a firm is inevitably and irretrievably insolvent. While there is life in it there is hope. 23. You will, perhaps, understand the question better when I say you are permitting that firm to compete against a similar trading firm whose business is conducted by honest traders?— Possibly the traders dealing with other banks would be found to be in precisely the some condition. It does not follow that they are all solvent when they are in competition with those who are insolvent. 24. Then, you support what has been said by Mr. Watson when before the House, in answer to a question—namely, that banks had to carry on insolvent concerns ?—They are sometimes obliged to do so. 25. That applies to other banks as well as the Bank of New Zealand ?—Undoubtedly. 26. Now, the balance-sheet prepared by a bank under such circumstances, with the account in suspense and not written off, would you consider and call that balance-sheet a statement of the true position of the bank ? —lf an adequate provision has been made for what the directors honestly believe to be dangerous accounts, it is undoubtedly, I think, quite legitimate. I think that, in view of the character of colonial banking, which is largely colonial business enterprise, a very much larger provision ought to be made by colonial banks for bad and doubtful debts than has been common hitherto. 27. Has the Bank of New Zealand any record filed showing the names of persons and corporations in whose favour writings-off have taken place, and the dates of such writings-off?—l have not seen any such record. 28. Would it be a very difficult matter to obtain this information ?—I am not able to say. I have not made any inquiry about that. I have not seen any of the past records of the bank at all. 29. Would a writing-off appear in the minute-book of the board of directors ? The process you describe is- this: that the directors meet, they receive the reports of the inspectors, and report on certain accounts which are bad and doubtful, or state that they are bad to a certain amount. The directors decide, as I understand by motion, that they should be written off. Is no record of that kept ? —Yes; but all these cases, unless some unusual circumstances attach to particular cases, are allowed to accumulate to the end of the year, when the balance-sheet is made up, when the whole of these matters are brought up before the directors—all the bad and doubtful debts supposed to have accumulated during the year —and they deal with them then. I can only speak of this matter from the experience of the one year, 1896, for which provision we recently made, and we satisfied ourselves that for anything that had arisen during the year while we had had charge of the bank we had made ample provision, and we also took about £49,000 out of the profits of the bank to make provision for bad and doubtful debts which had accumulated before we took office, and which were intended to be provided for by the amount held in reserve. But, as the profits of the bank were available, we preferred to leave the contingency fund undisturbed, and use the actual profits for the current year for the writing-off which had become necessary. 30. You do not mean to say that you could not give them in tabulated form—immediately before the balance-sheet—the printed list; those printed lists can be procured?— Yes; they can be. The Committee will not understand when I say they can be produced that I mean they are lists which woulcl be produced. 31. You say they can be produced, but do not commit yourself to their being produced?— That is so. 32. Did you prepare the statement for submission to the Government when you asked for assistance in the beginning of the session of 1895 ? —lt was prepared in the bank with our approval. 33. You were a party to that statement—to its submission to the Government, and in asking the assistance of Parliament ? —Yes. 34. Had the Government communicated with you in any way, or did you first approach the Government ? —We approached the Government as soon as we were in a position to say, without difficulty or doubt, what the position of the bank was. We became satisfied that the assistance of the Government was absolutely necessary, and we laid the position before the Government; and, as far as I know, that was the first knowledge the Government had of the position of the bank. 35. That would be in June last, the beginning of last session ?—That is so. 36. By ascertaining the position I understand you to mean that you found there was £771,000 that required writing off in the bank itself ?—Yes. 37. £800,000 shortage in the Estates Company ?—Yes. 38. That is taking the properties of the Estates Company at the values submitted to the Committee last year, and exclusive of that there was another estimated shortage of £800,000? —That is so. The exact amount of the Estates Company was £764,306; that was the provision we made. The aggregate amount of the bank included writings-off to the 31st March, 1896, £776,645. 39. The Chairman.] Is that answer a slight correction of the figures you gave the other day ? —Yes ; that is up to the 31st March this year. That is the final completion of the work going on for twelve months. 40. That is the amount you gave to us, the £1,531,000 the other day ?—Yes ; that is so. 41. When you say that that is the total amount written off up to the 31st March this year, you mean only since the banking legislation?— Yes. 42. Hon. Mr. Seddon.] There was a proposal for legislation, and a manner suggested for the assistance to be rendered. Do you remember a proposal coming from the bank to the Government
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and to the Committee-—a proposal submitted by the President of the bank ? Were you a party to those proposals?— The first proposal submitted—Yes. The directors were parties. I was a party to those proposals. 43. Were the directors parties to the acceptance of the final proposals?— They were. 44. Was this acceptance reduced to writing and sent to the Government with the formal approval of the directors ? —My recollection is not quite clear, but I believe we sent to the Government a formal acceptance of the final proposals. 45. A part of these proposals was the purchase of the Colonial Bank?— Yes. 46. With a view to increasing the earning-powers of the Bank of New Zealand?— Yes. 47. From whom did the proposals for the purchase of the Colonial Bank come ? Did they come from the Colonial Bank, from the Government, or were they suggested by the Bank of New Zealand itself, and when ?—I believe it is nearest the truth to say that it was the wish of the Bank of New Zealand that, if possible, arrangements should be made by which the Colonial Bank should be purchased ; I believe so. The president of the bank was very anxious that it should be done ; and we recognised that to some extent it was necessary, and, without doubt, advisable. 48. You would not be surprised, after that reply, to know that the Bank of New Zealand, as far back as 1889, had under its consideration the amalgamation with the Colonial Bank ? Have you made any inquiries into that ?—No. Apart from the additional importance of the earningpower to be got by the purchase of the bank, which could be done on reasonable lines, it was of great importance to the Bank of New Zealand that the competition of that particular bank should be removed —a competition which it was sometimes difficult to deal with. 49. Do you know whether the National Bank had ever been approached by the Bank of New Zealand for purchase or amalgamation?—l have no knowledge of it myself. 50. Did the Government, or any member of the Government, approach the bank in respect to the purchase or amalgamation of the Colonial Bank to your knowledge?— There was no suggestion of such a thing as far as I know in connection with the purchase of the bank. 51. A proposal for the purchase was contained in the Act passed in 1895? —Yes. 52., That Act was based upon the report of a Joint Committee of both Houses ?—Yes. 53. Did the Joint Committee of both Houses recommend the purchase of another bank so as to increase the earning-power of the Bank of New Zealand'?—l believe they did. 54. On the strength of the legislation that was passed giving the power to the Bank of New Zealand to purchase another bank—the bank having decided to purchase the Colonial Bank or approach the Colonial Bank with a view to purchase—will you tell us on what basis the proceedings took place to purchase?—We declined from the beginning, and emphatically, to buy the Colonial Bank. We determined that if anything was done we would buy only good business, and, in pursuance of that, we instructed the ablest officers we had to take the books of the Colonial Bank, which after some difficulty and some demur were submitted to us, and go through every account in the bank, and value the accounts and the securities —everything connected with them—and report to us. That was done; and then we as directors took their reports, and from day to day for a considerable time we went over every account ourselves and valued them, making some corrections where we thought the officers had been perhaps a little keen, but on the whole agreeing with them ; and that report we presented to the directors of the Colonial Bank, and, after a considerable amount of negotiation, our finding was embodied in the lists that were presented to Parliament. These lists disclosed the condition of the Colonial Bank at that time. 55. I understand you took the balance-sheet of the Colonial Bank as the basis ?—No ; we did not. We ignored the balance-sheet of the bank. We took the bank's books —we practically took the bank to pieces. We selected the lists as published, and took the business of the bank according to its safety and value. 56. I understand, then, from you that you took, first of all, the assets of the Colonial Bank ? —Yes. 57. That is, the whole of the assets in New Zealand and in London ?—-Yes. 58. You arrived at a conclusion as to the value of those assets ?—We did. 59. What were the total assets taken as good ?—The " A " list amounted to £926,197. 60. And the "B" and "C" lists?— The "B" list amounted to £604,695. The "C" list amounted to £98,382. These three lists make up £1,629,274. 61. Could you give the assets as per lists " B " and " C " which your bank considered good ? —■ I cannot give the names. 62. Ido not want the names. I am asking you. for the amounts ? —We took cover for the "B" list for £272,072. 63. What is the amount in the "B" list which is considered good?— According to this list given to me by you the aggregate in the lists " B " and " C " considered good is £375,772. 64. The Chairman.] Are you giving that answer from a document supplied to you by the Premier ? —Yes. 65. We want the answers, as far as you can give them, from your own knowledge ?—Well, my answer to the question would be that it is impossible to say how much of the " B " list is good, because we found it necessary to take on the amount represented—£6o4,69s—cover to the extent of £272,000. It might nearly the whole of it come out good, so that the cover would not be required; and it might be that most, if not all, the whole cover would be required. 66. Do you consider the cover you have provided amply sufficient for the losses incurred ?— We believe so. 67. You still believe that at the present time ?—Yes. I will give from no paper any answer to a question with which lam not satisfied of my own knowledge. The amount I gave from the list the Premier gave to me is the amount assumed to be good, taking off the whole of the provision. But I could not say that, because we hope a considerable amount of the cover we have taken will be available subsequently to the Colonial Bank. It may not be, but it may be.
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68. Of course, if you know that the figures on the paper which the Premier gave you are correct to your own knowledge you will reply ?—I believe they are quite correct. 69. Hon. Mr. Seddon.] I only handed them to him to refresh his memory, and they are certified to by the Auditor? —Yes. As worked out here the exact figures are given. 70. The amount to be held and dealt with as provided by the agreement is how much— "B " and "C " ?—Against the "B " and "C " lists the amount is £327,305. Perhaps I ought to say that there is a difference between the " B " and " C " lists, inasmuch as while we took over the "B" list, and took full responsibility for it after the provision was made, we took no responsibility for the "C " list. We are simply acting as agents for that, having a full guarantee on that against losses that may arise. 71. Having given us " A," " B," and " C " lists, there was another list called " D," was there there not ? —Yes. 72. Will you give us the amount of the " D " list ? —The amount of that list is £102,274. 73. What became of that ?—That is retained by the Colonial Bank, and is in the hands of the liquidators. 74. Will you explain to the Committee, who suggested and how it was that there were " A," " B," "C," and "D" lists?—l can give no information about that beyond this: that we made three lists. First, the list of the accounts that were good—that were entirely good. Next, a list of the accounts which were live accounts, but which were in a somewhat dangerous condition, and required some provision made to make them safe. And next, a list of the accounts which were not exactly in liquidation, but were practically dead as far as the bank was concerned. 75. If they were in your bank you would put them in the suspense account ? —We should put them in liquidation. 76. Now, did the Government, or any member of the Government, approach the bank, or know anything whatever regarding the placing of the accounts in the lists ?—I have no knowledge that they did, but I have reason to believe that they did not—that they had nothing to do with the arrangements that were made. 77. These arrangements were made entirely between the directors of the Colonial Bank and the directors of the purchasing bank—the Bank of New Zealand ?—I believe so. 78. Now we have had the lists, what was the amount paid by the Bank of New Zealand for the furniture and stationery of the Colonial Bank ?—£6,250. 79. With the furniture and stationery added, what were the total assets taken as good by the Bank of New Zealand from the Colonial Bank?— The total taken as good would be £2,568,190. 80. Was there anything to be added to the "B " and "C " lists—any allowance to the furniture and stationery? —An allowance is made off the furniture and stationery of £3,467 —the result of a conference with the directors. 81. And what was the amount in the " D " list ?—£102,274. 82. What was the total amount of assets as shown by the Colonial Bank's balance-sheet ?— £3,001,236. 83. What were the liabilities to the public?— The liabilities to the public were £2,509,284. 84. Will you give the Committee the particulars and details of that amount ?—The notes in circulation amounted to £107,367; bills payable and other liabilities, £457,887; deposits, £1,947,921. There are balances due to the bank which reduce that last amount by £6,972, leaving the net amount of deposits for which the bank was liable, £1,940,949. There were balances due to other banks, £3,080, and some odd shillings and pence make £1 more. That makes the total of £2,509,284. 85. In respect of the £6,972, you said that was a balance due by other banks: is not that balance the property of the bank ?—Yes. 86. Not due to other banks?— Yes. 87. Can you give us the other liabilities ?—The liabilities to shareholders on account of capital, £400,000; reserve fund, £65,000; profit and loss, £19,980; current account items, £6,972 : making a total of £491,952. Making a total of liabilities to the public and to the shareholders of £3,001,236. 88. What is the total of good assets ?—£2,568,190. 89. What were the liabilities assumed by the purchasing bank?—£2,509,284. 90. What was the amount left to credit of shareholders of the Colonial Bank? —£58,906. 91. That is exclusive of the £102,274, the accounts in the " D " list, or is it inclusive of that amount?—lt is exclusive of that amount. 92. What is the date at which this condition of affairs existed according to the balance-sheet just mentioned ?—The figures which I have given to the Committee rest upon the balance-sheet of the Colonial Bank as at the 31st August last, including the figures of its London office at the 31st May, 1895. 93. Was there a good-will paid to the Colonial Bank? —We agreed to pay £75,000 for the good-will. 94. Had you to pay cash, or what were the terms?—We paid in cash the amount for good-will, and there was a balance to the credit of the shareholders of the Colonial Bank of £58,906, making a total cash payment of £133,906. 95. What was the remainder or the reserve ?—That left us then with an amount in reserve to cover the " B " and " C " lists of £327,305. 96. Now, after giving the Committee the purchase of the Colonial Bank, what led to it, and what was paid for it, viewed by what has transpired since, and the workings of your own bank, did you make a good or a bad bargain ?—I have no hesitation in saying that all the experience we have up to the present time justifies the arrangement, and assures us that we made a good bargain for the Bank of New Zealand.
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97. Was each and every account, or the whole of these accounts, in the several lists closely scrutinised by the officers of your bank, or by the officers of the Colonial Bank ?—The accounts in the Colonial Bank ? 98. Yes?— Yes, by officers of the Bank of New Zealand. Ido not think it would be possible to examine with greater care the accounts. 99. In ascertaining the amount you required to be put on the right-hand column against the amounts in the aggregate, that was arrived at by the individual accounts being scrutinised and the amounts required to make them positively good--that was done by scrutiny by the officers of the bank ?—That is so. We went over the whole of the accounts twice, and in doubtful cases further consideration and examination was given. 100. The directors themselves, as well as the officers, went through these accounts ? —That is so; each one of the directors—that is, the whole of the directors, sitting together night after night, went carefully and patiently through the whole of these accounts, and with the officers of the bank. 101. That is, the joint directors of both banks? —No, Sir; of the Bank of New Zealand. 102. Did you meet the directors of the Colonial Bank after you had arrived at a conclusion as to the amount required to be put on the right-hand column ? —As soon as we were ready to report on the condition of the bank we did meet the directors of the Colonial Bank. 103. Did they admit the correctness of your estimates?— They refused to accept the position at all as we put it to them, and the negotiations were for a time broken off. 104. What do I understand by your saying they refused to accept the position ?—Our report to them showed the condition of the bank to be one which they would not accept as the true condition. 105. In asking for this £327,000 they considered it was unnecessary: is that it?— That is so. 106. In other words, they claimed that all their accounts should be in the " A " list?— They would have liked to have them there. 107. In these " A," " B," and " C" lists you could not by agreement compel the customers to come to the Bank of New Zealand; but, as a matter of fact, did you lose a good many of the accounts, or did a majority of the accounts come over to your bank ?—As a matter of fact, we were able to retain nearly the whole of the business of the Colonial Bank. 108. What has been your experience in working the accounts in the "B " list; have you found that your estimates put opposite the amounts have been sufficient, insufficient, or more than sufficient ?—I would not like to reply to that question with any confidence at this stage, because it has not been possible to deal with more than a few of the accounts with a view to determine their actual value; but in one or two cases—notably that of Anderson and Co., of Dunedin, which is in liquidation, and is outside the bank as an individual account —the provision we made for that would have about cleared the account only that some undesirable features have been revealed —features which were unknown to us and unknown to the authorities of the Colonial Bank, which will probably lead to the claim of some amount upon the "umbrella cover" of £272,000. With that exception, as far as we know, the provision we made has been about justified, and I think the ultimate result will be that there will be some surplus for the Colonial Bank from the umbrella cover. 109. You can claim on the aggregate amount, although on one account there may be a loss, and there may be a gain on the others ; or, claim in the final wind up under the cover?— Yes, on the umbrella cover. 110. What is the position of the bank to-day as compared with the time of the passing of the legislation—that is, your bank—is it improving its position, or is it gaining ground ?—The position of the bank is now one of, I think, complete safety, with adequate and prudent management, as compared with a position before the legislation of inevitable collapse. I do not think it was possible for the bank to continue at that time without the help we asked for. 111. What did you estimate the annual earnings of the Bank of New Zealand to be, given a fair year —last year you had only a portion of the year —but take the prospects of the year from the 31st March, 1896, to the 31st March, 1897 ?—I do not think I could answer that question beyond saying that I think the bank will have no difficulty in meeting its engagements to the Assets Realisation Board, and at the same time making a very large provision for bad and doubtful debts. I may say, further, that I see no reason why in three or four years it should not be quite easy to pay 5 per cent, dividends on the second call which is now being made on the shareholders. 112. Now, in respect to the branch business of the bank—that is, the intercolonial and Fiji business —how does your business stand in respect of Melbourne, the Victorian branch ?—I believe, myself, and I think my co-directors are in sympathy with me in saying so, that except for exchange business the Bank of New Zealand should as soon as practicable withdraw from business in Australia. We have closed the Newcastle branch ; we hope soon to close the Adelaide branch; and I think we ought to withdraw from advance business in Australia. As a matter of fact, we have gradually been working in that direction for sometime, and I believe it ought to be done. 113. I will go back to my question about the Victorian business. You have given a general answer, but I intend to ask specific questions as to Victorian, Adelaide, and New South Wales business. Regarding the position of the bank and its business in Victoria, is it satisfactory and profitable, or otherwise ? —lt is, I think, satisfactory at the present time, the business we are doing ; but the condition there indicates, I think, the prudence of what I have been saying as to the Australian business, just as much as at other places. 114. Are you doing much business there ? —Not very much. 115. Now, Adelaide. What are you doing there ?—Very little. 116 Have you made many losses in South Australia, or heavy losses ?—There have been heavy losses made in Australia in years gone by. lam not aware that we have made any losses since we took charge of the bank.
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117. Now, New South W 7 ales. What is the position of the Sydney branch ? —The business there is a fairly large one, and at present is a fairly profitable business too; but it has a great load of misfortunes to carry on its shoulders. 118. What is the nature of the misfortunes ? —Bad debts and bad investments of bygone years. 119. You told me previously that you could not say as to the writings-off of these places—as to the amounts ?—No; but in Adelaide, New South Wales, and in Victoria, as far as we are able to judge, all the bad and doubtful debts are provided for by the arrangements made in 1895. 120. The Chairman.] I think you told the Committee detailed information was in course of preparation. Can you give us an idea when that will be ready?—By to-morrow. 121. Hon. Mr. Seddon.] Now, the nature of the business in Fiji, and the volume ?—We have a fairly large and fairly profitable business in Fiji. It is not quite so good as it has been, but it is a fairly safe and profitable bank business. 122. Now, the bank took over a number of trading concerns under the arrangements made in 1895 : a portion of those trading concerns were in Australia?— Yes, that is so, Sir. We have sold the most of them though. 123. Will you state to the Committee what those concerns were?—We had left to us the Globe Timber-mills, with a branch business at Broken Hill. We have since sold the whole of that business. 124. What was its book-value, and what did it realise?—We received a good deal more than at one time we hoped, but something less than the book-value; not more, however, than is easily provided for this year. 125. What other properties had you ?—I would like to say, in reference to this Broken Hill business, for example, that we have sold it, and a good many thousands of pounds are paid on account of it; but I think, in the interests of those who have bought the property, that more information should not go to the public. With regard to another large sale, I think it would probably endanger the sale if I were to say anything about it. It is, as a matter of fact, completed, I believe; but it has got to be referred to another body, and if that other body got to know that an authoritative statement came from us here that the sale was effected they would probably repudiate it-; and therefore I will ask the Committee, in the interests of the bank, to permit me to leave the matter there. The sale is a very fortunate one for us. 126. The Committee are to understand that you are, as fast as you can, realising on these trading concerns outside New Zealand?— Yes, both outside and inside New Zealand. 127. I will keep you to outside New Zealand? —Yes, as fast as possible. 128. And so far as you have realised, and from what are now under negotiation, you have received satisfactory results ?—Yes ; we are in a very much better position with regard to them than I believe would have been possible two years ago. 129. Now, come to New Zealand. You took over from the Estates Company a number of trading concerns ?—We did. 130. Including a number of shares in companies? —Yes. 131. In respect of the trading concerns, what is their nature? —The Auckland Tramways and the Auckland Flour-mills. With regard to the others, unless the Committee press that I should give the information I think it would be unfortunate to do so, because they are worked as companies, and I think it undesirable that the intimate connection with the Bank of New Zealand with them should be shown. It may create a deal of difficulty in our dealing with them. 132. Do you mean it would be a disaster to the bank or disaster to the companies, or are both in a bad condition ?—They are in an extremely satisfactory position so far as profit-making is concerned; but as we are open to dispose of them, and they might be off our hands-within a limited period, it is extremely undesirable that particulars of them should be made public. 133. Are you alluding to the iron companies and other concerns?— Yes; I refer to trading ■concerns, some of which are now under offer, and it might result in great loss to the bank. We want to make as much out of them as we can. 134. I will not press the question so long as it is understood that they are trading concerns which the bank is now carrying on ?—Yes. 135. And on the amounts they owe to the bank you say they paid last year a fair rate of interest ? —Yes ; they were doing very well indeed. 136. How much did you make on the shares you took over ? You said you took over a large number of shares ; will you state what shares and what companies they belong to, and what you made out of them ?—I could not give the details of that information. I can only say some of the dead shares have come to life again, and have been realised to the advantage of the bank. 137. Are these in the North or in the South Island?— They are all in the South Island, the shares to which I refer. 138. Has the bank shares both in the North and South Islands ?—Yes ; shares of one kind or another we have. But the whole value of the shares stands at not more than £8,000. The whole value of the shares taken over is £8,824. 139. You say, as far as the shares are concerned, that they are not looking so bad, or are coming to life? —That is so. 140. Are there any mining companies' shares too ? —Yes. 141. You have gone into mining too, have you?— They are only what came to us. We have not been going into mining. 142. We come now to debentures. The bank also took over debentures in companies in the North and South Islands, did it not? —Yes. 143. How much did the bank make in respect of the debentures it took over last year; did you make anything or lose anything?—l do not think anything is determined in the matter of the debentures. •B—l. 6. -
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144. Did you write off anything on debentures last year ?—Yes, some provision has been made. 145. The debentures in respect of which provision had to be made by the bank in the way of writing-off have related to concerns in the North Island or in the South Island?—l do not see how it is possible to separate debentures from the trading concerns to which they belong. We have had no opportunity of dealing with debentures; they a.re practically as they were. 146. But there is a difference between the debentures of trading concerns which you are carrying on yourself and other debentures. I have separated them to show their position,—(l) Trading concerns you are carrying on yourself; (2) companies and shares held in companies; (3) debentures held by the bank in connection with trading concerns, but trading concerns not carried on by the bank : and my last question refers to these debentures ? —I am not able to give any information about them. « 147. I am not asking you to give the names of the companies?—No; I am not at present in a position to give the information you want as to the debentures. If the question is repeated I will look the matter up, and try to give the fullest information available on the subject. 148. Has the interest—you hold debentures which bear interest—has the interest to your knowledge on these debentures been paid? —Yes. 149. In every case ?—I would not say, except generally, that they had been paid in every case. I would like to have an opportunity to look into the matter, because it is difficult to separate, in connection with this question, debentures we have in connection with live accounts in the bank, and it is difficult to say how far it would be safe to go in answering the question. 150. You withdraw your answer? —If you will be good enough to ask the question on another occasion I will look into the matter and give the best answer that is possible. 151. Am I to understand, then, that you are partners as well as debenture-holders in companies ?—I would not like to attempt to define the position at a moment's notice. 152. Can you answer this question : Taking the trading concerns, shares held in companies, and other debentures for the last year, do they show a profit, and how much, if any?—l think they do; I could not say how much offhand. 153. Have complaints been made to the bank in respect of these trading concerns that the bank was injuring other traders and some of its own clients by continuing to carry these concerns on ?—I believe complaints have been made, and I believe they are entirely without justification. 154. Have you made inquiries into any of these complaints? —We have. We have made inquiries into complaints in respect to the Woolston Tannery, and in respect to flour-mills, and I am satisfied there is not any just ground for complaint in either case. 155. Have you had special reports, or general reports in connection with these trading concerns, or any of them ?—ln relation to the complaints to which you referred ? 156. No; in reference to the financial position and the bank's business ?—Yes ; we have complete reports and balance-sheets. 157. That is in respect of trading concerns. Have you any such reports in respect of companies in which the bank holds shares ? —I think we have complete reports and balance-sheets from all in which we are interested. 158. Have you as on the 31st March last any reports in reference to the companies in which you hold interest-paying debentures—prior to the 31st March last ? The Chairman : I notice that the counsel for the bank appears to be prompting the answers. Witness : No ; he is indicating only the answers that could be prepared in a satisfactory form. It is not possible to reply on the spur of the moment to a question of that kind; but we could easily prepare the information, and, if you would repeat the question, I would like to have time to answer it. With all these trading concerns it is difficult to determine at once how far it would be safe to go, and I do not feel at liberty to reply without a little deliberation. 159. Hon. Mr. Seddon.] It is a simple question requiring only a simple answer: Were there any reports on debentures in connection with trading concerns prior to the 31st March last ? —I do not know. 160. Had you any reports on these concerns since the 31st March last?—l think not. 161. You have had no reports by officers of the companies in respect of which you hold these debentures since the 31st March last ?—The only reports I know of are reports up to the 31st March, 1896.
Friday, 31st July, 1896. Examination of William Booth, Director of the Bank of New Zealand — continued. 1. The Chairman.] At the last meeting of the Committee, Mr. Booth, you undertook to produce certain returns at this meeting. Will you kindly give the Committee a list of them in the first place ? —I have got them in the order they are required, according to the schedule handed to me a few days ago. At paragraph Bof the printed paper lam required to produce a return of all expenses incurred in connection with the banking legislation prior to 1894 and since. 2. You have that ?—I have got that return here. 3. Have you No. 1 ?—Yes. 4. And No. 2?— No. 2 is practically included in No. 1. 5. We will number them as you hand them in ?—No. 3 is a statement of the amount of money paid by the Bank of New Zealand to Mr. John Murray for services in connection wuth the banking legislation of 1893, 1894, and 1895. 6. And No. 4?— That is the shareholders' committee's report of 1889.
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7. And No. 5 : Mr. Hean's report and valuations to the London board?— The only document I can give to satisfy No. 5 is the copy of a long cable message from Mr. Hean to the London board,, dated 12th May, 1890. That is the only record we have in the bank to satisfy that No. 5. 8. No. 6 : Reports of officers of the bank as to its position since the Ist January, 1888?— The note I have from the bank with reference to this is that there is nothing on record here ; but it is very probable Mr. W. T. Holmes, general manager, reported from time to time to his board in London, but we have no copies of his advice. It is probable, if we had them, that they could not be produced without disclosing the position of private accounts in the bank. 9. Hon. Mr. Seddon.] Surely they have reports in the colony from January, at the time Mr. Holmes came here, until 1890. When was the board taken to London—in 1891, was it not?— Yes. I can go no further than the note they have handed in to me; and I would remind the Committee that they point out that the report would almost certainly disclose private business of the bank, and it would be impossible to produce them. 10. The Chairman.] Your present answer is that there is nothing on record ?—That is so. 11. Now, No. 7 : Reports of the Globo assets department, and names of officers who prepared such reports? —Numbers 7, 8, and 9 I am unable to get, because of the same difficulty I mentioned before —they involve the disclosure of private accounts of the bank. 12. You decline to produce them ?—That is so. 13. No. 10 : Complete return prepared by Mr. Hanna in 1888 ?—We have not got that return referred to in No. 10. That is the answer given to me. 14. Hon. Mr. Seddon.] Will the bank have any objection, in case there is a copy in existence, to its being produced ?—I am not prepared to answer that question this morning. 15. The Chairman.] No. 11 : Statement showing in detail the landed property and bank premises referred to in subsection (a) of paragraph 11 ?—We are not able to produce that, because it refers to properties, some of which are under offer. 16. Do you mean by not being able that you decline to produce it ?—At present I think that must be the answer. 17. Why do you say "at present "?—Well, it is a matter I would like to submit, before I give a further reply, to the discretion of the directors of the bank. 18. No. 12 (b) ? —Paragraph (b) is here. 19. That is a statement showing in detail the furniture and stationery. You have got that ? —Yes. 20. The next one is (c) : Transfer of the shares of the Bank of New Zealand. Have you that? —The statement required by subsection (c) is not quite finished. If the Committee would kindly defer that it will be handed in. 21. Now (d). You have that ?—That is here. 22. And (c) ?—That is here. 23. And (/) ?—I am not able to produce any statement to satisfy that. 23a. You mean you decline to produce it ?—At present. 24. And (g) ? —They have not prepared that; they have not been able to give that to me yet. 25. It is being prepared ?—Yes. 26. And (h) ?—That is handed in. There is another paper required to complete that, referring to the time the board of the bank was in London. 27. And (i) : Statement referring to the £2,000,000 guaranteed stock?— That is not ready yet; it is being prepared. 28. Then subclause 12 ?—The whole of paragraph 12 with its subsections is a blank so far as any records in the bank are concerned. We have no documents relating to this. 29. You have nothing relating to that ?—No; nothing, 30. Have you any other information, any other documents to hand in relating to the matters included in the order of reference ?—I have brought the balance-sheet of the Estates Company and Auckland Agricultural Company to hand in. 31. Hon. Mr. Seddon.] Do you understand that there is nothing on record in the bank with regard to the visit of Messrs. Johnston and Horton to London ? —No record at all. 32. The Have you no documents referring to the deficiencies of the Bank of New Zealand Assets Estates Company to hand in ?—Not at present. 33. Have you got the information you promised to procure for the Premier with reference to the proportion of losses that occurred in the different colonies ?—Yes ; this is the return. 34. Have you now handed in all documents you have ?—Yes; all that I am at present able to produce.
Monday, 3rd August, 1896. Examination of William Booth, Director of the Bank of New Zealand— continued. 1. The Chairman.] With reference to the remainder of the statements to be supplied by you, Mr. Booth, some of them you told us on Friday were not ready. Have you got any additional ones this morning ?—Yes. 2. There is one marked (c), showing the transfers of shares of the Bank of New Zealand since Ist January, 1893. Have you that ready now? —That is here. 3. I think the next is (g), " Statement showing the details of the £148,110 set against the debt of the Auckland Agricultural Company as good assets" ?—That is not ready. 4. Then there is subclause (i), " Statement in respect of the £2,000,000 guaranteed stock"?— That is here. 5. Were there any besides the three I have named that you promised to hand in ?—I think that is all.
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6. There is 12 (a) : You gave an answer on Friday that you declined to produce these ?—We are not able to produce them at present. 7. Then there is 11 (a), " Statement showing in detail the landed property and bank premises," Ac? —These premises are practically in the position of trading concerns. Some have been sold, and some partly sold and paid for, and others are under offer, and it would be very injurious to the bank to give the details required in that item. 8. I will read the paragraph: "Statement showing in detail the ' landed property and bank premises' referred to in paragraph 25 (b) of the agreement of 18th October, 1895, with the value of each, and the price against any since sold, and the present income in respect of any remaining unsold " ?—That is the difficulty as I have stated it, Sir. That we do not see how the return could be produced without its doing a considerable amount of injury to the business of the bank. 9. Are you prepared to produce the list as it was handed by the Colonial Bank to the Bank of New Zealand at the time of the purchase ?—Without the values attached ? 10. As it was produced by the Colonial Bank to the Bank of New Zealand at the time of the -sale? —I do not think we can do that. 11. What is the Committee to understand by that answer? Do you refuse to do it?—l would not take upon myself to say in a case of this kind I would refuse to disclose that, because it is a special piece of business in connection with which the bank can be injured only as to the identical properties. It is on a different footing from that of papers of the bank which would disclose private accounts. It is like a private trading concern. Some of the properties have been sold, some.are partly paid for, and some are under offer, and to disclose the particulars required by this section would very much cripple the bank in dealing with these properties, and probably involve a considerable amount of loss. 12. Did the bank take a transfer of each property from the Colonial Bank ?—Yes ; the properties have been transferred to the Bank of New Zealand. 13. Your answer now to that question is, shortly ?—That I am not able to produce it at present for the reasons given; but if the Committee insists upon its production, Ido not think I should be at liberty to refuse. I should like to say, if I might, that it is a very painful position to place me in in connection with some of the questions. A question was asked, for instance, about the Australian business, and almost before the ink was dry an imperfect statement was cabled to Australia, and did a considerable amount of injury to the bank. 14. Hon. Mr. Seddon.] Was that as to withdrawing from the business there ?—Yes. It is very unfortunate, because the answer is sure to be misunderstood or misrepresented by interested parties •over there, to the damage of the bank. 15. I thought, myself, the way you answered that question was rather premature. 16. The Chairman.] Then, there was another question you gave the same answer to —" statement showing the recoveries in respect of the £200,000 ' contingent liability ' " ?—I shall not be able to produce that. 17. You will not be able to ?—That would disclose private accounts. 18. Then the same answer holds good to it —you decline at present ? —Yes. 19. Have you any objection to give a return or statement showing the total amount of the recoveries ?—No. 20." Are you in a position to give the total amount now ?—Not now. 21. I will ask you to be good enough to take a note, and give us the statement showing the total amount of recoveries against that ? —Yes. 22. There were others, 7, 8, and 9, " the reports of Globo Assets Department, and the names of the officers who prepared such reports ; the reports of the Estates Company, and the names of the officers who prepared such reports ; also in relation to the Bank of New Zealand Estates Company " —you decline to produce these? —Yes. 23. That is, you still adhere to your first answer, and decline to produce them at present ? —Yes. 24. Hon. Mr. Seddon.] Have you any other papers ?—Not any more. 25. Have you the papers in on the Australian business ?—Those were in on Saturday. The Committe here deliberated. On resuming, 26. The Chairman.] The Committee have taken into consideration your reply in reference to subsection (a) of clause 11, " Statement showing in detail the 'landed property and bank premises' referred to in paragraph 256 of the agreement of 18th October, 1895," —that if the Committee insist you will not feel at liberty to refuse the information. The Committee have decided to ask you to produce that statement at the next meeting of the Committee.—Yes. 27. You will remember that, in answer to subclause (/), you said you will give a statement showing the total amounts at the next meeting ?—Yes. 28. With regard to 11a, "Statement, showing in detail the 'landed property and bank premises ' referred to in paragraph (b) of the agreement of 18th October, 1895, with the value of each, and the price against any since sold, also the present income in respect of any remaining unsold." You will understand that means the value placed upon each at the date of the balance-sheet of the Colonial Bank Agreement? —Yes. 29. Hon. Mr. Seddon.] I desire to state, Mr. Chairman, to the Committee that the Committee having decided, on the casting-vote of the Chairman, to proceed with the inquiry notwithstanding that a no-confidence debate is proceeding, I do not think I am justified in going on to ask the witness any questions at present. I reserve to myself my rights, but I do not think I should be justified in going on. The responsibility of the no-confidence motion must rest with the leader of the Opposition. The questions which may be put by the Committee may be made to supply food for this no-confidence motion. Ido not wish to say anything further than this : that the responsibility lies with the Chairman and his casting-vote. He desires that the proceedings should go on, and therefore the matter must rest with him.
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30. Mr. Montgomery.] Mr. Booth, what has been the effect of the banking inquiry upon the current business of the bank ? —Distinctly unfavourable. 31. In what way ?—We have lost some business. 32. Much ? —I could not say how much. 33. Is the loss confined to New Zealand, or does it go to Australia ?—As far as it can be defined, I suppose it is confined to New Zealand—as far as it is definitely within our knowledge. Hon. Mr. Seddon moved the adjournment of the Committee. Discussion ensued. Motion negatived. 34. Mr. Montgomery (to witness).] I would ask you if the position taken up by Mr. Watson had an effect upon the business of the Bank ? —I think so. 35. What was the effect?— Favourable. 36. Do you think that the inquiry on the present basis—that is to say, the basis with the limitations which have been made by Mr. Watson—is likely to materially do the bank any harm ? —Yes. 37. You do?— Yes. 38. In what way ? Mr. Cooper : Might I interpose ? The Chairman : Counsel cannot address the Committee. Discussion ensued. Committee deliberated. On resuming, The Chairman: I have to state that the Committee cannot allow counsel to address them. Any question that counsel may desire to put must be put through the chair.
Friday, 7th August, 1896. Mr. W. G. Foster examined as to the production of documents. 1. The Chairman.] Are you prepared, Mr. Foster, to hand in the documents contained in the list forwarded to yqu ? —I am prepared to hand certain of them to the Committee at present. 2. In that case it will be as well to take them as they occur in the list, and to get your answer to each. Sub-paragraph lof paragraph 7 asks you to produce all balance-sheets submitted to the Committee in 1895 ? —I have them. My copies of the documents are those supposed by me to have been submitted to the House. The originals are in the possession, I assume, of the Treasurer. 3. Hon. Mr. Seddon.] They are not in the hands of the Treasurer. Any documents in the possession of the Treasurer will be kept by the Legislative Council.—They are not in possession of the bank or Estates Company. 4. The Chairman.] The next is " all station accounts and balance-sheets of the several stations "?—The same remarks apply as to originals. I produce copies. 5. Then come the balance-sheets submitted to the Government Auditor for adjustment of the accounts as between the Estates Company, the Assets Realisation Board, and the Government, together with all draft balance-sheets prepared for that purpose? —You have passed over the demand for the balance-sheets prepared between June and October. There are none such. 6. Have you got the balance-sheets submitted to the Government Auditor that I have just named ?—Yes; I have here a number of statements. There are no balance-sheets showing the adjustments necessary. These, I would like to point out, are original documents—office copies. They have a number of pencil memoranda (which I wish preserved), and I should like to have them returned to us. 7. " Copy of original certificates of the Government Auditor, showing adjustments as between the Government, the Assets Company, and the Realisation Board"?— Those, of course, I have not in my possession. 8. You cannot hand them in ?—No ; I assume they have been handed in to the Colonial Treasurer. 9. Hon. Mr. Seddon.] I have them, and if you wish to have them handed in I will give them to Mr. Foster ?—I wrote to the Treasury for a copy, and they said they would produce them when required, also the report of Messrs. Smith and Kember, and the rejoinder. 10. The Chairman.] Under subsection (2) you are asked for a " statement in tabular form showing the whole of the globo assets on the 17th day of August, 1895 (the date of the Joint Committee report), and detailing each property (its book-value) " ?—I hand them in in that form. lam not producing at present, without the sanction of the board, the latest valuations. The other I shall have to obtain permission for from the Assets Board, as disclosing valuations would seriously affect sales. 11. Subsection (b) —" The bank's latest ascertained value " —you cannot hand that in ?—I am not handing it in. 12. What do you say with regard to subsection (b) ?—I consider they are not in my control; they are in the control of the Assets Board, and therefore I cannot hand them in. 13. Subsection (c) —" Any valuations ascertained since the 17th August, 1895, with dates of such valuations " ? —The same remarks apply to them. 14. Subsection (d) —" All realisations since 17th August, 1895, with date and result of each " ? —Those I hand in. They are realisations of the Assets Board properties. 15. Subsection (c) —" Whether the title to each is considered good, bad, or doubtful "?—I have no document reporting upon that specially, but I understand from the solicitors that the titles are considered good. 16. The request is to state the title to each ?—I am unable to state that, but on the whole the solicitors state the titles are good. *4—l. 6.
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17. To what solicitors do you refer?— Messrs. Stafford, Treadwell, and Field. 18. Are you able to hand in a statement of " those assets referred to in ' The Bank of New Zealand and Banking Act, 1895,' as the subject of sale to the Assets Realisation Board"?— They have been handed in. 19. And " The remaining assets (retained by the Bank of New Zealand) " ?—That is also handed in. 20. " A statement showing the details of the £148,110 set against the debt of the Auckland Agricultural Company as good assets " ? —That is handed in. 21. In addition to this you are asked to produce "all other documents, papers, and writings relating to the matters respectively above mentioned or included in the order of reference " ?—There are no other documents I think you require. 22. Have you in your possession the profit and loss account of the Estates Company for the year ending March, 1896 ?—I have not it with me. I have it in the office. 23. Can you produce it ?—Yes. 24. Will you kindly produce it at the next sitting?— Subject to consideration I will produce the document. 25. Will you also see whether you can obtain the consent of the board to have "C" and " D " produced, and if the board are willing to produce them ?—Yes. Mr. O'Hara Smith examined as to the production of documents. Mr. Smith : All the statements I have have been put in before the Committee. I understood I was to be here to be examined upon my statements. 26. Hon. Mr. Seddon.] You have nothing further to add to your statements ?—No, except to be examined upon them if the Committee considers it necessary. 27. The Chairman.] You have already handed in all the statements you have ?—Yes. 28. And could only be examined on those statements ? —Yes. I presume, gentlemen, I can go away on my holiday. 29. -I think the Committee will not object under the circumstances ?—I have nothing more to say than what I have already stated.
Examination of William Booth, Director of the Bank of New Zealand, continued. [Witness handed in certain returns which had been called for.] 30. The Chairman.] The statement (g) which you were asked to produce has, I think, been handed in by Mr. Foster ?—Yes. With regard to (f) I ought to say that the total recoveries given there are in respect of the whole writings-off. 31. Does that complete the statements, as far as you have been asked for them?—-Yes, I think so. 32. Mr. Montgomery.] You recollect, Mr. Booth, that you said in your examination that the position of the Bank of New Zealand is now one of complete safety. I now ask you, would not a full knowledge of the bank's exact financial position and of its prospects tend to increase the public confidence in the institution ?—I do not see how the public can expect a fuller knowledge than they have already got. 33. I now come to the writings-off. You have said in the returns furnished, that the writingsoff amounted to 3,095,799. How much of this amount represents the debts of private persons released during the currency of their accounts ?—That I cannot say. 34. With regard to specific parts of this amount, is the reduction of the Assets Company share account included in the £3,095,799 ?—I believe so. 35. Will you return to exhibit 11 [return referred to by witness]? —Yes, that is so ; it is included. 36. So far as this amount is concerned, £764,306, it is not the writings-off of the debts of private individuals ?—Not directly. 37. Part of it is due to the fall in the value of properties, is it not ?—I should think a large part of that would be due to the fall in the value of properties. 38. Is part of it due to the heavy interest on debentures ?—No doubt the cost of floating the debentures, and the heavy interest that had to be paid, crippled the company and ultimately had a considerable effect in making the writing-off necessary. 39. Will you tell me how much the company lost through the debentures being floated at a low amount and being then subsequently bought in at £103 ? —I could not give you the exact figures without looking up the matter in the books of the bank. 40. Could you say whether there is about £300,000? —I would not like to say. I think it is not less. 41. Is not a great part of that amount due to losses on trading concerns ?—I could not say without looking up the matter to what extent the loss arises from trading concerns. 42. Do you agree with the report of the Committee of last year, that the deficiency of £400,000 is in trading concerns ? —I could not say, but the statement that was given to the Committee last year is the deficiency which arose in trading concerns and that properties outside New Zealand were responsible for a large part of it. 43. As to these losses—l am referring to the amount written off the Estates Company's shares consequent on the banking legislation—have they been incurred subsequent to the estates of private individuals being taken over by the Estates Company?—lt is impossible to say. 44. Hon. Mr. Seddon.] Do I understand that it is impossible to get it, or impossible for you to tell us ? —I could not tell you, and I cannot imagine how anybody could give you an exact answer to that question.
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45. Mr. Montgomery.] If the writings-off are included in the £3,095,799, they are some of them writings off private accounts, and I want to know how far these losses have occurred after the accounts were taken over ?—To a large extent the losses arising during the time the estates belonged to private accounts could be ascertained. 46. Could you furnish us with a return ?—No, I could not do that. 47. You can give us no estimate to show the amounts written off private accounts during the currency of those accounts —the totals in block ? —I think that could be got. I think the totals could be got from the books. 48. Would you kindly have that statement prepared for examination on a subsequent day ?— Do I understand the question to be this : You would like to know the total amount- of writings-off from private accounts—distinguishing that from the total writings-off, the balance we assume to be losses that arise apart from the private accounts ? 49. That is so ; showing part of the losses made by the bank itself—caused, for instance, by the mistake (if it was a mistake) that was made in issuing the guaranteed shares all at once, and having the money lying idle ?—I would not like to express an opinion on that point. 50. Did the money lie idle after the issue of the guaranteed shares ?—For a time some did. £1,000,000 we were obliged to keep idle for a time, because the investments that were used for that money were subject to the approval of the Colonial Treasurer for the time being; and it was impossible to invest so large a sum of money in a short time. 51. Can you say what amounts lay idle for a period of six months ?—I am not able to say that. 52. I understand you to say that a considerable amount lay idle after the money was raised for various causes ?—No doubt that was so. 53. You have said in your evidence that the sum of £1,531,951 was written off in 1896? —1895--and 1896. 54. Does that include amounts written off before the banking legislation of last year?—No; that includes only the provision that became possible, and that was used after the legislation of 1895. 55. I wish to call your attention to an apparent discrepancy in the amount. The amount the Committee reported as requiring writing off was £1,340,468, and it appears that £1,531,951 was written off. What caused the discrepancy—l am including the contingent fund ? —I am not able togive you the particulars, but the accountant or the Auditor of the bank would give them to you. There were some modifications which arose and caused the difference you refer to, but the particulars of them I am not able to give you. 56. How do you find out what amounts have been written off from year to year? —I am not able to say what is the usual custom of banks in the matter. My experience relates only to the writings-off shown in the balance-sheet of the 31st March, 1896. 57. Is there any way of discovering from the balance-sheets the provision made for bad and doubtful debts ?—I think not. 58. What about the contingency fund of £200,000 ? Is that a general cover for bad debts, or a special cover against certain debts?—A general cover. 59. A general cover for specific debts—debts a, b, c, and d ?—Yes. 60. What I mean is, could you include accounts which you had not previously included under the contingency fund?—l think not. The contingent fund is distinctly provided for debts which may arise out of past transactions in connection with accounts for which the present directors have no responsibility. 61. My point is, is the fund to provide for specific accounts a, b, c, and d, or is it for all the accounts of the bank ?—I do not think the directors have determined that point. 62. How did they estimate the contingency fund required ? —We formed our opinion by a careful valuation of a number of accounts that might or might not require provision when they came to be determined. 63. Then you might, instead of writing off the £54,000 for bad and doubtful debts out of profit and loss, have written it off from the contingency fund?—We might have done so, except as to an amount of perhaps £1,300 or £1,400, which were the bad debts determined during the year, and provision for which was not contemplated when the contingency fund was provided. 64. Did you contemplate the rest of the £54,000 as losses for which the contingency fund was provided ?—Yes; it was meant to provide for nearly the whole of what had become determined during the year. 65. Was the contingency fund meant to include those debts which you considered bad and doubtful ?—I am not able to say more, because there was no intention at the time that the contingency fund should be set aside for any particular and special cases. We, in going through the accounts, came to the conclusion that further provision would possibly —I may say probably—be necessary. 66. Did you not state before the Committee last year that you had discovered by investigations that £200,000 would be required for certain debts—to provide against them ? —I think it is very likely, as I said before, that it would be required. 67. I want to know whether that was said before the Committee last year ?—I have not a distinct recollection of making the statement, but it is likely that I did. That was, and is now, my opinion. 68. Then you said that you have written off about £30,000 from the contingency fund, and about £54,000 from the profit and loss account, when all could have come from the contingency fund. How was it that one loss was charged to the profit and loss and one to the contingency fund ?—The amount by which the contingency fund is reduced was taken at the time the final arrangements were made for writing-off as arranged last year. Practically, it was taken and is included in the writings-off of 1895 and 1896. 69. They were practically written-off at that time ? —Since that time the contingency fund has been undisturbed.
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70. Why have you left it undisturbed if it was provided for the specific purpose of writing-off bad debts ? —Because we have had the money available from the profits of the bank, and we thought it wise to use the money available and conserve the contingency fund to that extent. 71. Then, am I to understand that the contingency fund has thereby become £54,000 in a stronger position?— Practically, so far as provision is concerned, for all bad and doubtful debts it is stronger by some £50,000. 72. But you will still require, probably, the whole of it for bad debts ? —I think so. 73. Do you estimate that a large sum will be required for bad debts now during the year ?— That depends entirely upon the character of the management of the bank, and, to a large extent, upon the efficiency of the audit. 74. Can you say whether, since the report of the shareholders' Committee in 1889, amounts have been written off directors' accounts—l am not asking for any names?—l could not answer that question. 75. Do you mean to say that you could not, or that you decline? 76. The Chairman.] Do you mean that you do not know?—As far as I know it is not the case ; and if it were the case, I would not be able to give the information. 77. You have no knowledge of anything of the kind?— No. 78. Mr. Montgomery.] A word about the secret reserve fund you alluded to. Is this customary in banks ?—I believe so. 79. Does it appear in the balance-sheet ?—lt would appear only in the liabilities of the bank. 80. Would the secret reserve fund be among the liabilities ? —Yes, that would appear amongst the liabilities of the bank. 81. Would it be included in the general term " liabilities " ? —When the money is put aside the bank is liable for it when wanted. 82. What was the amount of the secret reserve fund of the Bank of New Zealand?—l have a return here that will supply the particulars. Perhaps I had better give you everything that went to make up the £1,531,951 that was used. ■83, The Chairman.] Will you be able to hand that in?— Perhaps that would be the better plan. 84. Hon. Mr. Seddon.] Read it and hand it in ?—There was capital, £900,000 ; reserve fund, £45,000 ; calls made in 1895—and here is where one of the differences of the account arose that changed the figures to which you referred ; the amount taken for writing-off included practically the call as it was paid up to the 13th July, 1896 : the amount taken was £441,206. Then there were profits accrued £7,031 lis. sd. Then there were other profits put aside in connection with accounts —old bank arrangements; a reserve supplemented by suspense accounts which made up £54,193. Then there was another reserve which in the books of the bank is called the general contingency account, which amounted at the time to £62,480 18s. Bd. There was another interest suspense account amounting to £3,720 ss. lOd. Then there was another account which had recoveries to its credit to the extent of £105 6s. 3d. Another account called the consolidated property account had to its credit £41 10s. lOd. Then in addition there was a reserve profit account which had to its credit £17,968 Bs. There was also another account called the bad debts suspense account which had to its credit £204. So that the capital and every reserve which the bank at the time had available for writing-off was £1,531,951 Is. The whole of these resources available for the purpose were appropriated as follows: Estates Company share account £441,206 —that was the exact amount of the call paid up to the date according to the arrangements made; the share-capital of the Estates Company was written-down to the extent of £323,100 : those made the total which you have had given to you before of £764,306. Then the bad debts written off from the bank were £542,316, and a further writing-off which covered the balance-sheet made up to the 31st March, 1896, of £54,193. That left the contingency fund which is now available at £171,136. That gives the exact position covering everything to the 31st March, 1896. [Exhibit A put in.] 85. Mr. Montgomery.] Have you the balance-sheet of 1896 before you?— Yes. 86. How much does the Bank of New Zealand share account appear to have been writtendown from last year ?—The whole of the capital was written off. 87. In the Bank of New Zealand Estates Company ?—I have not got the Estates Company balance-sheet.--88. You have it in the balance-sheet of 1895. How much is written-down ?-—The amount is £760,177 2s. sd. 89. In the return you handed in the sum written off the Estates Company appears as £764,386 ? —I expect the difference arises from the fact that the statement I handed in covers some money that was used beyond what is shown in the balance-sheet of 31st March, because in the statement I handed in the call that had come in up to 13th July of 1896 was used, and probably the difference is there. 90. Was the Bank Committee of last year informed of these reserves that were available for writing-off their debts ?—I do not know if the particulars were given to them—the special accounts from which they arise that I have given now to the Committee —but the gross sum, the whole amount which the bank had available, was disclosed to the Committee. 91. Then, it was disclosed to the Committee, but not disclosed in the Committee's report. The Committee did not disclose these apparently secret amounts?— No. The report to the Committee last year went to show that a certain sum was required to make further provision for losses in the bank. That sum amounted to £376,000; but that was only the balance required after the bank had used every shilling of those reserves referred to this morning. 92. And do you still say the Committee were aware of these reserves last year?—l do not know whether they were distinctly informed of what the reserves were, but they were aware that the entire resources of the bank were exhausted, and that there was still about £376,000 required.
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93. Were they made aware that such reserves existed at all ? —They were made aware of this, that after the bank had made provision to the last shilling of its available funds there remained a further deficiency to cover to the extent of about £376,000. 94. The Chairman.] But were they told that such a reserve existed and had been appropriated?-—■ lam not able to say. The bank were not able to make a claim for Government assistance for any amount until they had absorbed every source they had themselves for providing against losses. 95. Mr. Montgomery.] These interest suspense accounts —is that shown in the balance sheet?— I expect they all would be shown in the balance-sheet as liabilities. 96. Do you show them or not?—lt would be included in the heading "Deposits and other liabilities." 97. Then you are correcting your answer of a previous day. On the 22nd you said the secret reserves were obtained from suspended interest not shown in the balance-sheet ?—No, not the specific items. 98. You meant that they were included in the words " Other liabilities? " —Yes; as soon as they are put aside the bank is liable to produce them as soon as they are wanted. 99. Do you still keep a number of suspense and other accounts —bad-debt suspense accounts? Are they still in the bank?—l am not prepared to say. Practically they were all wiped out at the time. Whether they were revived Ido not know. 100. The Chairman.] All the accounts were existing, but you do not know whether anything was put to them or not ?—That is so. 101. Mr. Montgomery.] What is the interest suspense account ? —lt is interest taken on accounts that have become unsatisfactory, but meanwhile it is placed in the suspense account instead of being taken as profits made during the year and distributed. 102. You placed it in a suspense account ? —Yes; it may be required, and may not. 103. The Chairman.] Do you mean interest was received but not debited ? —The account is debited with the interest, but the condition of the account would not warrant a prudent management dividing the money and paying it away. 104. You could not divide that which you had not received ?—Yes. 105. Mr. Montgomery.] What is the value of the trading concerns owned by the bank or the Estates Company ?—I think the returns show, but I could not give you the figures. 106. Are they in the return handed in to-day?—lt is one of Mr. Foster's returns. I could not give you the figures. 107. Did Mr. Foster hand in the profit and loss account of the trading concerns?—l do not think so. 108. Is there such an account ?—He has promised to give the profit and loss account of the Estate Company. 109. Does the bank charge these trading concerns the ordinary rates of overdraft interest and discounts, or do they have special concessions? —I believe it is quite true that they do not have practically any special concessions. 110. They have none? —I believe not. 111. Can you say there is anything in Mr. Foster's account to show that interest has been made by the trading concerns from year to year? —I am not able to reply to that question. 112. Do you know if Mr. Foster's account shows the trading account every year ? —I have no doubt they show that. 113. How long do you think it will be before the trading concerns are realised?—l would like to say with regard to the concessions to trading concerns that the complaint with those managing them is all the other way. They say they are dealt with more hardly than are the ordinary accounts, and I think they are; but it is a matter of policy, and is, I think, a prudent arrangement. 114. How long will it be before the trading concerns are ultimately realised ? —I am not able to say any more than that we have sold some and have several others under offer, and that there is a reasonable prospect of quitting the whole of them within the next year or two. 115. Within the next year or two ?—I think so. 116. Can you say what is the amount of shares held in companies by the bank ? —No. 117. Does it appear in Mr. Foster's returns ?—I have not seen those returns. lam not able to say what the amount is. 118. Can you say what interest the shares pay?—l do not know what they are paying. 119. Can you say if the shares have any, and what, uncalled liability ?—The great bulk of them have no liability. There may be a liability existing upon a few, but it is not a serious amount, and for the most part the trading concerns are paying very well. 120. Are there many mining property shares?— There are not many. 121. In the balance-sheet of 1896 I presume the interest on the guaranteed capital up to date is included in the liabilities ?—Yes. 122. When were the preferred shares issued? —I believe in the early part of this year. 123. Is the interest on them up to date included in the liabilities? -I believe so. 124. The Chairman.] Do you know if that is so? Your answer, " I believe so," is not quite definite ? —I say I believe so because it is inevitable from the way in which the books are kept. 125. Mr. Montgomery.] Does the bank intend to pay £50,000 to the Assets Board? —I am not able to say what can be done, because the whole of the arrangements affecting that are in pieces at present on account of the difficulty about the adjustment of the accounts. 126. But to provide for the adjustment, the £50,000 has to be paid over to the Assets Board ? —If the accounts are accepted, as I hope they will be and think they should be, the bank will easily provide what is required. 127. They have £52,000 to do it out of?—I am not able to say exactly what the amount is, but within £300 or £400 the £50,000 is available. 128. £52.576 2s. Id. is the profit and loss account ?—Yes. •s—l. 6.
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129. In the ordinary course of things the £50,000 will be paid out of that—you are bound to do so by legislation ?—Yes. 130. On the other hand, the debentures have not been issued ?—No. 131. Therefore, the bank has not that amount of capital to finance with?— No. 132. Am I right in saying that had you been in possession of the debentures the profit and loss account would have shown an increase of profit ? —I think it would have shown some increase. 133. What increase would have been probable ?—I should not like to say, because it was not until the year was far advanced that we could expect to get possession of them. Assuming that no difficulty had arisen, I do not think the position of the bank would have been very much improved. There would have been an improvement, I believe, and some advantage to the profit and loss account, but it is impossible to say how much. 134. But for next year ? —For next year the matter is one of very great importance to the bank. 135. It will materially increase the profit ?—I think so. 136. On referring to the balance-sheet, I see there is an increase in deposits. Am I right in inferring that that is mainly through the Colonial Bank —1895-96 ? —Yes. 137. It is due also to the large increase in Government deposits?— There maybe some increase arising from that source. The Government deposits are changing from day to day. It is not easy to say at this time how the position of the bank is affected by them. 138. Do you know the amount of Government deposits in March, 1895 and 1896 ? —I have not the figures for any date except the 31st March, 1896. The Government deposits at that date were £1,311,826. 139. Will you take a note to ascertain the amount of deposits for the corresponding date for 1895?— I will do that. The Government deposits in London on the same date were £720,464. I might point out that I think you will find the average figures gazetted from time to time. These are the exact figures for the 31st March, 1896. 140. I just wanted a statement showing the increase in Government deposits during the year. Referring to the balance-sheet of 1896, the Colonial Bank landed property and premises are stated at £125,138- Were these valued at the time of the agreement for amalgamation?— The Colonial Bank properties? 141. Yes?— No. 142. They were not valued?— No. 143. You say that the directors of the Bank of New Zealand were prepared to take over the Colonial Bank properties without knowing their value?— Yes. We were prepared to take them over at book-value, because we were prepared to pay the £75,000 arranged to be paid for good-will, and because we were prepared to lose what we expected to lose on the properties —quite £30,000 — in return for the business we get. 144. In other words, the good-will, instead of being £75,000, was £110,000 ? —lt was quite that. But, besides the business of the Colonial Bank which we had selected and bought, we got a guarantee from them —two bank advances, which had become more than doubtful. We got these advances guaranteed. One was an advance of £20,000, and an advance of £5,000. The President of the bank was responsible for the advances, and we found, and were told by Mr. Larnach and Mr. McLean, that in the event of the negotiations falling through there would be nothing left of the security for us upon which these advances rested. We were prepared, rather than allow the negotiations to fall through, to pay the price ; but before agreeing to do so we stipulated that both of these advances should be guaranteed by the Colonial Bank, and we got the guarantee. 145. Is that stated in the bank agreement —the agreement laid before Parliament on the 18th October for its ratification ?—The agreement necessarily does not disclose all the details of the negotiations which resulted in the purchase of the bank. The agreement disclosed the fact that we paid a certain sum for the bank premises, and at the conclusion of the negotiations we were perfectly satisfied with the bargain we made; and we are satisfied now, and would be very glad indeed to make another one like it on behalf of the bank to-morrow. I see that the agreement does disclose, in clause 25, subsection (b), that " the landed property and bank premises appearing in such balance-sheet shall be taken at the values appearing in the said balance-sheet." 146. But there is nothing laid before Parliament that discloses the fact that the good-will was much greater than £75,000 ?—lt is disclosed in the statement that the premises were taken at their book-value. The book-value was in excess of the property-tax value, and was quite £30,000 in excess of what we believed was the selling-value. 147. Was that ever stated to the Government or to any member of the Government?—l do not know. These were strictly private negotiations between the directors of the Bank of New Zealand and the directors of the Colonial Bank. We had to buy, and make the best bargain for the Bank of New Zealand that we could, and we did that, and I believe we made a good bargain. 148. Were there any other secret agreements —that was a secret agreement, you will admit ? — No, it was no secret agreement; it was a condition as between ourselves and the Colonial Bank directors. 149. I will ask you at what do you estimate the amount of the good-will that was paid, or intended to be paid, direct and indirect?—As a matter of fact, it stood in this way: £75,000 and £35,000, less £25,000 which was guaranteed—advances which had been made to the Colonial Bank, and which had become unsafe. 150. That would be £85,000 estimated ?—£85,000. 151. Why is the Colonial Bank Good-will Account put down in the balance-sheet at £75,000? -—Because that is the amount we agreed to pay. 152. For the good-will ?—Yes. We should not have paid the book-value for these properties only that we were getting these two accounts, amounting to £25,000, guaranteed. 153. Are you aware of the sales that have since been made ?—I am aware of some of them,
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154. That a property at Lawrence valued at £2,559 has been sold for £1,009; that a property at Marton valued at £265 has been sold for £25; that a property at Normanby valued at £69 has been sold at £3; that a property at Rangiora valued at £1,390 has been sold at £1,000; that a property at Wanganui valued at £3,805 has been sold at £3,303 ; that a property at Wyndham valued at £77 has been sold at £90 ? Do you consider these sales are likely to be sample sales, or are they sales of the worst properties ? —I am not able to say. We went very carefully through the list, and I have told the Committee the conclusion we came to. ■ I think we shall get quite as much as we expected to get. 155. Have they since been valued ?—No. 156. Now, the Good-will Account. Is it intended to write this down or keep it fixed? —To write it down. 157. It has not been written down this year, has it ? —No. 158. Does the £75,000 represent the written-down Good-will Account, or the actual ?—The actual. We hope to write it down this year by at least £5,000. 159. What are the charges upon your net profits by law ?—There are, first of all, the bad and doubtful debts that have to be provided for ; then £50,000 has to be paid to the Assets Realisation Board. 160. Has not the interest on the guaranteed shares to be paid first ? —Yes ; that requires some further provision, I believe, by Parliament. The payment of the dividend is, I think, dependent upon the will of the shareholders. 161. I mean the guaranteed £2,000,000—£80,000 ?—Yes. 162. Then, the preferred shares—do they not come before the Assets Board £50,000? —The section provides, as I was giving it to the Committee. In the first place the guaranteed shares, and then the preferred shares ; after that, £50,000 per annum to the Assets Board. 163. And the dividends to shareholders? —5 per cent, may be paid on the call that is now being made with the consent of the Colonial Treasurer for the time being. 164. And the residue to the Assets Board ?—And the remainder goes to the Assets Board. 165. Coming to the Bank of New Zealand and its valuations : What valuations have been made since 1888 ?—I do not know. 166. When were the bank's buildings last valued ?—I do not know. 167. You do not know what instructions have been given to value them at any time?— No. 168. It is not within your knowledge because you have only been recently appointed ? —The matter has never come before us. 169. You cannot tell me what depreciation has been written off the different classes of property yearly ? What is the practice with regard to writing-off depreciation in bank's premises ? —I am not able to say. As far as any information goes that I have come across, the bank's premises are very good value for what they stand at in the books—probably in excess of that. 170. Now, coming to the information afforded the Government by the directors : What is the date you were appointed director?— About September, 1894. 171. Am I right in saying that you immediately began to inquire into the condition of the bank —all the directors did so at that time?— Yes, that is so. 172. Was any communication made by you, or by other directors to your knowledge, to the Government from time to time with regard to the affairs of the bank ?—I am not able to say. 173. You do not know?— No. 174. You know so far as to whether yon made any communication ? Did you make any communication to the Government from time to time ?—I made none. 175. To no Minister?— No. 176. When was the first information given to the Government with regard to the position of the bank ?—I do not remember the date. Do you mean in 1894 ? 177. There was no information given in 1894, after you were appointed a director ? —I have no knowledge. 178. What was the first information in 1895, to your knowledge?—l am not able to give you the date ; but when we were prepared to disclose the condition of the bank we did inform the Government, and arranged a meeting with Ministers; and, so far as I know, that was the first intimation they had of the urgent need the bank was in for assistance. 179. Have you any letters to produce bearing on that question ?—I have not. 180. Were there no letters written by you or by any of the directors or officers ?—I believe a letter was written, by instructions from the directors, by the President to the Government. 181. Were letters written to the Government before the Banking Committee was set up—the Banking Committee of 1895 ?—They were made acquainted with the condition of the bank. 182. Verbally, or by letter? —I do not remember to what extent they were made acquainted by letter. I do not know whether any communication went beyond a simple intimation that the affairs of the bank, and the condition of the bank, required to be reported upon to them. 183. Is this letter a copy of a letter sent to the Banking Committee by the directors, including yourself [letter of the 22nd August, 1895, handed to witness] ?—Yes, I know of this. 184. Do you know of none before that ?—I have no recollection of any before this. 185. Would you inquire whether in the bank's letter-book there are copies of letters which caused the Government to set up this inquiry, and produce all letters and memoranda sent to the Government on the subject or any member of it ? —I will make a note of that. 186. Was private information given to the Government in 1895 which was not given to the Committee ? —I have no recollection of that being done. 187. You could not say ?—I am not aware of any such thing. 188. Who would be the person who would communicate with the Government verbally?— The President is the medium of communication between the Government and the directors when there is any communication.
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189. Then you would only say " No " by hearsay ?—That is so. 190. Were you present at the interview between the Government and the bank directors?—l was present at the interview. 191. Then you know of verbal communications and consultations. Have you a diary to refer to as to the dates ?—No ; but I could find out the dates when the directors had the interview with the Government in relation to the bank's need for assistance. 192. Will you take a note of as many dates of meetings with the Government as possible prior to the Committee meeting and subsequently ?—Yes. 193. To your knowledge, have you or any other director furnished any member of the Government with any information with regard to any private accounts ?—No; not to my knowledge. 194. Are you now furnishing the Government with information for this inquiry — the directors?—l am not aware of anything of that sort. I have no knowledge of that being done. 195. Am I right in saying that the bank is entirely free from Government or official interference, and is not influenced in any way officially ?—Absolutely. There is no interference on the part of the Government with the hank. 196. Or by any Minister?—No ; and there has never been any interference. 197. With regard to the Estates Company, you are an attorney of the Estates Company ? —Yes. [At this stage the Committee adjourned.]
Saturday, Bth August, 1896. Examination of William Booth, director of the Bank of New Zealand, continued. 1. Mr. Montgomery.] You recollect, Mr. Booth, that you stated yesterday that you thought you could produce a return showing the writings-off from the private accounts as distinct from the losses of the bank. Have you got that return ? —I have got here what, I think, will show what you want. [Exhibit put in.] 2. You see the various accounts in this. Does that mean that the accounts were still current? —I cannot give you any information beyond what is in the paper there. I understand it to mean that the writings-off connected with the properties —the reduced values on each handed to the Estates Company—is in that amount, and subsequently the writings-off in 1895-96 are represented there. That leaves the writings-off from personal accounts to be the amount stated below. 3. The writings-off of personal accounts are £1,136,262 from 1888 to 1896 ?—Yes. 4. And that includes the sum of £171,136 m the Contingency Fund Account ?—Yes. 5. That may be written off, or it may not; it is not yet written off?— No. 6. Passing on to the Estates Company, you are an attorney of that company ?—Yes. 7. I do not quite understand the meaning of attorney —are there directors?— The head office of the company is in London still, and I am simply one of the attorneys representing the company here, along with the Hon. W. Johnston and the President of the Bank, Mr. Watson. 8. Do I understand that the Estates Company is. still managed from London, nominally ? — Nominally. 9. Who are the directors in London—the London board?—l do not think I can give you the names from memory. 10. Will you make a note of it ?—Yes. 11. lam correct in saying there are directors in London? —I think there are three. 12. Do they give instructions to the attorneys here ?—No, they do not interfere at all. 13. Then, what functions do the directors in London have ?—The company is still in existence as a company with all the responsibility of a company. 14. Can you tell me what part the directors take in it? Do they issue balance-sheets?— Yes ; they issue the balance-sheets after they have got supplied with information from the attorneys here. 15. Are the balance-sheets usually issued here? —No; we cannot issue them. 16. Do they issue the balance-sheets ?—Yes. 17. Are there such things as shareholders' meetings in connection with the Estates Company ?— There are only nominal meetings. There are a few nominal shareholders. . 18. The shares are all held by the Bank of New Zealand? —Practically all. 19. Is there any object in still retaining a London board ? —Not now. It is not intended to retain it. 20. Is it intended, therefore, to make the present attorneys directors here, or some persons directors here ?—Not directors, but liquidators. I cannot go into the details of the arrangements further than to say that, as soon as possible, it is the intention of the bank that the Estates Company shall be wound up. 21. The Estates Company is only in voluntary liquidation? —It is not in liquidation at present. 22. Is it to be placed in liquidation ? —Yes. 23. How is that to be done ?—I am not able to give you the process, but as the shareholders requiring to be consulted in London are only nominal shareholders, there will be no diffculty, when we are prepared to do it, in placing it in liquidation. 24. Will it be done during the next current year? —I am not able to say that; it will be done as soon as it can be. 25. Then the company as a company still exists, notwithstanding the legislation?—lt does. 26. As separate from the Bank of New Zealand, and as separate from the Assets Realisation Board?— Yes. 27. When were you first appointed attorney? —Soon after I became a director of the Bank of New Zealand.
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28. In 1894 ?—ln 1894. 29. Can you tell us in what position you found the Estates Company at the time you became an attorney ? —I do not think I can add anything to the facts that were disclosed to the Committee last year. 30. Yes, but you must remember that I was not on the Committee, and it was a secret Committee ?—But the facts to which I refer are published in this volume. 31. You mean facts so far as the figures are concerned?— Yes. 32. You found the properties were overvalued? —Yes. 33. To an extent indirectly of £1,879,000, and direct £731,000?— We found them overvalued as recorded in the different returns. 34. Did the Estates Company pay interest to the bank on its shares?—l am not able to say to what extent interest was paid on them. Ido not know. 35. It paid interest as far as it could ?—As far as it could, no doubt. 36. You could not say what interest it was earning ?—No. 37. What was the,amount of the shares held by the bank?—£l,Bso,ooo. 38. Since written down to £1,089,000 ?—Yes, £1,089,822 17s. 7d. 39. Were the earnings of the Estates Company sufficient to pay interest on the money borrowed on the security of its estates?—l cannot tell you that. 40. Are you able to give us the cost of floating the debentures and the subsequent conversion ? —I know nothing of them. 41. The redemption of the debentures took place while you were an attorney ?—Yes; and the final redemption has just been completed on the 30th June. 42. What was the date when the first £750,000 debentures were paid off?—l cannot give the date, but I can supply you with a detail from the beginning of the course we have taken in paying off the debentures of the Estates Company and the Auckland Agricultural Company's debentures. 43. You can supply the dates, and will take a note of it ?—Yes. 44. Who would be most conversant with the transactions of the debentures —Mr. Hanna?— Yes, Mr. Hanna, the late manager of the Estates Company. He was manager, I believe, at or soon after the formation of the company. 45. And he continued manager till ?—Till the early part of 1895. Mr. Cuff, the accountant, would also probably be able to give the information required. 46. How was it that Mr. Hanna was changed as manager ? —We found that Mr. Hanna was a very efficient and competent man to have charge of the books and the accounts, but that a different class of man was required as manager of a great body of landed estates, and for that reason, when an opportunity offered, we practically, I should say, retired him. He was a bank officer and was returned to the bank, and we engaged another and different class of man, who had the knowledge that was required for the efficient management of the properties —a knowledge which Mr. Hanna never claimed to have. lam alluding to Mr. Foster. 47. Have you found that Mr. Foster's management has been beneficial to the Estates Company's properties ?—I think it has helped very largely to save the position of the properties, and has been an advantage to the bank and the Estates Company to the extent of some thousands of pounds. 48. Mr. Foster is the general manager ? —Yes. 49. Does he undertake the accountant work as well?—No; of course he supervises all the work of the office, but the accounts are in charge of Mr. Cuff. 50. Is Mr. Foster the only supervising officer of stations ?—He is now. Of course, under Mr. Foster there are station-managers appointed to the different properties. 51. You have told us that you found in 1894 that the book-values were artificial values ? —We thought so. 52. Do you still continue to keep them up? Was there no writing-down until you came to Parliament ?—No ; we had no power to disturb them. 53. You had no power ?—We had no power to write them down ; we had no funds. 54. Was the London board aware of the probable value of the assets ?—I am not able to say what their knowledge was. 55. Were reports sent to the London board from time to time ?—I believe an annual report was sent by Mr. Hanna. 56. Can you produce those reports —copies ?—I think not. I expect they will be in London. lam not aware that there are any copies in the bank. You wish to know if copies of Mr. Hanna's reports can be produced ? 57. Yes. Were the reports submitted to the attorneys ? —As a matter of fact they were, prior to our taking office. From the time we took office all the arrangements connected with the Estates Company and the Auckland Agricultural Company have been in continuous movement towards the results that were fixed by the legislation of last year. 58. When were the properties last valued ?—I am not able to say. Mr. Foster, I think, would give you that information. 59. They were valued in order to place the values before Parliament in 1895 ?—They were, I believe, by Mr. Foster. I think the most reliable valuations that were placed before Parliament were those which were given by Mr. Foster last year. 60. £1,879,000 ? —I do not remember the exact figures, but they are on record. 61. I understand those were not Mr. Foster's figures. Do you know what Mr. Foster's valuation was ?—No. 62. Was the sum I have mentioned, £1,879,000, the value placed on the properties by the directors—their estimate?—No ; the directors did not meddle with the values of the properties with a view to vary them from what they found in the books—the book-values. Mr. Foster's valuation, as far as it was a separate one for which he undertook to be answerable, was given, I think, in a
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letter; and in all probability it is substantially different from this value which is given here in the Committee's report—l.-6 of last year. 63. What I want to get at is this : Who was responsible for this valuation—£l,B79,ooo ?—lt was in the books of the bank. Beyond that I cannot say, but I think either Mr. Cuff or Mr. Hanna would be the proper parties to get the particulars from. 64. I presume that Mr. Cuff would be the person best acquainted with the balance-sheet— profit-and-loss account ? —Yes ; he would be able to give all the information you want. 65. There was, as a matter of fact, a heavy loss in 1895 on the properties ?—I am not aware that there was any loss in 1895 at all different from the loss which had been accruing from year to year for some time. 66. 1895 was a bad year, was it not ? —I am afraid they had all been bad years for some time before. 67. Have you a profit-and-loss account for 1896 ?—Of the Estates Company ? 68. Yes ?—No ; Mr. Foster could produce it, I have no doubt. 69. Can you tell me the book-value of the Estates Company and the Auckland Agricultural Company ?—I have not got the papers here. 60. As far as the writings-off of the Estates Company are concerned, there are no writings-off from private accounts ?—I could not say. 71. Now, there are a few leading points in this adjustment dispute. Will you tell us the history of the sum of £54,507 which appears in the combined balance-sheet of the bank, the Estates Company, and the Auckland Agricultural Company as the amount paid in excess of Mr. Hean's valuation?—l do not think anybody here—at least, I know of nobody—who is acquainted with the history of that item. I know it was reported to the Committee last year, and was included in the £2,371,000 which was to be covered by debentures. 72. Was objection taken to the sum ?—I am not aware that objection was taken to it. 73. By the auditors ? —The special audit ? Yes, under misapprehension, I think. 74. Will you explain the misapprehension or the mistake? —It appears to have arisen through their being under the impression that the adjustment which was to be made might extend to and go behind the position as it was fixed by the Bank of New Zealand and Banking Act of last year. They do not seem to have been aware that the £54,000, however it arose, was provided for, and was set forth in the arrangement that was made last year. I think Mr. Butt, the Auditor of the bank, would be the best person to give full information about the position. 75. Will you explain shortly the misapprehension that arose with regard to the writing-down of the stock ?—The value of the stock, along with the land and other property was arranged to be covered by the debentures for £2,731,000. The value of the stock was given with the other values, and we expected and it was arranged that the value put upon the stock at that time was to be a fixed amount to be covered along with the other properties by the 3-J-per-cent. debentures. There was no change in the value of the stock affecting what was reported to the Committee and affecting the figures upon which the debentures rested. The change in the value of the stock was simply a matter of account and management arising subsequent to the adjustments made last year. 76. Did Mr. Foster write the stock down? —I think it would be better to leave the explanation of that point to Mr. Foster, who will be better able to satisfy the Committee as to the misunderstanding. 77. You, as an attorney, could tell us what positions the attorneys took up with regard to Mr. Foster's writing-down ?—As soon as it was reported to us we said at once that we did not feel able to interfere with the values which had been placed before the Committee last year, and which the Committee had provided for. 78. Did you direct Mr. Foster to write the values up accordingly?—We directed that the figures should be left as submitted to and provided for by Parliament last year. 79. Can you explain the item of £44,858 connected with station-implements suspense account, or would Mr. Butt?— Mr. Butt and Mr. Foster would be able to give you the details. I could not give you the details. 80. Is there any prospect of any adjustment being shortly agreed to ?—I hope so. 81. I presume until the adjustment is made the debentures cannot be issued?—l believe not. 82. How long would it take to get the debentures ready ?—I do not know. I should think a fortnight would be ample time. 83. You can give us information with regard to the apparently large sum for the valuations of Matamata objected to by the auditors. Can you explain the objection by the auditors? Who made the arrangement with regard to Matamata ?—lt was made in London in connection with the reconstruction of the Loan and Mercantile Agency Company. 84. What was the arrangement?—l am not able to give the details of it, further than to say that we were not pleased with the arrangement when it came to our knowledge, and on writing to London for an explanation, we were told that it was part of a concession which had become necessary owing to the fact that until the securities held by the Bank of New Zealand for the indebtedness of the Loan and Mercantile Agency Company to it were set free, the reconstruction scheme was not possible to be carried out, and that its failure would be an unfortunate thing for the bank. And we were also told that there was a further reason for making the arrangement arising from the fact that some of the securities which the bank held were not in a satisfactory position. 85. As a matter of fact, at the time the matter was brought before the parliamentary Committee, the Estates held the whole of Matamata ?—Yes; they were in possession of the whole estate at that time. Mr. Butt would be the likeliest person I know of to give you further details, if you wish to have them ; but it is not. likely that he is fully acquainted with the matter, because it was done in London, and the papers are there.
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86. Who is best acquainted with it?—l think Mr. Butt would have the best knowledge. We found it an accomplished fact, and accepted it as such. 87. Have you got the correspondence —you say you inquired?—No doubt the bank has got that correspondence. 88. Will you take a note to produce it at the next meeting? —Yes; I will take a note to see. 89. Passing on now to the Colonial Bank and the amalgamation, as far as your knowledge is concerned, can you tell me what were the first negotiations made for amalgamation since you have been a director ?—The question arose immediately after the arrangements were completed which were embodied in the Bank of New Zealand and Banking Act of 1895. 90. I want the first proposal of 1894 ?—I have no knowledge of that. I am referring to the negotiations which resulted in the purchase of the Colonial Bank. 91. Then, the first proposal on the 7th September, 1894, was made before you were a director? —I have no knowledge of that. I became a director on the 25th September. 92. You are aware of this proposed amalgamation, and the papers relating to it, of 1894. Do you say you have no knowledge of the circumstance ? —I have no knowledge, except what is known to everybody through the public Press. 93. After this first proposal, what were the negotiations which were opened again ? —The first negotiations we had anything to do with were those which arose during Parliament of last year. 94. What was the date of the beginning of the negotiations ?—I cannot give you the date. 95. Was it early in 1895? —It was during the session of 1895. 96. Were there any overtures made before the session ? —I have no recollection of overtures at that time. 97. Who was it negotiated it ?—The President of the bank was practically the mover in the matter, so far as the directors are concerned. He was the medium of communication from the directors of the Colonial Bank to us. 98. Did he communicate by direction of the directors always?— No. There were no specific instructions given to him. He brought the matter up before the board and we were very willing to negotiate as soon as they were prepared to submit any offer to us. 99. Then, were the board aware that the President was privately negotiating? You said he brought the matter up from time to time before the board. I understand that he must have been negotiating with the Colonial Bank in order to bring it up ?—He knew the Colonial Bank were willing and anxious to sell, and that we, on behalf of the Bank of New Zealand, were willing and anxious to buy ; and out of that arose the negotiations which culminated in the purchase. 100. Were the negotiations conducted by the President, or was the official instructed from time to time by the directors ? —The negotiations were conducted and taken possession of from the beginning by the directors of the Bank of New Zealand. 101. Who introduced the subject?—lt is not easy to say or define exactly how a matter of that kind can be started. It was a natural and inevitable act which arose from the fact that the directors of the Colonial Bank wanted, and had liberty, to sell, and we, on the other hand, wanted to buy. It required very little to bring us together, under these circumstances ; and, once we began to speak on the matter and open negotiations, the directors of the two banks took charge of the business. 102. Were there written negotiations—communications ?—There were no written negotiations that lam aware of. We asked at onee —when we knew they were open to treat with vs —the books of the bank, and we sent a messenger to get them ; but there were no formal writings that I am aware of between the directors of the two banks. 103. Were there any between any of the directors of one bank and the other ?—I have no knowledge of such. 104. Have any documents in connection with this amalgamation been destroyed ?—I think not. I have no knowledge of the destruction of any documents. 105. Was not at one time the amalgamation proposal off ? Did you separate ?—Yes, that is so, and a lot of notes that were made were destroyed ; but they were all renewed and rewritten when the negotiations were renewed. We took the hooks afresh, and went over the whole ground afresh. 106. Have you got those renewed notes ? —I have got no notes. lam not aware of the existence of any notes that could be of any use, because the substance is embodied in the arrangements that were made. In going through an account, for example, you make a pencil-note as to the value of the account and come to a definite conclusion, and you note that. That is all that would be available in any case, and that is embodied in the agreement and in the lists. 107. Were there not draft schemes for amalgamation ?—I do not think so. It was practically a gradual evolution arising from the examination, and discussion continued during a considerable number of weeks. There was no formal scheme, to my knowledge, ever set out. 108. No formal scheme until the actual one was brought before Parliament ?—Well, of course, the scheme that was submitted to Parliament was threshed out and fairly settled amongst ourselves, or we should not have been in a position to submit it; but I know of no definite scheme other than the one that was practically submitted to Parliament, and which was the result of the discussions and negotiations which had been carried on for some time. 109. Did not the Colonial Bank want to have everything in the "A" list at one time?— Naturally. It was because they wanted all in the "A " list and we wanted some in the "B " list that we had so much trouble in coming to a conclusion. 110. It took some time to draft this agreement ? —Yes, it did. 111. Are there not some drafts of the agreement ?—No, there are no drafts. The nearest approach to a draft outlining the scheme finally agreed upon would be some pencil-notes Mr. Macarthy has. As a matter of fact, the agreement was the gradual growth from day to day of the discussion that was going on.
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112. Who met on these discussions ?—The directors of the Bank of New Zealand, with the Auditor, and with the Acting General Manager, and the two inspectors. 113. Mr. Buller ?—Mr. Buller and Mr. Litchfield. 114. Was Mr. Buller there the whole time the accounts were being gone over? —Not the whole time when the accounts were being examined by the directors; but on several occasions, when we thought it might be useful to have him present, we had him present with the board during the examination. 115. Was he there when the accounts under letter" W " were discussed ? —I could not possibly say that; but Mr. Buller examined all the accounts, and when we wanted his assistance we got that during the discussion the board had over the accounts. Mr. Buller examined and reported, to us, and we examined every account that was submitted to us to be taken over. 116. Was Mr. Buller in favour of the amalgamation ?—I think it is quite a mistake to say that the arrangement we made was an amalgamation. It was a purchase of the live valuable business of the Colonial Bank, and I have no recollection of Mr. Buller having expressed any opinions on that point. 117. Who prepared the " A," " B," and "C," lists? —We prepared the lists; but their being called " A," " B," and " C," or " Alpha," " Beta," " Gamma," was a mere accident. 118. Were there always four lists—" A," " B," " C," and "D" ? —I do not think at one time there were more than three lists ; but there were one or two accounts in a different category from those embodied in the lists which we made—the three lists—and it was suggested, and apart from us it was arranged, that this fourth list should be made to comprise these. 119. Is that the "C " list ? Is there one or two accounts ?—I am not able to say what were the number of accounts in the list. As a matter of fact, I do not remember the number of accounts. 120. Do I understand that the negotiations came to an end on at least one occasion ?—Yes ; I think it is quite true to say that. The Colonial Bank directors, when we met them after we found ourselves able to report upon the condition of the Colonial Bank, were not willing to accept the position as we stated it. Naturally they were very much disappointed with the view we took of their business. 121. Did you have full particulars for inquiring about every account ?—We had the fullest information given to us about every account that we dealt with. There were several accounts that we declined to have anything to do with at all, and they were put outside, where the Colonial Bank could do what they liked with them. We decided, for reasons which satisfied us, to have nothing to do with them. With the exception of these accounts, we declined to have anything at all to do with them. The fullest information we could wish—everything we asked for and required was freely given to us by the Colonial Bank authorities. 122. How was it that the bank premises were not valued, and that you made no inquiries ?— The result of our inquiry into the condition of the Colonial Bank left them with nothing but the sum of £58,000 and their bank premises. The question then arose, What was a fair price to give for this business in the shape of good-will ? And, after a great deal of negotiation, it seemed reasonable to us to give what I explained to the Committee yesterday —the book-value of the premises and £75,000. 123. You explained to the Committee yesterday that part of the consideration for taking the book-value was that the bank guaranteed an advance of £20,000. You said the President was responsible practically for the advance. Now, did the President make this advance without consulting the directors ? —I do not think I can give to the Committee any information beyond what I gave in reply to a similar question yesterday. I felt bound to say so much, because the securing to us by the Colonial Bank of these advances was a material consideration which influenced us in finally coming to the agreement which was afterwards submitted to Parliament. 124. Hon. Mr. Seddon.] You have given book-value for the properties?— Yes ; we were satisfied with the bargain, and it was of no use for us to inquire into or separate the properties. We took them at their book-value, and from that time on we have been selling them for the best price we can get. 125. Mr. Montgomery.] You have not answered my question. My question was, Were the directors consulted with respect to this £20,000 advance ? —I do not think I can give any further information about that matter. 126. Did the directors approve of it ? —I am not able to say more about that; but I think the Committee should recommend that provision be made by which the directors can call upon the Auditor to report anything which they think should be disclosed to the Colonial Treasurer for the time being, so long as the bank bears the relation to the State which exists at the present time. 127. Is this a matter which should have been reported?—l do not think I should say anything further. It does not seem to me that I ought to say anything further about it. 128. Was this advance secured on the debentures of the Ward Farmers' Association ? Mr. Cooper : I have advised the witness to decline to answer that question. ilfr. Booth : I decline to answer. 129. Mr. Montgomery.] I take it that you decline to give any further information about that ? — That is so. Hon. Mr. Seddon: I object that this question does not come within the order of reference. Discussion ensued. The Chairman.] I think it cannot be put until it has been shown to be a writing-off. Witness : No, it was not a writing-off. 130. Mr. Montgomery.] Then I ask on what date that advance was made ? —I do not remember the date ; and I do not think I can give any further particulars about the matter beyond what I have already given.
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131. You have mentioned Mr. Larnach's name. What part did he take in the negotiations?— He was one of the directors of the Colonial Bank. 132. Were the Government, or any member of the Ministry, aware that negotiations were going on ? —I have no knowledge that they were, except as other people were. It was commonly known. 133. Did you have any communication with any member of the Government with regard to the negotiations ? —No. 134. Are you aware whether any of the other directors did ?—I have no knowledge of anything of the sort. 135. Do you keep a diary?— Yes, I do sometimes; not continuously. 136. Are there meetings concerning the negotiations entered in it? —I think not—not the several meetings. 137. Do you know what are the accounts in the "C " list ?—I know that there were several. 138. Was the President apparently anxious for the amalgamation ?—Yes; no doubt. 139. Did he press it on ?—Yes. 140. Were all the directors unanimous with regard to the amalgamation or purchase ?—We were quite unanimous and contented with the final agreement. 141. Did the directors, or their officers, or solicitors take any part in drawing up any of the Bank Acts passed since you have been a director ? —We had the assistance of Mr. Hosking, and to some extent of another firm—Messrs. Buckley, Stafford, and Treadwell. 142. Was the Bill submitted to the bank? —It was submitted to the bank, and discussed by the bank to a certain extent. 143. Did you inquire into the Colonial Bank balance-sheets when you were negotiating for the amalgamation ?—No ; we did not concern ourselves about that, except as to matters in it which we had no opportunity of examining, and we took a general guarantee that covered what we were not able to examine—money in transitu between the colony and London, for instance. We took a guarantee securing the bank as to undisclosed business. -144. Did you place any value upon the apparent balances shown ? —I do not think so. We took out the good business and valued it for ourselves. 145. Was the result of the investigations into the Colonial Bank accounts to show that their balance-sheets were correct or otherwise ?—I do not think we troubled at all. It was no business of ours, because of the plan that we adopted in dealing with the proposed purchase. We did not concern ourselves about them. 146. Did you not notice a discrepancy in the value of the assets as stated in the balancesheets ?—We only noticed it as everybody else might have noticed it. 147. The President, in a letter signed —to be found in 1.-6, page 15—estimated the additional earning-power of the bank under the amended proposals, and he put the net profits of another bank at, say, £30,000 a year. Can you separate the net profits derived from the Colonial Bank business from the bank's ordinary profits ?—Not at present; it is too soon yet to form an estimate of the advantage to the bank. 148. You cannot form an estimate ? —We cannot form an estimate of what has been the actual result; but we did make our own estimate of the probable result of our getting the new business which we took over. 149. From the information of the present business of the bank, will that estimate be realised— probably ?—I think the estimate we formed will be more than realised. 150. You have placed £14,000 for the London inscription business. Did you get that?— Not yet, Sir. 151. Are you going to get it ?—I am afraid not. 152. You said you do not expect to get it ?—I believe there are some legal difficulties in the way. 153. The second million has not been earning your estimate this year of 4f per cent.?— The second of the two millions guaranteed ? 154. Yes?—lt is impossible to say. 155. I find that it has invested £1,069,189 Is. Bd. in Imperial Consols, Colonial Government securities, municipal securities, and other securities. That is in the balance-sheet of 1896 ; what rate of interest would that be earning ?—I do not know; but it is not invested now in those securities. It has been changed to a much more profitable form. 156. Then, you will get increased profits next year from this source ? —Certainly. 157. Has the saving been up to your estimate—£ls,ooo? —I think it is too soon to speak definitely about that. 158. Has the bank now assets to equal its liabilities ? —lt has more. 159. I ask this question, and explain it in this way : Last session it was just about square. Is that position more favourable now ? —I think so—very much more. 160. In what way—you might explain it just roughly ?—We have not yet got the debentures we were to have. I have no doubt that in a week or two matters in dispute will be settled. We shall then get £2,731,000 of available funds, subject to the adjustment that is in dispute. 161. Is the class of business the bank is now doing a safe business ? —I think it is quite safe ; but I think to keep it safe there ought to be at least one more auditor provided, and the auditors ought to keep a continuous oversight over the accounts in every part of the country, not only reviewing the inspector's returns, but also taking note of, and keeping careful watch over, the large number of accounts that are always from a variety of causes liable to drift. Colonial banking, such as I have become acquainted with since I became a director, has not nearly the safeguards that, I think, ought to be insisted upon now that the State has become responsible for the Bank of New Zealand. You have got in the bank accounts for which the bank is liable of more than 30,000 in •6—l. 6.
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number. These will take care of themselves; but the advance accounts are more than 6,000 in number, and, seeing that many of the advance accounts are made under the stress of a competition which is often, in my opinion, dangerous, I think an extended audit, such as we have now, should be strengthened by the addition of another auditor. And I think, further, that all colonial banking companies doing business on the lines shown by what we know of their history, and by what is indicated by their balance-sheets, should make a very much larger provision for bad and doubtful debts than has commonly been the case in the past. 162. Have you any other suggestions for increasing the safety of the bank's business ? —I think, while the relationship continues that exists at present between the bank and the State, that the Colonial Treasurer for the time being should not have any interest, direct or indirect, in any advance accounts in the bank. In making that statement, I wish to say that, so far as the late Colonial Treasurer is concerned, we have nc knowledge at all of anything approaching interference of any kind from him. I think it is only fair I should say this, seeing that I am called upon to make the above statement, with the view of guarding against danger that might arise in the future; and I think it is important that, while the veto of the President is continued—l have no quarrel with it—the directors themselves should be able to call upon the Auditor of the bank to report to the Colonial Treasurer for the time being anything which they think it important and necessary that he should know in the conduct of the bank. I think that is all I have to say. 163. The President's veto: Has he ever used his power?— No. 164. Would it be an advantage if the board of directors was strengthened by an increased number of directors representing different parts of the colony ?—I do not think any change of that kind is necessary. 165. Is the Estates Company in a fair way to realisation ?—I think, if the general improvement in trade which has arisen from the increased price of grain and the development of mining continues, the properties—the most of them, at any rate the trading concerns —might be disposed of before long—say, in one or two years. We are leaving no stone unturned to secure that object. 166. Do the facts within your knowledge warrant you in saying whether the colony is likely to incur ultimate loss through the bank ?—As far as I am able to form an opinion, I think the colony need not lose a shilling, always provided the management of the bank is competent and trustworthy ; and always provided that arrangements are made for the conduct of the bank which will nob require interference with its business such as is involved by a parliamentary inquiry of this kind.
Monday, 10th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. Mr. Hutchison.] Have you ascertained the date of your election as a director, Mr. Booth ? —I think it was given to the Committee before—the 22nd September. 2. The 25th, I suggest. You were elected at the meeting of shareholders in Wellington, presided over by Mr. John Murray, after the passing of the Two-million Guarantee Act, were you not ? —It would be on the 26th September. 3. What is the remuneration of the directors of the Bank of New Zealand ?—lt was arranged at the time the directors were appointed that the remuneration would be £250. 4. Has it been changed since then ?—Yes; it was changed after two of the directors became attorneys for the Estates Company. 5. In respect of those two it was changed, was it ? —Yes, and in respect of the other two. 6. Tell us of the change ? —The appropriation for the attorneys was £1,000. 7. Each? —No, for the two. 8. You might tell us what amount was for each?—£soo each. 9. For the two attorneys other than the President, who is an attorney too ? —He had no remuneration apart from the amount paid to him as President of the bank. 10. When did that take place —the change ? —I am not able to give you the dates ? 11. The year? —It was not long after the appointment of the board of directors. 12. That was in September. Soon after that, you say the change was made ? —Yes. 13. By resolution of the directors ? —No; it was made at the time that two of the directors were appointed attorneys of the Estates Company. 14. Do you know when that was ? —I am not able to give you the date from memory. 15. Your power of attorney is dated the Bth September, 1894. Was it soon after that?— That would be, I believe, the time it was made. 16. The remuneration was then fixed at £250 per annum, and soon after the Bth November a change was made, by which two of the directors, who were attorneys of the Estates Company, received £500 per annum ?—That is so. 17. Was any change made in the remuneration of the other directors ?—The payment of the directors who had become attorneys was reduced to £150, and the £100 taken away from each was given to the remaining directors, making their payment £350 per annum. 18. What is the cumulative amount paid to those directors who are also attorneys? —£650 each. 19. And the President's salary is £2,500 ? —£2,250, I believe. I ought to mention that the deed of settlement of the bank provides that £2,500 per annum shall be set aside as payment for the directors. That is supposed to provide £500 per annum each for five directors. The arrangement was that they should take £250. 20. You have stated the arrangement at present in force ? —Yes. 21. What part of the payment to the attorneys who were directors is debited to the Estates Company ?—£l,ooo.
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22. The fifth director is in London? You have five directors besides the President? We have five directors. 23. Besides the President ?—No. 24. Four with the President ? Are all the directors here in Wellington ? —Yes. 25. Is there not one in London ? —One of them is away; Mr. Kennedy is on leave. 26. All your directors are in Wellington, or are temporarily absent ? —Yes, that is so. 27. And Mr. Johnston and Mr. Watson are co-attorneys with you for the Estates Company ? —Yes. 28. Appointed by deed ? —Yes. 29. Who are your principals ? —The following are the directors of the Estates Company : Messrs. W. Watson, W. Booth, W. W. Johnston, R. H. Glyn, J. A. Ewen, and R. J. Jeffery; but the first three director's are attorneys in the colony. 30. Of the company, besides being directors ?—Besides being directors. 31. The three last-named directors of the Estates Company are resident out of the colony? ■—Yes. 32. In London ? —I do not know where. 33. For instance, there is Mr. Glyn : He is resident in London ?—Yes. 34. And Mr. Ewen is in London ?—Yes. 35. And the third, Mr. Jeffrey ?—For anything I know he is probably in London. 36. What is their remuneration ? —I believe they have £200 a year divided amongst them. I am not sure about that, but I could get the information. 37. Now, with reference to the Estates Company :It was formed in 1890, was it not; the 22nd June, I suggest?—l do not know. 38. It was formed when you became a director, of course ? —Some years before. 39. Do you know the amount in round figures that the globo assets were valued at on the formation of the company?— No. 40. Have you heard of it as four millions and a quarter ?—No. 4.1. Which was reduced by Mr. Hean's valuation in 1889 to £3,107,933 ?—I do not know. 42. Do you know how the company was formed?— No. 43. You do not know what the capital was? —No. 44. You are aware that all the shares are held by, or in trust for, the Bank of New Zealand?— I believe that is so. 45. Do you know who the shareholders are ?—I could not give you the list. 46. It is not a long one, is it ? Being a joint-stock company, it must be more than six persons, you are aware of that ? —I do not know. 47. Do you know if any shares at all are held outside the Bank of New Zealand?—l believe there are some nominally held. 48. Outside the bank as a corporation? —It is not a matter that is within my own knowledge. 49. How were you elected a director of the Estates Company?—l was appointed from London. 50. Do you know how you were elected, or whether there was any meeting of shareholders ? —I do not know. 51. Did you ever hear of a meeting of shareholders of the Estates Company ?—I do not remember. The deed was sent out from London. 52. If your appointment was regular, it would not be by deed, but by resolution. Did you never inquire how you became a director ?—We have information that I was elected a director from London, but I do not know the particulars. 53. You could find that out ?—Yes ; I could see if it is known here. 54. And if it was at a meeting of shareholders you could ascertain, and also who proposed and seconded your election, and that of Mr. Johnston, and that of Mr. Watson?— Yes. 55. When you were elected a director of the Bank of New Zealand, was the present Auditor in office ?—The present Auditor was not at that time appointed. 56. Was the President ?—No. 57. Who presided at the meetings, if there were any, of directors before Mr. Watson was appointed President? —The President was appointed by the Government on the 12th October 58. Were there any meetings of directors at the bank before his appointment ? You were elected in September, and with the other directors then elected formed the executive of the bank, until there was an addition to your number ?—I think Mr. Johnston presided. 59. You had one or more meetings, and you think Mr. Johnston presided ; and then Mr. Watson was appointed, and took the chair as President ?—Yes ; he took office on the 12th October. 60. That was in 1894 ?—Was there any reference to amalgamation before your board in 1894 ? —No. 61. There was no reference to an amalgamation? —Not that I am aware of. 62. You attended all the meetings ? —Yes. 63. And you do not remember any reference ?—No. 64. Do you recollect the directors of the bank deciding to purchase £150,000 New Zealand Consols? —Yes. 65. When was that ? —I could not give you the date without reference to the books of the bank. 66. Was it in 1894 or 1895 ? —I could not give you the date without seeing the books. 67. You can ascertain ?—Yes. 68. The Consols were bearing interest at 3f per cent. ?—Yes. 69. Was that money directed to be taken out of the second million of the two millions guaranteed ?—I believe so. 70. In that case you had a direction of the Colonial Treasurer, which you can produce probably ? —We have the approval of the Colonial Treasurer.
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71. Of course in writing. And you can produce that, I presume ?—lf the approval was given in writing no doubt I can get it. 72. If it was a statutory approval, no doubt it was in writing. Where was the money paid over?—l am not able to say. I can find out. 73. Can you say whether it was in London or in the colony ?—Not at present. 74. Of course these Consols are still held by the bank?—l believe so. 75. And you know now, in connection with subsequent dealings, that the same money has come back to the Bank of New Zealand in the shape of deposits?—l think that is not a fact. 76. Is it not a fact that the Colonial Bank gave deposit receipts for the £150,000 repayable at intervals of three months, beginning on the 9th May, 1896 ?—The Colonial Bank? 77. Yes, which you purchased. Do you not know that ?—No, I do not know that. That would be new to me. 78. Very well; perhaps it would be interesting to inquire whether you took over that liability of the Colonial Bank in your purchase. You can ascertain whether there is any record in the Bank of New Zealand on the subject ? —I can ascertain, but I think that is entirely a mistake. 79. Were there any deposits outside the " D " list mentioned in the agreement of purchase of the Colonial Bank not taken over by the Bank of New Zealand ?—I have no knowledge of it. 80. Did you not buy the business of the Colonial Bank, except what was excluded by the " D " list?— Yes. 81. All the deposits ?—Yes. 82. Perhaps this, as you say is something new, although the item is not a small one. You will, perhaps, also find out if you did take it over? You paid the first amount of £25,000, at any rate, on the 29th May of this year, and another amount is payable on the 29th of this month ?—I can look up the matter. 83. The directors made a call of £500,000 on the shareholders of the Bank of New Zealand in December, 1894 ; do you remember that ?—Yes. 84. That was by the direction of the Colonial Treasurer, was it not ? —I believe so. 85. That direction you would have in writing; I would like you to produce it. Have you a copy of the circular calling up that half-million ?—Not here. I will get the circular. 86. Was there any correspondence between the directors and the Colonial Treasurer as to making this call of half a million ?—I have no recollection of any. 87. Will you find out about that, too ? I suggest that the circular gave as a reason for the call the necessity of paying off one-half of the one million and a half of debentures outstanding against the Estates Company. Do you recollect that ?—No, Ido not recollect that. 88. In February, 1895, you had a meeting of the shareholders of the bank here in Wellington ? —I believe I was present at the meeting. 89. Mr. Watson, as President of the bank, took the chair, did he not ? —I believe so. 90. Had the directors agreed upon the statement he was to make to the shareholders? —Yes. 91. And you heard him, I suppose, say this : " We found on making a careful examination of the bank's affairs, in which we were ably assisted by the Government Auditor, that there were losses to be provided for somewhat exceeding £300,000 " ? That was the result of your careful examination up to February, 1895 ?—lt was. 92. Did Mr. Watson go on to say to the shareholders, " We have satisfied ourselves that when this call is paid, and provided we can work on the lines laid down for ourselves, of which we have every expectation, then the earning-power of the bank will be placed beyond doubt, and no further call will be necessary." Do you remember Mr. Watson saying that ?—I believe he did say that. I believe it is on record. 93. Further, did he not state that " It is well known that a bank has to carry a load, in the Bank of New Zealand Estates Company's affairs. The assistance from the Government both by guaranteed capital and by legislation is calculated, however, to enable us to make up that deficiency " ? —Are you not mixing up the two meetings together ? 94. No ; but you can verify these ? —What is the date ? 95. I think it was the 7th February, 1895 ?—I would like to look into that. I have no recollection of the matter being as you stated it to be. . 96. These are statements made at a meeting on the 7th February, 1895. Now, with reference to the legislation of last year : What was the first overture made on the subject of further assistance to the bank by the colony ?—We asked the Government to meet us that we might lay the position of the bank before them. 97. The overture was from the bank ?—That is so. 98. What was the date of that ?—I could not give you the date without reference. 99. Have you the reference here ?—The date of the conference we asked for is the 4th August. The request to the Government would be sent in probably a few days before. 100. It would be in writing. "Sou would write to the Government? —I am not able to say whether the request was verbal or put in writing. 101. If verbal, it would be through the President ?—Yes. 102. You would be able to find whether there was a letter ? —Yes. 103. Did the directors meet the Executive?—We did. 104. On the 4th August ?—On the 4th August. 105. Had there been any communication preceding this conference with reference to assistance ?—Not that I am aware of. 106. Or with reference to the Estates Company?— No. 107. I would like you to be clear on that point. My question is, Were there any overtures whatever on the part of the bank or of the Estates Company for assistance prior to that of the 4th August, 1895 ?—I am quite clear that there was no previous application to the Government, or representation, within my knowledge.
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108. Is it not certain to be within your knowledge, as a director of the bank and an attorney of the Estates Company ? —I think so. 109. The result of the conference was that the Government proposed to set up a Committee of inquiry ?—That was the result. 109 a. When was Mr. John Murray sent for ? —I am not able to say. I was not present in Wellington when that was done. 110. Were you present at any meeting of directors when any resolution on the subject was approved or confirmed ? —No. 111. You did not know, then, that he was sent for ? —I was made aware on coming to town that he had been sent for. 112. By whom ? —By the President of the bank, after consulting with the directors who were in town. 113. It was not at a formal meeting that this was done, but in this somewhat informal way it was approved of by the directors ?—The directors in town were consulted. 114. And you were told of it when you came to town? —"Yes. 115. Did you acquiesce in it ?—No. 116. Is there any minute on the subject in the books of the bank ? —I am not aware of it. 117. Were you a party to the vote of £500 to Mr. John Murray in recognition of his services in 1894?—N0. 118. When was that vote passed? —I do not know. It has never come within my knowledge. I was not a director at that time. 119. You were a director at the time of the payment, probably ? —I have no knowledge of it. 120. Can you find out when that money was paid ?—I think it is in the return I presented to the Committee some days ago. 121. I am aware of the return, but there is no date given as to the payment ?—lt is Exhibit No. 3, which has been handed in. I can get the date. 122. Up to your appointment in September, 1894, there had been no directors of the bank in New Zealand for some years. I want you to tell the Committee who voted that sum of money to Mr. John Murray for his services in 1894 ? It would be paid in Wellington ? —I have no knowledge. 123. You can find out? —Yes. 124. Will you also find out the particulars of the amount paid in reimbursement of Mr. Murray's expenses, amounting to £531 Is. lid., which included "costly London cablegrams "1 — There will be a record of the particulars. 125. Would not the bank have copies of the "costly telegrams" sent to London and the replies sent from there, which would be included in these disbursements ?—I am not able to say. 126. You would be able to find out ?—I would be able to find out. 127. The report of the Banking Committee of last session was made public on the 20th August. I mention that date as fixing a time. In that report there was a recommendation as to the purchase of another bank ?—That was so. 128. Had that been a subject of recommendation by the directors to the Committee ?—I have no recollection of that. It was the opinion of the directors that such a purchase was very desirable if it could be brought about. 129. Then, it is probable that in your evidence, or tbe evidence of some of the directors, that point was referred to?— Yes, it is very likely. 130. Were there any negotiations or overtures at that time—that is, in August, 1895 —with any other bank?— Any other than the Colonial Bank ? 131. Any bank at all? —No, I have no recollection of any, apart from the Colonial Bank. 132. Can I take it, then, that during your period of directorship there has been no overture or negotiation for purchase with any bank except the Colonial Bank ?—I think not. 133. Now, with reference to the Colonial Bank, which I understand was present to the minds of the directors when recommending the purchase of another bank : How long before your appearance before the Committee of last session had you been in communication with the Colonial Bank ?—I have no recollection that we had made any direct communication to the Colonial Bank at that time. 134. You mean that there had been no written communication ?—I have no recollection of any. 135. Are you aware that there were communications other than in writing between the two banks before you approached the Committee ?—I have no knowledge of it. 136. What, then, was the basis of your recommendation that the Colonial Bank should be purchased ?—lt had been spoken of from time to time amongst the directors, and it was generally understood from the previous year that there was a possibility of purchasing the Colonial Bank. 137. It was a matter which had been held in view then ? —Yes. 138. And was discussed from time to time by the board of directors ?—There was very little discussion about the matter until Parliament authorised the purchase. 139. In fact, there was a prohibition at the time against such a purchase on the statute-book? —In 1894 there was. 140. But, notwithstanding, you contemplated something of the kind coming off as soon as the prohibition was removed? —Yes. 141. Did you, as a board of directors, hold any communication with the directors of the Colonial Bank on the subject ?—I believe not. 142. Did any directors of the one bank or the other communicate informally ? —I think not. 143. You personally did not ?—No. 144. Were the directors who had been appointed in September, 1894, consulted at all with reference to the appointment of the President in the following month ?—I believe not.
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145. You do not remember that they were consulted ? Did the directors make any representation to the Government as to the selection of a.President?—l have no recollection of any representation being made. 146. Then, there was no recommendation from the executive of the Bank of New Zealand as to the choice of a President ?—I have no recollection that we interfered in any way with the matter. 147. You and the other directors elected in September, 1894, would be the executive of the Dank from that date, with the addition of the President, who was appointed in the following month ?—Yes. 148. And so superseded the directors in London ?—Yes. 149. Is there any record as to any representations being made in London prior to the election of the board here as to the choice of a President ?—I have no knowledge of any. 150. Would this statement be correct: " The executive of the Bank of New Zealand itself urged and recommended that an officer should be got from the bank which was to be purchased or amalgamated, if it were possible to obtain the services of such an officer who had got the experience, to occupy the position of President, in order to insure the carrying-out of the entire proposals to their first-intended aim " ? —I have no recollection of it. 151. No knowledge?—No; no recollection of it at all. 152. On the 4th September the Act was passed by which the colony was to come to the assistance of the bank by taking £500,000 in preferential shares, and guaranteeing the globo assets to the amount of £2,734,000 in round numbers. You recollect the provisions of the third section of the Act: " (1.) Notwithstanding anything contained in the deed of settlement or in any Act or law to the contrary, the said capital of nine hundred thousand pounds, and the past and future proceeds of the said call " —that is to say, the half-million we have heard of—" shall be dealt with by the directors as follows : (a) The sum of three hundred and seventy-six thousand nine hundred pounds, part thereof, shall be forthwith applied to the writing-off in the books of the bank of a corresponding amount of assets represented by debts due to the bank, which the directors already, treat as bad and irrecoverable." You remember that provision ?—Yes. 153. And you acted ?—That, I believe, has been done. 154. Then, the next subsection, (b), deals with the sum of two hundred thousand pounds, as the contingent dependency you have also spoken of?— Yes. 155. Have you the Act before you?—lt is here. 156. I ask you to look at subsection (b), which reads: " The sum of two hundred thousand pounds, further part thereof, shall be transferred to the credit of an account which shall be opened in the books of the bank, to be called the ' Contingency Fund Account' to be available for and applicable to the writing-off in the books of the bank of a corresponding amount of existing assets of the bank which the directors may hereafter find to be bad, irrecoverable, or valueless." You had that fund provided which was to be available for further writings-off?—Yes. 157. Did you take any advice as to how you should treat the "bad, irrecoverable, or valueless " debts, which might become apparent since the Act was passed ; or did the directors act in the matter as you thought you should act, without legal advice ? In your balance-sheet of the 31st March, 1896, you have, you say, allowed £54,000 for bad, irrecoverable, or valueless debts?— Yes. 158. Do you not think that the direction of the Act was that the bad, irrecoverable, and valueless debts should be provided for out of the £200,000 until it was exhausted P —We did not read it so. 159. You have, you say, only taken about £30,000 from that sum?— Yes, about £29,000. 160. And you have written off the profits for the year ending 31st March last, £54,000? —Yes. 161. If you had taken that £54,000 in addition to the £30,000 out of the £200,000, your profits for the year would have been £54,000 more ?—About that sum. 162. And there would have been a sum to that extent correspondingly more, as provision for the interest upon the share capital that is being called up under the second half-million of reserve liability of the shareholders, and ultimate advantage to the Assets Realisation accounts ?—No. 163. How is that ?— Because we were satisfied that the provision we held was not more than we ought to have made. 164. But I am assuming that you ought to have carried the £54,000 to the debit of the £200,000, and not taken it out of the profits of the year. If you had taken that view of the matter, would there not have been so much less of the £200,000, and so much more to be carried to the credit of the shareholders' dividend account, and after that as payment to the Assets Realisation Board? —Yes; but we were not able to do that. 165. You, as directors, took it upon your own responsibility to do what you have done? It never occurred to you, I suppose, that you should have first exhausted the £200,000, and not interfered with the profits of the year ?—The £29,000 was taken from the £200,000 in connection with the arrangements made for the writings-off for 1895 and 1896, according to the provisions of the Act of last year. 166. The directions in the Act are just what I am asking your attention to. Will you read this subclause again : " (b) The sum of two hundred thousand pounds, further part thereof, shall be transferred to the credit of an account which shall be opened in the books of the bank, to be called the ' Contingency Fund Account,' to be available for and applicable to the writing-off in the books of the bank of a corresponding amount of existing assets of the bank which the directors may hereafter find to be bad, irrecoverable, or valueless"? —Our reading of the Act, and of the position, is that we were not at liberty to pay anything away as profits of the bank until we had made ample provision for possible had and doubtful debts. 167. Very well, but possibly the view I have pointed to never presented itself to the directors ? The capital was £900,000 ?—Yes.
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168. That was directed by the Act to be written off ?— Yes. 169. As also the proceeds of the first half-million call?— Yes. 170. The proceeds of that call, according to the return you gave us, amounted to £441,206? — Yes. 171. Is there any addition to be made to that sum from payments received since the return was made up? — Some small sums are continually coming in in further payment of the call that was made. 172. Supposing we take it for the present at £441,206, these two amounts together make £1,341,206, out of which the bank was to take the £376,900 mentioned in subsection (a), and the £200,000 mentioned in subsection (b), as against bad, irrecoverable, or valueless assets? —Yes. 173. These two sums so to be deducted from the £1,341,206 amount to £576,900, and leave a balance of £764,306 ?—Yes. 174. And that was to be dealt with as directed by the following clause (c) of the Act, which requires that "the balance shall be applied to the writing-off in the books of the bank of a corresponding amount from the nominal value of the shares of which the bank is the owner in the capital of the Estates Company "? —Yes. 175. That amount was £I,Bso,ooo?—Yes. 176. Has the £764,306 been taken off that amount ?—Yes. 177. Leaving £1,085,694 as the nominal interest of the bank in the Estates Company ?—One of the returns handed in at the last sitting showed the balance. 178. Has the bank as against that balance the globo assets not transferred to the Realisation Board, as represented by the list of properties retained by the Estates Company for the bank ? —I cannot give you the particulars. There is a great variety of properties. 179. The residue of the globo assets after those which have been transferred to the Assets Realisation Board ? —I can only take the total. 180. Which represents a value of £1,294,456? Is that the position?—-Mr. Watson is more familiar with the details, if you will allow him to assist me in verifying the particulars. 181. The general answer is all I expect from you, Mr. Booth ?—I can only say that the Auditor of the bank must be applied to for the particulars required to answer that question. 182. Are these assets against the reduced amount so standing in the books of the bank as representing the shares of the Estates Company in terms of section 3 of the Act ?—I could not answer that question. 183. Is £1,294,456 the estimated value of the globo assets retained by the bank ?—lt seems to be so. 184. You need not trouble yourself further on that point. Now, the Act which was passed on the 4th September last removes the embargo against purchase or amalgamation ?—Yes, that is so. 185. How soon after the 4th September was it that negotiations were resumed between the two banks ? —lt was soon after, but I am not able to give the exact date. 186. What shape did the communications take ?—We were informed by the Colonial Bank directors that they were willing to negotiate for the sale of the bank. 187. Was that the first intimation—l mean the first overture —and did it come from the Colonial Bank? —We understood that to be the case. 188. That would be in writing?—l think not. I think it was made by the President of the bank. 189. Then, he was in communication, very soon after the Act was passed, with some one on behalf of the Colonial Bank ? —Yes ; it was understood also that we were anxious to make the purchase if found to be possible and advantageous. 190. Before the Committee there was no secret that the Colonial Bank was the one to be purchased if possible?—lt was no secret. 191. It was assumed »all through that once the embargo was removed the negotiations of 1894 would be revived ?—Yes, we understood so. 192. And you think that overture in 1895 from the Colonial Bank was not in writing?—l think not. 193. Is the reply of the board in writing ? —I think not. 194. Was there any communication whatever in writing between the two banks before the agreement of the 18th October, 1895 ?—I think not. 195. Will you inquire, and produce copies, if possible ?—Yes. 196. When did you first draw up the draft agreement ?—I cannot give you the date. 197. In the month of September or October—it must have been one or the other ? Which bank drew up the draft agreement ?—I think both banks drew it up. 198. Do you mean that it was done at a conference ? —lt was the result of discussion and examination continued at various times. It grew up by degrees during the progress of negotiations. 199. At conferences between the directors of each bank ? —Yes. 200. But some one had drew up a draft agreement ?—When we had come to an agreement as to the substantial and important features of the business we had legal assistance to put the matter in form, and the form that was arranged is the form in which it was presented to the Legislature afterwards. 201. The 18th October is the date of the agreement presented to the Legislature : Do you mean that there was no draft agreement made before that —no draft agreement presented by one bank to the other? —I do not think so —nothing that would approach the form of a complete agreement. 202. A clerk did not engross the agreement from dictation, I presume. The agreement of the
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18th October was surely engrossed from some draft ?—We took counsel with our legal adviser as soon as we were prepared to state the terms upon which the business of the Colonial Bank could be bought by us, and the result of the conference with him was the production of the agreement submitted to Parliament embodying the arrangement we were prepared to make with the Colonial Bank. 203. The solicitor had not the agreement ready before you told him ?—-No. 204. Did you not instruct some document to be drafted ? —Yes. 205. Who did you instruct?— Mr. Button was our adviser in that matter. 206. He drew up an agreement, which you approved of as directors of the Bank of New Zealand?— That is so. 207. And you sent it to the directors of the Colonial Bank for their approval ? —I think they were as much parties to it after we had come to an understanding as we were. I assume that Mr. Button would be the medium of communication with them. 208. Ido not know if there is much good in making a mystery of this, Mr. Booth. It is not usual to have a draft first ?—I am not making the least mystery about the matter. lam simply endeavouring to give the Committee, as clearly as I can, the way in which the agreement came to be made. There was no draft agreement made by either of the banks to my knowledge. We discussed the position during a number of weeks ; we came to an agreement as to what we would do, and we obtained from them the final result as to what they would concede. We then called in the assistance of Mr. Button, who was instructed fully as to the position, and the arrangement the two banks were prepared to make, and the result was the making of an agreement which satisfied us, and which, I believe, when submitted to the Colonial Bank directors, satisfied them, and which was afterwards submitted to Parliament. 209. Now, we have got it that an agreement was drawn up by the solicitor of the Bank of New Zealand and submitted to the directors of the Colonial Bank, is that not so ?—I assume that he submitted it to them; I have no knowledge. 210. Did you see that draft agreement ? —Yes, I saw it. 211: Have you seen the draft since the agreement has been formally drawn up?—l have no distinct recollection of seeing the draft agreement; but the agreement, when I did see it, satisfied me as one of the directors that our instructions had been carried out, and that the position we had taken up was embodied in and secured by the agreement. I was satisfied of that. 212. Possibly you can inquire as to this draft agreement and see whether you can produce it? —I will make inquiries. 213. You know the procedure is that a draft is sent from one side to another, and is returned to the side sending it. You will inquire as to whether this draft is in existence, and whether you can produce it ? —Yes. 214. As to the final agreement signed by you and two other directors of the Bank of New Zealand and three directors of the Colonial Bank, how many original copies were there ?—I do not know. 215. How many did you sign ?—I do not remember whether we signed more than one. 216. You can find that out, too?— Yes. 217. There Was certain to be one. Were the lists " A," " B," " C," and "D " attached to the one you remember signing ? —I believe they were. 218. The Chairman.] The "D " list as well?— Yes. 219. Mr. Hutchison.] And you believe all four lists were attached to the original agreement? —I am not able to say whether they were attached to the agreement. 220. You have just said you believed they were ? —Yes, I think they were. I am quite clear that we knew what they were. 221. With reference to the basis of that agreement arrived at on the 18th October—at any rate, signed on that date —how near before the 18th October was it that all the details were ar ranged ; weeks or days ?—Only a few days. « 222. As you have told us, for the purpose of arriving at a basis for purchase, you took the Colonial Bank to pieces ? —Yes. 223. But you had some statement from them, I suppose? —We had the bank's books. 224. Had you not also a balance-sheet ?—Yes ; we had the balance-sheet. 225. Made up to the 31st August, 1895 ?—I think the latest balance-sheet was of that date. 226. And you took that to pieces, you say ? You saw the balance-sheet ? —We had. seen it. 227. And you know, of course, as a matter of fact, that the " A," "B," " C," and " D " lists totalled exactly the last item in the balance-sheet—namely, that against "Bills discounted, and all other debts due to the bank"? I ask you to look at that balance-sheet. Let us run through the "A " " B," " C," and "D " lists. Mr. Watson has given Parliament a memorandum on the subject. The "A" list is £926,197; "B," £604,695; " C," £98,382; " D," £102,274: total, £1,732,548; which, leaving out shillings and pence, is the amount of the last item on the credit side of that balance-sheet ?—Yes. 228. You had that balance-sheet before you?—No; we had the balance-sheet in our possession. 229. It was available for you?— Yes, that is so. 230. The "A" list amounted to £926,197; what did that represent—it is a gross sum?—lt was the total sum of the accounts placed in that list. 231. We have it also from Mr. Watson that the amount you paid to the Colonial Bank was £133,906?—Ye5. 232. Did that include the amount for landed properties and bank premises : £125,399 ?—lt is not possible to put it so. It did and it did not. That amount of £133,906 is made up of £75,000 for good-will and a balance remaining due to the Colonial Bank after we had completed the arrangement, which included the payment of the book-value for the properties.
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233. Well, is this sum of £133,906 the total amount you have paid to the Colonial Bank?— Yes, that is so. ' . 234. Now, if we take the good-will off the sum paid, it leaves £58,906? —Yes. ,235. Is that the amount represented in the consideration-money as representing the assets in the " A " list after deducting its liabilities?— Yes. 236. You took cover in respect of " B " and " C " lists together ?—Yes. 237. And the " D" list you discarded ?—Yes. ' 238. Would it not follow from the " D " list being discarded, and from cover being taken for the " B " and " G " lists, that the £58,906 is referable to the "A" list ?—The Committee has a statement which shows exactly how the accounts were arranged. Yon will get full particulars there.- - ?ad c i - ,'•: •'.• \ 239. Well, now as to "B " and "C" lists, amounting together to £703,077, you took cover against them to the extent of £375,772 ?—Yes. 240. Leaving as probably doubtful in these lists, £327,305 ?—Yes. 241. You told us that, in respect of that cover, you allocated £272,072 to the "B" list?—■ Yes. 242. That left £55,233 of cover. Is that amount standing in the right-hand column of the "C" list?— Yes. 243. And the amount in the other column of that list is £98,382 ? —Yes. 244. When did this contract of amalgamation or purchase take effect ?—I believe the date is the 18th November. , 245. How do you fix that date ?—lt was embodied in the agreement; but Ido not remember the date exactly. 246. Have you got the agreement before you? Is there any reference in the document as to when it should take effect ? —I am not able to give you the date; but it was to take effect on the second Monday after the agreement was approved of by the shareholders of the Colonial Bank. 247. You are thinking of the transfer of the business. When was the contract of purchase to take effect ? —I have no knowlege of the date except that indicated under section 8. 248. Under that section you see the Colonial Bank indemnifies the Bank of New Zealand in respect of the accounts in the "C " list. It does not indemnify the bank as to any loss over the cover in the "B" list?—No; because in the "B" list we take full responsibility with the provision of £272,072. With the "C " list we took no responsibility. 249. While in respect of the " C " list the Colonial Bank indemnified you, in respect of the " B " list you took cover for what you thought sufficient—£272,o72 ?—Yes. 250. Will you look at the proviso in the 18th clause, " Provided the purchasing bank shall, immediately on the contract taking effect, write off the amounts standing in the right-hand column of the " C " list and credit the respective accounts in such list with the amounts so written off." Did you do that ?—Yes ; I believe that was done. We had no responsibility in the matter, and were quite willing to make any arrangement about the account the Colonial Bank wished to have. 251. Can you tell us the date when that was done ?—No, I cannot. 252. Would it not be either at the end of October or the beginning of November ?—I do not remember. 253. The result then would be that you wrote off the £55,233 from the £98,382 ?—I have no knowledge that there was any writing-off. 254. I would remind you that, in answer to the question put to you, you stated that what the 18th clause provided to be done was done. I now repeat: Did the Bank of New Zealand, on this contract taking effect, write off the sum which appeared in the right-hand column of the " C" list from the sum which we know was in the other column ? —As far as I know the sum arranged to be part of the cover of those accounts in that class was written to the credit side of the accounts. 255. Did the Bank of New Zealand, on this contract taking effect, write off the sum which appeared in the right-hand column from the amount which we know was in the other column of that list —which you have told us was in the other column of that list ?—lt was not in the power of the Bank of New Zealand to write off anything. Mr. Montgomery : I protest against Mr. Cooper interfering with the witness. Mr. Cooper. I claim the right to advise the witness on this question. The Chairman : Mr, Cooper, as far as I could see, was privately advising the witness as to the answers he should give. Witness : I should like to say that, so far as I am able, and so far as is consistent with the stand we originally took up with reference to the confidential relations of clients with the bank, lam willing to give information to the Committee, and whatever suggestions may come from other directors present they will not interfere with the integrity of the evidence I give. Whatever may be the wording of that clause with reference to the " C " list, we did not recognise any obligation to write off anything in that list. We had no responsibility in connection with the "C " list, and a cover was arranged with the Colonial Bank that it should be written to the credit of the accounts in the "C " list. We have not written anything off. 256. Mr. Hutchison.] You have the agreement before you ?—Yes ; it is here. 257. Look at clause 18 1 should like Mr. Cooper not to communicate with Mr. Booth. Mr. Cooper : I shall do so unless I am absolutely stopped. The question now being put is in reference to a legal document, and, I say, he is entitled to legal assistance in framing his answer in reference to that clause. 258. Mr. Hutchison (to witness).] You have the contract before you. The first part of the first sentence of the 18th clause has reference to the guarantee of the Colonial Bank to the Bank of New Zealand of the accounts in the "C " list. That you see? —Yes. *7—l. 6.
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259. Then read on, and you will see that it provides that " the purchasing bank " —that is, the Bank of New Zealand—" shall, immediately on the contract taking effect " —and it took effect, did it not ?—Yes. 260. "Write off the amount standing in the right-hand column of the 'C list." Do you follow that ?—Yes. 261. Well, the amount in the right-hand column of the " C " list was £55,233 ?—Yes. 262. That was to be carried to the credit of the amount in such list, which we have ascertained was £98,382 ?—Yes. 263. Which was to be credited " with the amounts so written off"—you see these words?— Yes. 264. They are plain English ? —Yes. We understood that they were not to be written off as paid, but to be written to the credit of the account. 265. Then, you credited the £98,382 with the £55,233 ?—We did. 266. Leaving £43,149?—Ye5. 267. And that is how the " C " list stood immediately after the contract took effect ?—Yes. 268. That list was guaranteed to you by the Colonial Bank ?—lt was guaranteed to us as it stood in the books. 269. And in that respect it was different from the " B " list ?—lt was different from the " B " list, as we did not take the " C " account at all except as agents. 270. You took your own security in the shape of cover, and for any loss over that cover of £55,233 the Colonial Bank was responsible to the Bank of New Zealand?— That is so. 271. Mr. Seddon.] Did you state distinctly whether the Bank of New Zealand never took over the "C " list ?—We never took it into the bank. We made an engagement to work it as agents for the Colonial Bank for three months, and then we were to say whether we would take it or not. One day within the three months we informed the liquidators that we would not take any account in the " C" list. 272. Mr. Hutchison.] Then, the position is this: that you took the guarantee of the Colonial Bank for the " C " list, and you were content with £272,072 in respect of cover for the " B " list ?—Yes. 273. The "B " list amounted to £604,695, so that any loss over and above the £272,072 taken as cover for the accounts in the " B " list would be the loss of the Bank of New Zealand ?—That is so. 274. Now, when this contract took effect, and the sum in the right-hand column of the " C " list was, as you said, credited to the accounts in the same list, that transaction did not include provision for bills in transitu ? —ln reference to the " C " list ? 275. You might look at clause 25, subclause (d) of the agreement ?—Yes; there was nothing in the " C " list that I have any knowledge of that would be affected by that clause, subsection (d) of clause 25. 276. I ask you to look again at the clause 25, subclause (d) ; what is "the balance-sheet" referred to there ? —The Colonial Bank balance-sheet. 277. Then you had it before you. Have you it before you now in print?— Yes. 278. What are the items in the balance-sheet shown as in transitu ? —£548,762 4s. 4d. 279. I suppose there were bills m transitu which came in afterwards to be dealt with by the Bank of New Zealand?—l expect so. 280. But you say there was no bill, nor any bills, afterwards debited to the "C" list? —It is quite outside my knowledge of the business—all this variety of details. 281. You say the " C " list is a special list ?—I have no knowledge of anything arising from that arrangement having any connection with the " C " list. 282. I ask you to ascertain whether or not there was any bill or bills in transitu at the date of this contract which were afterwards debited to the " C " list ?—I will do so. 283. Among the reports which were submitted to you, were there any by the Colonial Bank inspectors as to the accounts you were going to take over ?—We had as far as we required the assistance of the inspector of the Colonial Bank, but we relied upon our own examination as to the accounts, and upon that of our own officers. 284. Had you any reports from the inspectors of the Colonial Bank submitted to you?— We had in the books of the Colonial Bank what amounted to a complete report from the inspectors of the bank. 285. I ask you whether you had any reports from the inspectors of the Colonial Bank submitted to you?—l think not, except so far as we found it necessary to ask for them with a view to get information which was not in the books of the bank which we were examining. 286. The Chairman.] Did you ask for any reports ?—Yes, we asked for and obtained at all times the information we wanted. 287. Mr, Hutchison.] Did you ask for any reports in respect to the "C" list?—We had no need for any report on the " C " list. 288. I ask you if you asked for any such report ? —The information we had about the accounts in the " C " list rendered it quite unnecessary for us to ask for any information from the inspectors of the Colonial Bank. 289. That is not an answer. Did you ask for any information with respect to the accounts in the "C" list?—l have no recollection that we asked for information with respect to those accounts but what was supplied to us. 290. Was the report of any inspector supplied to you inreference to the accounts in the " C " list ? —Yes. We had information supplied to us. 291. Was it in the shape of a report ?—No. 292. Verbally?—lt was written in the books of the bank; and it was verbal information supplied to us.
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293. By whom was the verbal information supplied ? —I believe it was verbal information we had. Ido not think I remember the origin of the information. It came to me after it had been communicated to the other directors. lam not able to say. Mr. Johnston and Mr. Macarthy had some verbal information which they communicated to me. 294. Was that all the information you had in reference to the " C " list —that which you heard from Mr. Johnston and Mr. Macarthy ? —No. We had a good deal of information in the books of the bank itself. 295. I am speaking now of oral information?— There was no special communication about the accounts except what came to me from Mr. Johnston and Mr. Macarthy. 296. You have differentiated the question again. I asked as to special information. I ask you whether you had any information other than that you got from your co-directors with reference to the accounts in the "C " list ? —No ; I had not. 297. Did the communications to you extend to information as to whose accounts were in the " C " list?—We knew whose accounts were in the " C " list. 298. From the books, or from Mr. Johnston or Mr. Macarthy ? —We knew from the books. 299. Were these sums of £20,000 and £5,000, which you have mentioned before, in the " C " list ? —I am not able to say anything about them. 300. Do you mean to say you are ignorant of the fact that they were in the " C " list ?—No; I am not ignorant. 301. Then, you decline to answer whether the two amounts previously mentioned—£2o,ooo and £5,000 —were in the " C " list ? —They have no connection with the " C " list. 302. They have no connection with the " C " list —that is your answer? —That is my answer. 303. What list were they in ?—They had nothing to do with any of the lists. 304. They are entirely outside the lists?— Entirely outside. 305. Was the £20,000 in respect of a parcel of debentures? —I am unable to give any information. 306. Are you unable to tell us from want of knowledge ?—lt is not from want of knowledge, but I am resting on the ruling of the Chairman on Saturday. 307. I must ask that this question be answered : Did this sum of £20,000 have reference to a parcel of debentures ? Mr. Seddon: I rise to a point of order. We cannot go beyond the order of reference No writing-off has been proved. Discussion ensued. 308. The Chairman.] This question as to the £20,000 under discussion, I understand, was not connected with any of the lists " A," " B," " C," or " D " ? —No. 309. You said at the last sitting that, in relation to the £75,000 paid for good-will, that what induced you to take the book-value of the premises was the fact that you had been guaranteed these two sums of £20,000 and £s,ooo?—That was a substantial inducement. 310. Mr. Hutchison.] Have you ever estreated that guarantee in any way ?—I do not see that I can answer the question, because it refers to advances from the bank, and a reply would practically disclose our confidential relations with private accounts. The Chairman: I shall rule that the question is premature. It is irrevelant at the present time. 311. Mr. Hutchison.] What represented the £5,000, Mr Booth?— The position as to the £5,000 is precisely the same as the position of the £20,000. 312. What is that position?—l think it is covered by the ruling the Chairman gave on Saturday. 313. What part of the contract do you say covers these amounts of £20,000 and £5,000 —what clause of the contract has reference to them ?—They had nothing to do with the contract. 314. Nothing to do with the contract of the 18th October?— No. 315. And yet they influenced the amount you paid under that contract? —Yes. At the same time they had nothing to do with the contract beyond what the contract disclosed. 316. What I ask you is, What part of the contract relates to these two amounts of £20,000 and £5,000? Can you point to any part which covers them?— The contract disclosed the fact that we paid for the buildings the book-value. The contract had nothing to do with the details of the discussion between the directors of the two banks which resulted in the acceptance by both parties of that position which was disclosed. 317. You, in your own mind, put the actual value at about £90,000 instead of about £125,000?— Yes ; about that sum. 318. Ninety thousand pounds you treated as the value of the landed property and bank premises ?—We were satisfied that after realising these properties we should make a substantial loss on their book-value. 319. You reckoned them at £90,000 instead of £125,000 ?—We estimated that a deficiency on realisation might arise of from £30,000 to £35,000. 320. Which do you say, £30,000 or £35,000 ? —How can I give exact figures ? That was our estimate, that we might expect to lose £30,000 or £35,000 in realising those properties. 321. You remember mentioning £35,000 before as the probable loss on landed property and bank premises taken over from the Colonial Bank?—l think so. 322. Were not the figures you gave the other day £35,000? —I expected that might be about the loss. 323. What did you say in your evidence?—£3s,ooo. 324. And you did not mention £30,000 before ? You wish to alter your evidence to that extent? You now put £90,000, or £95,000 as the value of the landed properties, and premises?—l do not think it makes much difference in a matter which is so uncertain.
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325. At what stage did this matter crop up in reference to this possible loss of £30,000 or £35,000 ? At what stage of the negotiations ; was it near the end ?—I think the first time it came up for discussion by the directors was at the end, when the final conditions were settled. 326. How did you first hear of the £25,000 being in jeopardy ; who spoke to you about it ? —The fact became plain to us in the course of the negotiations. 327. Who told you ?—The fact became plain, as I indicated before, during the course of the negotiations. 328. Was it from Mr. McLean or Mr. Larnach that you first heard of it?— No. The advances had become doubtful; but the position became practically defined as indicated by the statement I made before, that, in the event of the agreement falling through, the security upon which the advances rested would disappear. 329. Supposing the agreement had fallen through, how would that have affected the Bank of New Zealand ?—I do not think I can say more without the answer involving a disclosure of the confidential relations of individual accounts, both of persons and companies, trading with the bank. 330. Did these advances of £20,000 and £5,000 originate in the Bank of New Zealand ? —They were advances made by the bank. 331. And during the arrangements for amalgamation or purchase you stipulated for these advances being guaranteed ?—We took advantage of what we believed was a very good opportunity, to obtain, as part of the bargain, a guarantee that would make these advances safe. 332. How was it that the Colonial Bank came to guarantee advances made by the Bank of New Zealand ? —I do not think I can explain that. 333. Can you do it, or do you refuse to do it ? —I cannot explain that. 334. From want of knowledge ? —Not from want of knowledge. 335. From indisposition ? What had the Colonial Bank to do with these two advances at all ? —That is another form of the last question. i: 336. Did they come to you from the Colonial Bank originally ?—No. 337.. Yo.u took the guarantee at the time of the agreement ? It was an insecure transaction which you took the opportunity of making stronger by your agreement?— Yes. 338. Do you repeat your former answer, that the President of the bank was responsible for the advances in the first instance ?—I adhere to my former answer, but it does not correspond with that. 339. What was your former answer?— That he was practically responsible. 340. Did the directors know of this at the time the advances were made ?—I do not think I can say anything further about that. 341. Were the directors, you being one, responsible for these two advances at the time they were made ?—I am not able to answer the question. 342. I wish you to answer clearly whether you decline or not —I am not able to give the answer. It would involve disclosures respecting private accounts. 343. It is that you refuse on that account ? You are able to answer, but you decline ? —That is so. 344. I desire that question to be taken down. Discussion ensued. h The Chairman : I think the question is one that can be put. Mr. Hutchison : Will you answer the question ? 345. The Chairman.] Were the directors, you being one, responsible for these two advances— namely, £20,000 and £5,000 —at the time they were made ?—I am not able to reply to that question without disclosing what would traverse the Chairman's decision of Saturday. 346. It is simply Yes or No, whether the directors were responsible or not? —I think, Sir, the question is not capable of being answered with truth, yes or no. The true answer would involve disclosures which would traverse your ruling on Saturday. 347. I ruled on Saturday that the question could not be put which was before us then, because it referred to writings-off, and we had no proof that there had been a writing-off. Discussion ensued. Witness : I can only say that, if that answer is not sufficient, I am not able to give an answer. 348. The Chairman.] Do you mean, you must decline to answer the question?—l must decline to answer the question. 349. Do you give any reasons?—l think that a further answer would disclose the confidential relations of the bank with its customers.
Tuesday, 11th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. Mr. Hutchison.] There were some matters you were going to inquire into, Mr. Booth ?— The information is being prepared. It is not yet ready. Probably it will be by to-morrow. 2. Do you know the date of your power of attorney?— You will find it most likely in the papers that will be supplied to-morrow. 3. Can you tell us the date of the purchase of the Consols ?—No ; not from memory. i . 4. In fact, you are holding over all these matters which were in. suspense yesterday until to-morrow ?—I think the information will be ready to-morrow. They are preparing, it at the bank. 5. That includes also the doubt you had as to whether the President of the bank made certain statements at the meeting of the 7th February?— Yes.
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6. Do you consider, from the facts within your knowledge, that it would be desirous to have a report made by the Government Auditor as to the advances made by the President?— What I said indicates what I think is an absolutely necessary provision to be made in view of the existing arrangements—that is, that the directors, when they see occasion, should have the power to call upon the Auditor or Auditors to report to the Colonial Treasurer for the time being anything in the nature of an irregularity in the management of the bank. 7. Have there been any facts within your knowledge which appear to you to justify that course?— Yes. 8. It is not a mere theory ?—No ; it is a necessity. 9. Founded on experience ?—lt rests upon the experience we have had in the management of the bank. 1 10. Has this advance of £20,000 to which we have been referring, and which was guaranteed by the Colonial Bank, been redeemed by that bank ?—I do not think I can give any further information about it. It is perfectly safe. 11. But has the guarantee been redeemed? Can you say whether it is still in the bank, or whether it has been withdrawn?—l believe it still exists in the bank—the guaranteed account. 12. What shape did the guarantee take?—l do not think I can give that information. 13. You mean you do not think you can give it, because you think you should not give it. You decline on the same grounds as yesterday?—l am not acquainted with the precise form of the guarantee. 14. Are you unable to answer from want of knowledge ? —So far as that particular matter is concerned. 15. But you could ascertain? —I can do that. 16. Can you say whether the same guarantee covered the £5,000 as the £20,000 ?—The same. 17. And they were on a similar footing?—So far as that arrangement went. 18. As to the security? —Yes. 19. I was taking you through clause 18 of the agreement to purchase, and we had dealt with the first sentence down to the words "so written off." You know that under the next sentence of that clause the Bank of New Zealand had the option, within three months of the contract taking effect, to take over the accounts in the " C " list?— That is so. 20. Can you tell me when the contract took effect —can you give the date ?—I cannot give you the date. It will come with the information being prepared. 21. It did take effect some time or other, and the bank had three months within which to elect. Then, the next sentence indicates that the selling bank—that is, the Colonial Bank—may require the Bank of New Zealand to elect. Did the Colonial Bank call upon the Bank of New Zealand to elect ?—I do not remember whether they did or not. We took care before the time expired to intimate to them that we did not intend to take over the accounts. 22. But Twas desirous of knowing whether the Bank of New Zealand elected of its own motion or waited till the Colonial Bank called upon you to elect ? —I do not remember. 23. Can you find that out ? There would be a communication if the Colonial Bank called upon you ?—Yes. 24. Can you say when the election was made—the time ? —We took care that it was so much within the time as to make the position perfectly safe. 25. One day ?—Not less than one day. 26. That would be towards the end of the three months from the date of the contract taking effect ?—Yes. 27. You see there is an alternative in the latter part of the clause, the alternative being that the selling bank might call on the Bank of New Zealand "to realise or liquidate." You did not elect to take the "C" list, but you were called on to realise or liquidate them. Is there any difference in the terms, as far as you know —between "realise " and " liquidate " ?—We have not been required to realise or liquidate. 28. Are you sure of that ? Do you say the accounts remain in the Bank of New Zealand?— We were subject to our refusal to take them over. 29. You were required " to realise or liquidate ". ?—Yes. 30. Then, the Colonial Bank called upon you to do what—to " realise "orto " liquidate " ? Is there any difference in the terms, or are they synonymous?— Synonymous. 31. Did you realise or liquidate?— There was a considerable amount of negotiation as to what should be done, but the ultimate result was that the liquidators took over to liquidate the whole of the "C'list. 32. That is, the liquidators of the Colonial Bank ?—Yes. 33. Then, the " C " list passed out of the Bank of New Zealand ? —Yes. 34. What security did you get, if you got any security from the Colonial Bank, as to this ?— The"C" list? 35. Yes ?—We did not require any security for that list. 36. What is the meaning of the words in the clause as to the responsibility of the selling bank ?—We have no responsibility in connection with it. The liquidators took it over. 37. On what date was that? —I cannot give you the date. 38. You can ascertain it. There was an agreement probably. How come you to part with the " C" list at all under the contract?—We never took it. 39. You entered into a contract that, on being required by the Colonial Bank to realise or liquidate the accounts in the " C " list, you would do so ?—Yes ; but we were acting only as agents; we took no responsibility. 40. But you contracted apparently to continue to act as agents? —Yes, for a given time. 41. Do you say the Bank of New Zealand is entirely quit of these accounts in the "C" list?— Entirely.
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42. Within the three months you were acting as agents?— Yes. 43. You treated the matter in that way?— Yes. 44. You acted throughout as agents ? —Yes. 45. And you were relieved of the agency by the liquidators?— Yes. 46. Then, the " C " list does not affect any of the new customers of the Bank of New Zealand ? —No. 47. Is there any objection to produce a copy of the " C " list ?—Yes. Although the accounts in the " C " list were not taken into the bank, the names belonging to the " C " list do belong to the bank, and do belong to the confidential accounts in the Bank of New Zealand, and on that account I could not undertake to produce the " C " list. Mr. Montgomery : I suggest that Mr. Cooper be not allowed to interfere with the witness. Mr. Cooper : I was advising Mr. Booth, and understand that I was directed by the Chairman that I had a right to do so, as to whether he should answer that question. The Chairman : I think the decision was that Mr. Cooper should, if the witness desired, advise him as to answering questions. Discussion ensued. 48. Mr. Hutchison.] Can you say in what month you handed over this agency to the liquidators?—l am not able from memory to supply you with the date. 49. You will supply that to-morrow? —Yes. 50. Was there at one time a stoppage in the proceedings prior to your handing over the " C " list to the liquidators—l mean during the three months which elapsed before you decided not to take over the accounts in the "C " list? You were bound, as I understand the agreement, to realise or liquidate, if so required by the Colonial Bank, but that before you did anything in that direction you were relieved of the agency under the " C " list by the liquidators of the Colonial Bank ?—That is so. 51. Can you fix nearly the date when the transfer of that agency took place ?—I could not give it from memory. 52. Would it be this year?— Yes. 53; Before that event —say, in the month of November last—was there any debit carried to the accounts in the "C " list?—l am not able to say without looking at the bank books and making inquiry. 54. Will you look and tell us your answer to-morrow, whether there were any amounts debited by the Bank of New Zealand to the "C" list? You have referred to the case of John Riley, a bankrupt. That is in the "B" list, I think you said? Do you remember referring to the case of John Riley ?—What I said in the reference to that is true. Ido not remember the exact words I used, but the statement I made was true. 55. Well, you recollect it ?—I do not think I can exactly. 56. Was it not to the effect that Riley was in the "B" list, for which you took cover?—l should like to have the particulars referring to the answer, and to the context. 57. I will put it to you again : Was not Riley in the " B " list?—l do not think I can say anything further about that than I have already said. 58. I want to get what you have already said. Did you say Riley was in the "B" list? This is my note of your evidence on the point: " There would have been enough provided in the cover against that account, but there were other complications which will involve a further call on the £272,072." Is that right?—l am not able to say without seeing the evidence and knowing exactly the context. 59. These are my rough notes. lam recalling to you the words you used. Can you not say whether Riley was in the "B " list or not ?—I am not able to say without getting the exact statement I made, and the context. 60. Do you not know, as a fact, that Riley was in the " B " list ?—Yes ; but I am not able to begin going into particulars as to the lists. 61. I am only asking you now as to a fact which I understand you have already stated?—l am not willing to reply without reference to the evidence and the context. 62. I ask you, as a fact, whether the name of John Riley is in the " B " list ? 63. The Chairman.] Do you not remember being asked a question and giving an answer in somewhat similar terms to that now given by Mr. Hutchison ? —No. 64. Mr. Hutchison.] lam asking you a definite question now ; it is a simple fact: Was John Riley in the "B" list? —The question may easily become one of a series that I cannot possibly say anything about. In the form in which that question comes lam obliged to object to it. 65. You are obliged to object to tell us whether John Riley was in the " B " list or not?— Yes, at present I am. 66. Why at present ?—When I see the statement I made and the context, I have no doubt I can explain my objection to it. 67. Can you say whether the amount that John Riley is indebted to the Bank of New Zealand on behalf of the Colonial Bank is upwards of £74,000 ?—I am quite unable to give any particulars about any of those accounts. 68. You can ascertain, I suppose ?—I can ascertain. 69. I ask you whether you can ascertain if the indebtedness to the Bank of New Zealand for the Colonial Bank by John Riley is upwards of £74,000 ? I am asking you as to bankruptcy proceedings which are public property ? —Well, I am not able to give you any information about it. 70. At present, or not at all ? —Not at all. 71. I shall ask that this question, and the answer to it, be taken down ?—I am quite willing to ascertain, but cannot make any engagement to produce it. 72. The Chairman.] You will ascertain that ?—Yes.
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73. Mr. Hutchison.] And you will also ascertain whether the bankrupt is indebted to the Bank of New Zealand apart from the Colonial Bank ?—Very well. 74. And the securities, if any, that the Bank of New Zealand holds in respect of its claim? Had you any correspondence as to the appointment of liquidators of the Colonial Bank ?—I have no knowledge of any. 75. Will you ascertain if there is any?— Yes; I can do that. 76. Or as to the purchase of the Ward Association. I would direct your attention to what I understand has been sworn to by Mr. Cook, who is now liquidator of the Ward Association. He says, " I knew of a correspondence between the Bank of New Zealand and the Colonial Bank, and of a suggestion made that the position to be arrived at by Messrs. Smith and Reid." Have you any recollection of that correspondence ?—No. 77. I ask you, Mr. Booth, if you know of any correspondence between the two banks as to the appointments of liquidators of the Colonial Bank or in connection with the Ward Association ?—I have no knowledge of anything. 78. In the Ward Association?—l have no knowledge that we had anything to do with the matter. 79. Or between the two banks as to the appointment of liquidators of the Colonial Bank?—l have no knowledge of any. 80. I want to put this question to you as I did before, as to whether there has been any correspondence by the bank as to an investigation into the position of the Ward Association ? Mr. Seddon : I object. Discussion ensued. The Chairman : With reference to this question, I am afraid my only course is to rule as I did before—that at the present time the question is premature and irrelevant. I have to do that because Mr. Booth, in his evidence on oath, has stated definitely and distinctly that there has been no writing-off. 81. Mr. Hutchison.] Zou are aware that the Ward Association is in liquidation?— Yes. 82. And, consequently, in the same position as Riley—a bankrupt ? Mr. Seddon : I object. The Chairman : I would like to hear that question again. 83. Mr. Hutchison.] You know, Mr. Booth, that the Ward Association is in the same position as a private person who is bankrupt ?—I know by the public prints, but have no knowledge of it as a director. 84. Is not the Ward Association, now in liquidation, a debtor to the Bank of New Zealand ? Mr. Seddon : I object. The Chairman : I must again point out that under our order of reference we are precluded from inquiry into the affairs of persons or companies except where there has been a writing-off. 85. Mr. Hutchison.] Has there been any writing-off in the case of John Riley?—l am not able to give any information with reference to any particular accounts. 86. You know that on a previous day you did give information with reference to John Riley. You remember giving some information, do you not ?—I shall be quite willing to give what I stated when I see the evidence and the context. 87. The Chairman.] The question is, " Have there been any writings-off in the case of John Riley " ?—I am not able to depart from the position we have taken up with regard to private accounts ; but as to this particular question I can say there has been no writing-off. 88. There has been no writing-off from the account of John Riley?—No. 89. Mr. Hutchison.] Now, can you say there have been no writings-off for the Ward Company ?—I must decline to answer any question as to that. 90. Do you suggest that the Bank of New Zealand did not comply with clause 18 of the contract of purchase in any respect ?—We complied with it as I explained before. We kept the money from the beginning. And what objection could we have, since we had the money in hand, to put it to the credit of the accounts ? There it was left, and we never wrote anything off. 91. Do you suggest that you did not comply in some respect with clause 18?— No; I believe we did comply with the intention of clause 18. 92. You got your security under it ?—We did. 93. And complied with the intention of the clause ?—With what we believed to be the intention of the clause, and what we believe was the intention of the clause when it was framed. 94. And you kept the money you received in respect of the " C " list from the Colonial Bank? —We had it from the beginning. 95. How much did you keep; did you keep the cover? —Yes; the whole of it. 96. The cover in respect of the "C " 1i5t—£55,233 ?—I believe that was the amount. 97. That is part of the cover of £375,772, taken as against the two lists. You kept £55,233 in respect of the "0" list, being part of the total cover—£327,3o5 —taken as against both "B" and "C"?— That is so. 98. And £55,233 is the amount you credited to the larger sum representing the accounts in the " C " list ?—Yes. 99. You held the money in hand ?—Yes. 100. And when the accounts were taken over by the liquidators you handed back that part of the cover ? —Yes; we handed the whole of it to them. 101. Were there any securities you also handed to the bank in connection with the " C " list ?—I am not able to say anything more about the matter, because it would involve a disclosure in reference to an account that had been in the bank for years, and is a good account in the bank now, so far as the Bank of New Zealand is concerned. 102. It involves a good account ? —lt would involve reference to it.
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I 103. Then, there is no part of the " C " list now in the Bank of New Zealand ?—Not of the " C " list as a list. 104. And you are not able to say that the balance of £43,149 underwent any alteration before the list was taken over ?—I am not able to say. 105. Do you mean that you cannot at present say, or that you decline ?—I think I should have to decline to give any further information about that. 106. You will not tell us what the position of that account was when it was taken over ?— No. 107. That it was upwards of £94,000 ?—I cannot give it. 108. I want you now to tell us—l do not think it will affect any confidential relations —how the total amount of assets was arrived at under the agreement with the Colonial Bank. The total amount is mentioned by Mr. Watson in his letter of the 23rd October, which was laid before Parliament, as £2,643,190 ? —You will find, I understand, the whole of the information in the statement Mr. Watson put m. 109. I would like you to refer me to it. Ido not know of any such statement ?—I understand that one, of the statements handed in at an early stage of the proceedings comprises the whole of the particulars. 110. Was it handed in,by you?— Mr. Cooper's recollection is that it was handed in the first day. I think the paper is here [produced]. 111. I have asked you the question how the assets of £2,643,190 were made up, and how the liabilities of £2,509,284 were made up, leaving the balance of £133,906 paid to the Colonial Bank. Will you read from the document you are referring to, and which has been handed to you by the Premier. Have you not a similar statement of your own?—l have not. 112. Tell us the particulars of these amounts?—l can give them only as supplied to me here by the Premier; they are from Mr. Butt, the Auditor of the bank. The assets are : Coin, bullion, and cash balances at bankers, £363,087; money with London brokers, at call and at short notice, £45,000; notes and balances due by other banks, £9,589; Government securities, Consols, &c, £168,131; remittances in transitu and awaiting maturity, £548,762: that makes a total of £1,1.34,569.. Then, there was landed property and bank premises, £125,399; bills discounted and all other assets due to the bank, £1,731,549. That last-amount is dealt with in this way: Good assets, the "A " list, £926,198 ; assets, "B " and "C " lists, £375,772. The gross total of those is £1,301,970. The cover kept by the bank for the lists "B " and "C " amounts to £327,305. Bank furniture and stationery, net, £6,250; shillings and pence, £2. That gives a grand total of assets, taken as good, £2,568,190. Then, you had the remainder in lists "B " and " C," £327,305. We retained that money as cover. Then, there is the allowance we have got from the furniture and stationery, £3,465. These two items make £330,772. To that must be added the assets that we did not take in the "A" list, £102,774; you get then the total you have in the balance-sheet, £3,001,236. 113. That is the balance-sheet of the Colonial Bank of the 31st August ?—Yes. 114. That does not, however, correspond with the £2,643,190, the assets as stated in the paper from Mr. Watson laid on the table of the House ; nor are the figures identical with those you give before of £2,568,190. Mr. Watson's figures are in print in paper 8.-27 a of last year [produced]. Would you like to look at it? —Yes. It is last year's. I am not able to explain that. Mr. ; Watson might be able to do so. These figures I have given you are figures supplied by Mr. Butt, the Government Auditor. 115. What you have given us now is an analysis of the Colonial Bank's balance-sheet. Will you now give us the other side to complete the account?— Notes in circulation, £107,367; bills payable and other liabilities, £457,887; deposits, £1,947,921, less bills the property of the bank, £6,972, leaving the net sum of deposits for which the bank is liable £1,940,449. Balances due from other banks, £3,080; shillings and pence, £1. That makes a total of liabilities to the public of £2,509,284. Then the liabilities to shareholders—capital, £400,000 ; reserve fund, £65,000; profit and loss, £19,980 ; current account items, £6,972. These four items represent a total of £491,952, making a total of liabilities amounting to £3,001,236. 116. That is an analysis of the Colonial Bank?— Yes. 117. But you are not able to give an answer to the first question put as to the £2,643,190 mentioned in the statement of last year ?—No. 118. Nor as to the liabilities, amounting to £2,509,284, mentioned in the same statement, which leaves the balance of £133,906 you paid the Colonial Bank?—lf you will allow me, I think I shall be able to make it quite clear. The total amount of good assets is £2,568,190; the total liabilities to the public which the Bank of New Zealand assumed is £2,509,284; thus leaving a balance to the credit of the Colonial Bank shareholders amounting to £258,906. The amount paid for good-will was £75,000, thus making what was left to the shareholders £133,906. The remainder that was left to cover the " B" and " C" lists, £327,305, make, with the last amount, the facevalue for the consideration of the purchase £461,211. 119. It would be convenient if you could get that list you have been referring to copied, or' another copy of it handed in. Can you do that ? —This is a private document of the Premier's. '120. I know ; but it is by the Auditor of the bank ? —But it might be a confidential document; 121. The Chairman.] It cannot be confidential now after you have given the whole of the particulars. You could get a copy of that, Mr. Booth?— Yes. 122. Mr. Hutchison.] In the £2,568,190 representing good assets I observe you treat the 1 landed properties as representing £125,399. Did you arrive at the total amount which you considered good, and the total amount you considered to be liabilities against the good, before you decided upon the amount to be paid for good-will ? —We were content to treat it as good because of the consideration we got in the purchase of the bank. 123. But that was a matter.which arose almost at the end of the negotiations?— Yes; it is prudent to leave some things until the time comes to use them.
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124. I want to ask you about this £2,568,190: Did you ascertain that to be good before you came to a consideration of the amount to be paid for good-will?— Yes, that the assets were good that we took over, including the guarantees we took over from the Colonial Bank. 125. You say that point arose at the conclusion of the negotiations, and threatened their breaking off. Before that point in the negotiations, what was the amount you were satisfied was good business to be taken over from the Colonial Bank ?—We were satisfied with all the assets we took over, except the assets representing the Colonial Bank premises, amounting to £125,300. 126. Now, supposing that the more than doubtful character of the £20,000 and the £5,000 advances had not been discovered until after the agreement had been concluded, what would have happened with regard to that liability ?—But it had been discovered. 127. What was the position before you discovered it ?—The position was that we meant to have that protected when the proper time came. 128. I understand you did not know of it until towards the end of the negotiations?—We knew very well. 129. For a long time?—We knew it for some time. 130. How long?— Quite long enough to make the bargain to protect ourselves. 131. Was it during the course of the negotiations you ascertained?— Partly so. 132. Possibly you will explain, so as to clear up this matter? —I could not give you any further information without entering into a variety of details. It would be quite impossible. 133. When was it that you, as a director, became first aware of the precarious position with regard to these two amounts making the £25,000 ?—The knowledge we had as to the insecurity of the advances was to some extent a result that arose out of the negotiations; but the final and definite conclusion—the determining information—came to us as I informed the Committee. 134. Shortly before the completion of the agreement?— Just as we were on the point of coming to an understanding. 135. Now, before you came to a final understanding, what was the condition of these amounts of £20,000 and £5,000 with relation to the good assets of the Colonial Bank?— Practically they had nothing- to do with the good assets of the Colonial Bank. 136. But the good assets included the amount for landed property ?—Yes; but they were outside that. We agreed to give £75,000 for good-will, and we were asked also to take over the properties at their book-value. We were not willing to do that unless we got as a consideration in the business what was arranged for—these two accounts guaranteed by the Colonial Bank. 137. That, I understand, was the result of the various steps in the course of the negotiations, which began after the Bank Act was passed on the 4th September, and culminated on the 18th October —an interval of five or six weeks. Now, at the beginning of that time, were the directors aware of these two advances amounting to £25,000 ?—I do not see how it is possible for me to give you the details. 138. lam not asking for any details. Were the directors aware of these precarious advances, aggregating £25,000, about the beginning of September, when you resumed the negotiations for purchase ? —I am not able to give any more information about them. 139. Were you individually aware about them ?—I can only give you the same answer. 140. What is the answer? —That I am not able to say. 141. Does that mean that you decline?— Yes, I must decline. 142. That is all you say, that you decline to say anything further about this matter?— Yes, I must decline. 143. Are you aware that you had included in the balance-sheet of the Bank of New Zealand to the 31st March the item " Landed property and bank premises " of the Colonial Bank at the amount at which it stood in the balance-sheet of the Colonial Bank ?—Yes. 144. That is a fictitious item, is it not ?—ln a sense it is, in the same way that the £75,000 for the good-will was fictitious. No doubt it will be written off. 145. Should you not have written down that sum by the £30,000 or £35,000 which you believed would be the loss upon it ? —Provision should be made. 146. But should you not have done it on the 31st March ?—I do not think so. 147. You were aware of the character of the item then?—We knew of the estimate we had formed. 148. And you put the amount down at what was the "book-value," and not the actual value ?— Yes, and it was shown in the balance-sheet as the book-value. 149. Yes; and as the £1,089,822 against the Estates Company's shares, is not that also in a sense a fictitious item ?■—l would not like to say that. 150. Supposing you had written down the value of the landed property and bank premises acquired from the Colonial Bank by £30,000 or £35,000, you would have had to represent the goodwill at £105,000 or £110,000 ?—I am not willing to have it imposed upon me what I would have done or what I would not have done. 151. You are managing the bank for the colony, and are paid for your services?— The course we have taken in the matter is a prudent course, and, as soon as the opportunity arises, provision ought to be made for writing down the bank properties. 152. When will the opportunity occur for writing down that item of landed property and bank premises ?—I am not able to say. We want time to obtain the money. 153. Do you need money to write down that account ?—Yes, we must earn it before we can spare it to write off the properties. 154. Do you say you must earn the money before you can write down an account ? Have you earned the money you wrote off the capital last year ?—We have got the money. 155. You expect the colony to find the difference in the one case as in the other ?—No. *B—l. 6.
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156. Where, then, do you expect to get the money to write down this fictitious amount for landed property and bank premises ? —We shall have to leave it to the future. 157. Meanwhile you put it as an asset in your balance-sheet, and you also treat the whole of the £75,000 for good-will as an asset ?—lt is a very good asset. 158. Have you made any profit out of the Colonial Bank business against which you can place the £75,000 ?—We have made some. 159. How much ?—I am not able to say this year. Surely it is but ten minutes, so to speak, since we took the business over. How is it possible to say, with the thousands of complicated accounts we have, that after a few months' working of a great business like that, to what extent it has been profitable. We are satisfied that the business is good to us to the extent of probably £20,000 or £22,000 a year. Surely the sum paid for such a business is not an outside price. 160. Is not that an assumption ? —lt is not an assumption. 161. Can you point to any proof?—We have a reliable valuation as to what the Colonial Bank is worth to us. 162. Where is that valuation ? —I am not aware that we have the particulars, but we had a very careful valuation made by the acting general manager, Mr. Andrews; and, after making a most generous discount, we had, at any rate, from £20,000 to £22,000 left, upon which, I think, it is perfectly safe to rely. 163. You think so; but could you give us any basis for that opinion ?—No; the negotiations belong to us, and we are responsible. 164. But you are responsible to the country, represented by this Committee?—We are; and we are discharging the duty faithfully, as well as to the bank. 165. I desire to have the foundation for the opinion you have so frequently expressed before the Committee, that you made a good bargain in buying the Colonial Bank ?—Yes. 166. I ask for your foundation for that opinion, so that we can test its value. What is the basis of your opinion, so that we may judge as to the correctness of that opinion ?—I do not at present see any objection to the detail being given to the Committee, which would show the course we took in determining the value of the business we were to acquire ; but I would like to have time, if I am permitted, to consider the matter and give answer to-morrow. 167. Taking the last balance-sheet of the Colonial Bank, the items of which you have given us to-day, is not the result of your analysis that the whole capital and reserve fund of the Colonial Bank was literally doubtful—from your own showing ?—No; we cut out from the Colonial Bank everything upon which their losses had been made, and took from it only their good business. 168. That would mean that the whole of the reserve fund and capital of the Colonial Bank had disappeared ?—I think you can form your own conclusion just as well as I can from the figures. 169. You are an expert. Can you not tell us what would be the result ?—I do not feel called upon to express an opinion about the Colonial Bank balance-sheet. 170. Very well. We will take the items of the Colonial Bank balance-sheet. First, as to the debit side : There was the capital, £400,000, and the reserve fund, £65,000. Then we find the items : Notes in circulation, bills payable and other liabilities, deposits, and balances due to other banks, aggregating £2,516,255, and, with the capital and reserve, totalling £2,981,255. The other item is, Balance profit and loss—this is a credit, but appears on the debtor side to balance the account—and the total thus being £3,001,236. Now for the other side: Coin, bullion, and cash balances at bankers, notes and balances due by other banks, Government securities, landed property and bank premises ; which last item appears at £125,399. Should it not rather be £30,000 or £35,000 less to be safe?—l do not think lam called upon to express an opinion. 171. On the valuation made by the Bank of New Zealand, should it not be less than £125,399 ? —If I was buying them I should not give so much by £30,000 or £35,000, I suppose, for them. 172. Would that not leave the value at £90,000 or £95,000—say, £95,000 ?—That is my estimate. 173. Then there is the item of bank furniture, which appears at £9,717. Should not that be put at £6,250 —the price you paid for it ?—I do not think so. 174. Was that the amount you took it over at?— Yes; we bought it, but did not want it; but the Colonial Bank possessed it, and we had full use for it. 175. We will suppose that the Colonial Bank was in liquidation. You estimated the value of the furniture for your purpose at £6,250 ? —Yes, that is what we got it for. 176. Very well, then, the last item is bills discounted and all other debts due to the bank, £1,731,549. Now, you treated the "D " list as something you would not purchase. You would not have anything to do with that?— No. 177. Then, the whole of the " D" list, amounting to £102,274 and £327,305, for which you took cover, as against the " B " and " C " lists, indicated the accounts that you would not take over out of that sum of £1,731,549 ?—Yes, that is so. 178. Then, assuming the figures I have given to be correct, including £95,000 for the landed property and bank premises, and £6,250 for stationery, and deducting the " D " list and the cover for the " B " and " C " lists, instead of a credit balance to profit and loss of £19,980, as shown by the Colonial Bank balance-sheet, there should appear on the other side a debit balance against profit and loss of close on £450,000 ?—Yes, supposing they do not get out of the " B " list any part of the cover. 179. They may recover something; but is the position at present as I have indicated ?—I do not think that is the position, consistent with the truth of the case. In the "D " list a considerable number of items have become much better, and the list promises to be much better than appeared to us likely at the time of purchase of the Colonial Bank ; and there may be a substantial advantage from working the "B " list. During the next two years the result may be that a large amount of money will come back to the Colonial Bank.
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180. But I am taking it on the lines on which it was purchased by the Bank of New Zealand. Those lines would indicate a position such as I have mentioned ? —Yes, but we provided for quite an unusual safeguard we thought it prudent to take under the circumstances. I think that should be taken into consideration. 181. You mean the cover?— Yes. 182. I think I have dealt with all the figures in the Colonial Bank balance-sheet ?—Your figures are according to the book, but sometimes figures are very misleading. 183. But here is the balance-sheet, which shows a profit, which even your writing-down of the landed property alone would cause to disappear. Is it not so ? —Yes. 184. Alone, that would make a difference and throw the balance from one side to the other? —I think this series of questions are more suited to the directors of the Colonial Bank. 185. We, as representing the taxpayers of the colony, were the purchasers of the bank, and we are concerned to see that we have got value for our money ? —We picked the best out of the business. 186. Can you explain how it is that the liquidators of the Colonial Bank brought before the Supreme Court the other day in Dunedin an item from the " A" list?—l have no knowledge of that. 187. Will you inquire as to that. It is the account of one Archibald Morton, debt £348 18s. 9d., shortage on advance on shipment of wool. The report says, " This was the case of a man who lost everything by last year's snow-storm; from being a runholder he had been reduced to the position of a shepherd. He was in the 'A ' list." Was that a mistake?—l have no knowledge of it. 188. The report goes on :"A friend had offered to pay £150 in settlement " ?—I should not be at liberty to go into any accounts in the list. 189. The liquidators appear to have got the assent of a Judge of the Supreme Court to their dealing with that account. I ask for an explanation?—l must decline to give an explanation about any account in the "A " list. We provided a generous margin to cover accidents. 190. But this is in the " A " list ?—We are not entirely infallible. 191. I would like to know how it was that the liquidators of the Colonial Bank were purporting to deal with an account in the "A " list. Can you explain?—l do not know. 192. Can you inquire?—l can inquire, but Ido not think there can be any result. 193. The Chairman.] But this is one of the accounts in the "A " list which the Bank of New Zealand took over absolutely ? —lt is apparently one of those accounts. 194. It is a dealing by the Colonial Bank liquidators of an account in the " A " list which the Bank of New Zealand has taken over with all risks ?—I do not think I can give any information about it. 195. Mr. Hutchison.] Now, with reference to the item, Value of inscription business in London, which you estimated would increase the earning power of the Bank of New Zealand by £14,000 per annum. Do you remember that ?—I remember the statement being made. 196. You put it before the Committee last year as a probable result of the country's assistance being extended again to the bank ?—Yes. 197. You are aware now, I suppose, that there is an Imperial statute which prevents the inscription business being taken from the Bank of England?—l believe there is a difficulty of that kind. 198. The inscription, being under an Imperial statute, cannot be changed from the Bank of England without repeal or alteration of that statute, so that item of £14,000 must be considered as having disappeared until the Imperial Parliament passes some amending Act?—l think the Colonial Treasurer is the proper person to give a full explanation of that. He has been the medium of communication on the subject. 199. The bank is not earning that profit of £14,000 at present ?—Not any part of it. 200. You also estimated an economy in the administration at £15,000 per annum, and you have handed in a document indicating the expenses of management for the last five or six years ?—Yes. 201. Does not the last year show an increase instead of a decrease in the cost of administration ? —Yes ; but it would not necessarily have any significance as being contrary to that undertaking, because, in the first place, a considerable number of economies cannot be arranged to take immediate effect; and in the next place the bank, owing to circumstances with which the Committee is perfectly familiar, has been put to very large and unusual expenses. To what extent they have effected the comparison of the cost of working between this year and previous years I am not able to say in detail, but I should not be surprised to find that arrangements had been made, making a large saving, although we are still, for the time being, at a disadvantage owing to the unusual expense incurred by the bank during the last eight or nine months. 202. The estimate I refer to was given last year—about twelve months ago?— Yes. 203. And in view of the purchase of the other bank ? —Yes. 204. Was it not intended that there should be some reduction this year as against the former year? —It is quite impossible to say to what extent the reduction has been interfered with by the unusual circumstances. 205. What are the unusual circumstances you refer to?— The great variety of expenses connected with the proceedings which have been taking place for some time. We also took over some surplus staff from the Colonial Bank. It was necessary to prevent undue hardship to a number of bank officers, and it required time for their absorption. I do not think a comparison can be made with reasonable approximation to accuracy for one or two years to come. 206. Just take the last three half-years, and I will put the total from this return to you. For the period ending March, 1895, the cost of administration was £78,190 ; for the next period, ending September, 1895, it was £73,804; and for the period ending March, 1896, it was £87,471? — We had a large addition to the business and a large increase in the staff.
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207. The heading of the estimate given last year was " Approximate estimate of additional earning-power of bank under amended proposals submitted " ?—But you must give them time to work. You cannot fix a definite date when you can begin. It is a gradual progress from month to month. You would require to allow the bank to be worked for two or three years. 208. You say the time has not elapsed for you to go to work. But there appears to be an increase of £15,000 this year over the cost of administration in 1895 ? —The cost of working the bank with the double business is very much less than the cost of working the two banks with the same amount of business. You are assuming that that is part of the amended proposals, but the expense is also part of the cost of working the business of another bank.
Wednesday, 12th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. Mr. Hutchison.] Do you produce, Mr. Booth, the information and documents you were unable to hand in yesterday? — The first note we have is the remuneration of the London directors. We find that that is, as, I think, I mentioned to the Committee, £250 among the three. The particulars of my appointment was the next one. When the remaining directors —the other directors having retired in January, 1895, under clause 70 of the articles of association ■ —Messrs. Johnston, Watson, and I were appointed directors. Mr. Johnston and I were further appointed to be managing directors of the Estates Company, with Mr. Watson in association for consultation on important points, and for the execution of deeds; and at the same time Mr. Jeffrey retired from the post of managing director. A resolution was also passed to the effect that the £1,250 to be paid to the directors under clause 72 of the articles of association should be divided, as regards £1,000, between Mr. Johnston and myself, the remaining £250 to be divided amongst the three directors in London. Messrs. Johnston, Watson, and I had previously, on the Bth November, 1894, been appointed attorneys for the Estates Company. 2. Have you a copy of the articles of association of the Estates Company ? —I have not got a copy- here, hut it can be obtained. 3. Was there a meeting of shareholders at which Messrs. Johnston and you were elected directors ?—lt was done at a meeting of directors. 4. I wanted to know how you were elected ? —By the directors. 5. Did you ever hear of a meeting of shareholders of the Estates Company ? —I have no recollection of it. 6. How many shares do you hold in the Estates Company ?—I have no shares in the Estates Company. 7. But you are a director, you say ?—According to these instructions here. 8. Did you ever hear of a director of a company holding no shares in the company of which he was director ?—I do not know ; Ido not remember. 9. There is no case in your mind, at any rate?— No. 10. Do you know how many shares Mr. Johnston holds?—l have no knowledge on the subject. 11. Do you assume that you were appointed by the directors in London?— Yes; that is the note. 12. Do you know how many shares are purported to be held ? —No. 13. Do you still adhere to your statement that, as far as you know, the directors of the Estates Company, or of the Bank of New Zealand, had no communication with the Government prior to the 4th August of last year as to further assistance being required for the bank—that was the date of the interview you mentioned ?—I have no recollection of any prior to that date, 14. You were to look up the correspondence preceding that meeting if there were any?— There is no correspondence beyond the note of which I spoke before—requesting that the Government would meet the directors with a view to their being made acquainted with the condition of the bank. 15. Have you a copy of that letter ?—lt was a confidential letter sent to the Government. 16. Did it contain more than a request for a meeting? —I am not aware that it contained more than that. 17. It would be hardly confidential if it was merely a request to meet. There is a copy of it in the bank, I suppose ?—No doubt there is, but it is a confidential communication from the bank to the Government. 18. That will not matter in evidence. To say that it is confidential does not exclude it from evidence. If you decline to produce it we can understand you. 19. The Chairman.] Can you answer whether you will produce it ?—I do not see how I could promise to produce that letter without the consent of the Government. It is marked " strictly confidential." 20. From the directors to the Government ? —Yes. Mr. Cooper : I advise the witness that he cannot produce it. 21. Mr. Hutchison.] Do you decline to produce it ? —I do decline. 22. The Chairman.] Without the consent of the Government? On the ground that it is a confidential communication to the Government. Without their consent you decline to produce it ? —Yes. 23. Mr. Hutchison.] Assuming that you were right that the directors had no conference with the Government before the 4th August, 1895, had the directors of the Estates Company any scheme for realising the properties in their hands prior to the session of last year ? —I do not know that we had any scheme for dealing with the properties beyond taking advantages of any opportunities that might arise for the sale of the properties.
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24. The Chairman.] To your knowledge, there was no proposed scheme?— Beyond what is known to the Committee, that there was a proposal. made that some of the properties should be disposed of by lottery. 25. Mr. Hutchison.] That was a scheme that you proposed to have sanction given to by Act ? —Yes. 26. That was in 1895, was it not; and you were one of the petitioners to Parliament in support of that Bill, were you not? —Yes. 27. Where did that idea originate, in London or here ? —I do not know. 28. As a director of the Estates Company you say you do not know?—l do not know who first suggested that such a course might be taken. 29. I do not ask you who; I ask, Where did the idea originate, here or in London ?—Not in London, certainly. 30. Then it must have been here. Do you consider that that scheme, if you had got the Act through, would have relieved you from the necessity of applying to the Government for assistance ? —It is not likely; but it might have been of some substantial assistance to the Estates Company. 31. I do not think the Bill was ever circulated, or came before Parliament. Will you look at that [copy of Bill], and say if it is a copy of the Bill you desired to have passed ? 32. The Chairman.] Do you recognise that as embodying the proposal of the company?— Yes. 33. Mr. Hutchison.] That is a copy of the Bill proposed to be introduced ?—I believe so. 34. The next point is as to to the Consols. You were to ascertain the date of the purchase by the Bank of New Zealand of £150,000 of New Zealand Consols? —The information that we have got is not quite complete. If you will be kind enough to hold that matter over until to-morrow morning I will endeavour to get it. 35. Have you got the consent of the Colonial Treasurer to the purchase, or is that to be held over also ?—Mr. Cooper requires more time to look into the question of the Consols. 36. Then, as to the date of the call of £500,000, and the purpose for which it was made 1 : The circular would probably fix these points if you have it ?—There is a copy here of the circular and of the public notice. 37. Have you any correspondence as to the making of that call between the Colonial Treasurer and the bank? —I shall be obliged to give the same answer in this case as in the former one. The correspondence on the subject between the Colonial Treasurer and the bank is confidential. 38. And you decline on that ground to produce it ?—Yes. 39. Can you now verify my quotations from the statement made by the President at the meeting of shareholders on the 7th February, 1895 ? —I have not read the report. I can hand in the complete report. 40. I will ask you if you can find in it the passages I quoted to you?—l have not had an opportunity of reading the report. I would like to have an indication of the parts you wish me to examine, that I may see the parts themselves and the context. 41. Very well; I will mark the passages either to-day or to-morrow. I asked you if you could give me the date when the original copies of the agreement of October were signed ?—I understand that, both as to the number of agreements and the drafts, I shall have to refer to Mr. Button. They are not able to supply the information at the bank. 42. But you can find out, I suppose ?—I can find out from Mr. Button by applying to him. 43. Have you the particulars of the payments made to Mr. John Murray ?—You refer to the payment of £500 to Mr. Murray ? 44. My question was as to the date of the payment of the £500?— We have not got the date. It was a payment made in London from a trust account. We have no further information about it. 45. It was made in London from a trust account and drawn against here ?—I believe that is so. 46. Have you the particulars of the disbursements to Mr. Murray of £531 Is. lid. ?—You refer to the cost of the telegrams ? 47. Yes; and the other items included in the £531 Is. lid. ? —The particulars are not in the possession of the bank here. 48. Were the payments made here ?—I have not got full particulars here. We were not able to say whether they were made here or in Auckland. 49. That is held over, then ? —Yes. 50. You have handed in a return of the particulars of the Colonial Bank landed property and bank premises ?—Yes. 51. The order of the Committee was that it should be a " detailed statement" ?—Will you indicate what the details are that you want ? 52. The details would probably be given if you would dissever the landed properties from the bank premises. If they are all bank premises we could understand it being complete as handed in ? —I do not think there is any further information that could be of use. What is meant is that the properties are on lands which are taken over, and here and there there may be a few feet, and possibly a vacant section, more than is actually required for the buildings. 53. Then, I understand that this return refers to bank premises and land adjacent to the various buildings formerly belonging to the Colonial Bank in the colony ? —Yes. 54. I was about to ask you yesterday, when the Committee adjourned, as to the appointment of General Manager. Did you ask for applications for that office ?—-No. 55. How did you proceed to the appointment ?—There was no proceeding necessary in the matter. The President of the bank was anxious from the beginning that Mr. Mackenzie should be appointed General Manager.
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56. When do you refer to as " the beginning." As soon as Mr. Watson was appointed President, do you mean ? —No ; from the time when we purchased the Colonial Bank business. 57. That is, in October, 1895. The question of appointment of General Manager came up then before the directors, I suppose ?—The acting general manager was not in good health, and Mr. Watson, President, was always very anxious that Mr. Mackenzie, with whom he had been so long associated in the Colonial Bank, should come into the Bank of New Zealand and become General Manager; and the matter was put and pressed in such a way that practically the question of the appointment of any one else never came distinctly before the directors. The attitude the directors took up was one from the beginning unfriendly to that appointment, and we simply opposed it from time to time, and we were never willing that it should be made. 58. I understand that you, with your co-directors, other than Mr. Watson, who was President, were unfavourable to the appointment—the whole of them ? —That is so. 59. How, then, was it made against the objection of the directors?—ln the course of the discussion and difficulty that continued for some considerable time on the subject, it came about that we were asked to take the advice of the Premier, and the Premier was asked if he would interfere in the matter. Ido not know how the arrangement was made, but we consented to go together and consult the Premier in the matter; but the Premier—as I think, very properly—declined to advise the directors or interfere, beyond saying that he saw no particular objection to our giving Mr. Mackenzie a trial, always taking care that we gave to him no time commitment. At a meeting of the directors, held immediately after the interview, the appointment was made, and Mr. Mackenzie became General Manager on the same terms as are common to the other officers of the bank—that is, subject to a three months' notice. 60. What is the salary fixed at ?—£1,750 per annum. 61. What was the salary of the previous general manager ? —I do not know. 62. You can ascertain, of course. Mr. Andrews was acting general manager ?—He was at that time. 63. What was his salary ?—I do not know, but can get it. 64. Was that appointment of Mr. Mackenzie by resolution of the directors?—lt was. 65. The four gave way in the circumstances, as you have indicated ?—Four did not give way. I was not able to consent to it. 66. He is now General Manager?—He is. 67. Would you care to mention your reasons for dissenting from the appointment ?—I would much prefer that the Committee should accept the matter as it stands now. 68. I will not press the matter if you prefer to leave it there, beyond asking who voted for the appointment at the time it was made ?—Practically the board silently assented to the proposal, and it was recorded; but I felt called upon, for the first and only time since I became a member of the board, to ask that my dissent should be recorded when the minutes came to be confirmed. 69. Then, it appears in the minutes when the appointment was made that you dissented ?— Yes. 70. Were you the only dissentient ?—I was the only one whose dissent was recorded. 71. Were all the directors present at that meeting?— Yes. 72. And, while not actually concurring, they did not, other than yourself, record their dissent ? You say all were present at this meeting?— That is so. 73. You do not say that the others, except the President, were concurring other than by silence ? —I think that is so. They silently accepted the position. 74. Coming to a more recent event, was there a meeting of directors at which the fine imposed upon Mr. Watson was agreed to be paid by the bank ?—I believe there was. 75. Were you not present at that meeting?—lt was a meeting of the directors—an informal meeting —but I believe they were all present except the one absent in England. 76. Mr. Kennedy?— Yes, Mr. Kennedy. 77. Was it agreed that this fine should be paid by the bank ?—lt was agreed that it should be paid; but it is not quite correct to say that it was paid by the bank. The deed of settlement of the tank places at the disposal of the directors for their fees a sum of £2,500 per annum, and that money is set aside, but not all used. For a considerable time we used not more than £250 for each director of the sum set aside, £2,500. There is a considerable part of that at the disposal of the directors, and we ordered the fine to be paid from that fund. 78. Taking £2,500 as the sum available for directors' fees for the current twelve months, what will be the regular charge against that fund for directors' fees ? You have told us you and Mr. Johnston as directors of the bank take £150 each ?—£lso. We added £100 each to the payments of the others from the £250 we have. It is £350 each, and £150 each to those who act also as attorneys to the Estates Company. 79. I am speaking of the Bank of New Zealand only ? —Up to this there was £350 each for two directors, and £150 each for the other two. What they are at the present time lam not able to say, because the matter is, I believe, rearranged, owing to the fact that since the sale of so large a part of the Estates Company to the Assets Realisation Board the Estates Company directors will not receive more than £100 per annum, and I believe each of the directors now is to receive £500. But I cannot give you the date, because it is a recent arrangement owing to the fact that at the end of March the Assets Realisation Board took charge of the bulk of the properties. 80. Then, we may take it that from March, 1896, the charges against the Bank of New Zealand for the directors are £500 each ? —I would like to refer to the bank to get the exact figures, because it has been changed since the 31st March. 81. We will hold that over, then. Why do the directors take cover for the "B " and "C " lists together, or why do they say in the agreement of purchase of the Colonial Bank that the cover was against " B " and " C " together ?—Because it was against them.
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82. But you have distinguished the amounts referable to the " B " and " C " lists included in that cover?—We had only distinguished them in this way, that the accounts in the "C" list were accounts we had no intention from the beginning of taking over. But, of course, we were quite willing to suit the wishes of the Colonial Bank and work the " C " list as agents for three months. 83. What reason was there for not stating that the cover for the " B " list was £272,072 ?—I am not aware of any reason. 84. Then, as to the £55,233 which we now know was the cover for the " C " list; was there any special reason why that should not be stated in the agreement ?—I am not aware that we had a special reason. 85. Had any one else a special reason ?—That I cannot say. 86. Who suggested that the cover should be expressed to be general as to the two lists? —I am not able to say who suggested that. 87. Was it done by you or your co-directors?—l do not think so. 88. It may have been from the other side—the Colonial Bank?—lt may have been. 89. Why was it that the amount agreed to be paid for good-will was not stated in the agreement -which was laid before Parliament ?—I have no recollection of any special reason why that was not done. 90. Was the fact communicated to the Government ?—I am not able to say. Ido not know. 91. There is no mention of good-will at all in the agreement—no reference to good-will?— No. 92. Can you refer to any word in the agreement about the good-will? —Mr. Cooper thinks it would be inferred from the first clause —" the selling bank shall sell and the purchasing bank shall purchase the assets of the selling bank." 93. Do you find the word "good-will" mentioned anywhere in the agreement?—l am not aware that it is. I have no recollection of the matter coming up to be considered or decided in any way. 94. £75,000 is the sum you have now put in the balance-sheet as payment for good-will ?—Yes. 95. That sum figured no doubt in some memorandum or draft that was drawn out ?—-It figured in our memories of the negotiations. 96. I have no doubt you had in some way a draft in pencil or ink ?—I do not think so. I have no recollection of doing so. 97. Who is the officer of the bank best able to inform us as to the globo assets retained by the bank ?—Mr. Foster. 98. Is he still connected with the Estates Company ?—He is still in charge of the globo assets on behalf of the Estates Company. 99. He is also manager or has something to do with the Realisation Board. What is he there ? —Manager. 100. So he is managing the whole of the globo assets at the present time ?—That is so. It has not been found convenient to make the rearrangements which have still to be made. 101. He is your officer in part ?—-Yes; he advises as to some parts of the bank's properties. 102. What properties are these outside the Estates Company which are still held by the bank? —I have not got a list of them with me, but Mr. Foster can supply you with full particulars. 103. Perhaps it would be better if you, as a director, could hand in a list of any properties outside the Estates Company held and administered by the bank distinct from the globo assets, which have been divided, part going to the Assets Realisation Board and part being retained by the Bank of New Zealand ? —No ; they are the property of the Estates Company. 104. I understood you to say that you asked Mr. Foster to advise you as to some of the properties of the bank included in the Estates Company ?—But they are properties connected with the Estates Company or Assets Board. 105. Are they in the bank?— They belong to the bank, but those properties not transferred to the Realisation Board remain subject to the Estates Company. 106. Are there any properties administered by the bank not included in that category—namely, of the Estates Company ?—No. 107. Are you clear about that?—l have no recollection at the moment of there being any. 108. Perhaps you will ascertain. It is suggested there are some ?—I will ascertain. I cannot call any to mind. 109. The Chairman.] You will make inquiries and supply the information as to that ?—Yes. 110. Hon. Mr. Seddon.] Are the East Coast lands Estate Company's properties?— Yes; I think the bank holds a mortgage. I will get full particulars. 111. Mr. Maslin.] Do you not think it is highly desirable for the Bank of New Zealand to realise on its trading concerns as soon as possible ?—I have said so. 112. As a general rule, do you not think the carrying-on of trading concerns by any bank is calculated to injure its general banking business? —I think so. 113. Do you think the trading concerns of the Bank of New Zealand bring it into competition with any of its customers ? —That is very likely to happen. 114. Would such competition be prejudicial or beneficial to the business of the bank ?—The tendency of that competition would be unfriendly to the bank. 115. It would be prejudicial to the general business of the bank, would it not ? —As a rule, I think it would be undoubtedly so. 116. What steps is the bank taking to dispose of these trading concerns ? —I could not say anything in respect of that question more definite than this : that we are doing everything possible to dispose of them. 117. Is the bank prepared to sell any of its trading concerns at their currrent commercial value?-—I believe we shall be glad to sell them all at their commercial value. 118. At current commercial value—l mean, at a valuation arrived at by competent persons
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at the present time ?—I think so. I think we shall be very glad to sell them all under such arrangements. 119. At their present value ?—Yes. 120. The Chairman.] Their fair market value to-day ?—Yes. 121. Mr. Maslin.] Are balance-sheets prepared of each trading concern carried on by the bank ?-—I believe so. 122. Can you give any information as to how the balance-sheet of each trading concern is compiled ? Is stock taken of each concern ?—I would prefer you to ask Mr. Foster, who has full particulars, and will no doubt give you all the information you want on the subject. 123. Have the trading concerns been written down by any considerable amount ?—I could not give you the particulars. I think it would be better to leave the reply to a question of that kind to Mr. Foster. 124. You are aware that they have been written down, I suppose, in a general way ?—lt is a large question, for which I would require a considerable amount of information to enable me to reply so as to give the Committee a reliable idea of what has been done. 125. Would you give that information, so that we may know how much has been written off the trading concerns since they first came into the hands of the bank ? —I will try to get the information, but I believe the Committee will be able to get it at once from Mr. Foster. 126. In the report, 1.-6, of last year there is this paragraph: " There is a deficiency of £467,077 in the Estates Company against which no assets exist, and a further deficiency of £44,601 in trading concerns and properties outside New Zealand." How far did this sum consist of trading concerns —the £44,601 ? It says trading concerns and properties ? —We have a batch of trading concerns, and they have been affected by the writing down, but in the information given there as a writingdown of trading concerns there is a large amount to write off. Some are written clean out of existence, such as the Fiji property. You could get the information from Mr. Foster, and I could get it, but it would be repeating what you want. 127. How do you write an account out of existence in the bank, or how do you write them down ?. It would be a very simple process when you have arrived at the determination to do the thing?—lt is very simple indeed when you have got the money to do it with. 128. I would like to know the procedure by which you write an account down, or write an account off ? What book-keeping entries do you get ?—Well, if you ask the Government Auditor he will give you the exact process. 129. But still, as a business-man, you know how this writing-off is done ?—As a business-man I would credit the account with the amount I have written down. 130. Do you consider that any further loss is likely to be made on the trading concerns, or have they been written down sufficiently to avoid further loss ?—I think, substantially, they will come out at what they stand at now in the books. There is a possibility of some gain on several of them. 131. I want to ask a question in respect of the second £1,000,000. Was the whole of the second £1,000,000 in liquid securities, as provided for by the Act of 1894 ?—I am not able to give you the particulars. 132. Ido not want particulars: I only want the facts?—l could not give the facts without getting them out from the books. The investment was spread over a considerable time, and it was made in a variety of securitities. 133. I suppose you have a list of such securities?— The bank has a complete record, no doubt, connected with the investments. 134. Did the investment of this second million for 1894-95 result in a loss to the bank ?—I am not able to say. 135. Was there any profit to the bank resulting from the investment of the second million?— I am not able to say. 136. The Chairman.] You mean you do not know ?—I do not know the current details of the bank's arrangements. It is quite impossible that I should be familiar with them. 137. Mr. Maslin.] Did it earn 4 per cent., the amount you were paying on the second million of debentures? —I do not know without reference. 138. Did you not report to the meeting of shareholders in Wellington that you were making a loss on this second million ?—Probably that was the result at that time. 139. The Chairman.] Are you aware that the directors made such a report to the shareholders —that they were making a loss ? —I have not a distinct recollection, but it is very likely that a statement of that kind was made. 140. Mr. Maslin.] Have these investments made of the second million been realised, and is the money now in use in the bank's general business ?—I think it is. I think they have been realised, and have been used by the bank to very much better advantage. 141. The whole of the investments have been realised?—l think so. 142. You mean with the exception of the £150,000 of New Zealand Consols?—We have been using the money to pay off the costly debentures of the Estates Company. 143. Then, that £150,000 is the only security which remains in the hands of the bank as an investment of the second million ?—I could not say that. There are probably some other investments, but I could not give the amount. 144. I understood you to say that you had realised on the whole of them, but I knew that the £150,000 was not realised. There is only a small balance of the million outside the £150,000 that is still invested outside the business of the bank ?—You see the second million is placed at the disposal of the bank, and becomes part of the funds of the bank besides the other deposits. I cannot tell you, and I do not think it would assist you at all to know where it begins and ends. It is current business.
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145. What I wanted to ascertain was whether the second million is available and now in use in the general business of the bank, or whether it was locked up, and on which the bank might be making a loss ?—Substantially it has been available since the legislation of last year, and is being used to the best advantage possible of the bank. 146. Who appointed Mr. Watson the President of the bank ?—lt was a Government appointment. 147. Were any of the directors consulted by any members of the Government as to the appointment ? —Not to my knowledge. 148. I think you have told us before that Mr. Watson has never since his appointment exercised the power of veto conferred on him by the Act of 1894? —I do not remember his having done so. 149. I suppose that has been due to the directors giving way when Mr. Watson has opposed the general wish of the directors?—l think I can only say that it has not been in any matter finally found necessary. 150. You implied as much just now in answer to Mr. Hutchison's question respecting the appointment of General Manager—that, unless the directors had given way, there would have been practically a deadlock. The directors were not agreeable in the first instance to the appointment of Mr. Mackenzie? —That is true; but it is hardly true to say there was an actual deadlock, or that Mr. Watson's veto was used. 151. But there would have been a deadlock had you not appointed Mr. Mackenzie ?—lt is not easy to say what might have happened. 152. You have stated in your evidence that Mr. Watson wanted to appoint Mr. Mackenzie from the very first ?—Yes. 153. The directors wanted to appoint some one else ? The Chairman : No; Mr. Booth said they were opposed to Mr. Mackenzie. He did not say the directors wanted some other particular person. Mr. Maslin : Well, if they were opposed to Mr. Mackenzie, it was evident they wanted to appoint some one else. 154. Hon. Mr. Seddon.] He did not say they wanted any other person, but that they were not agreed as to Mr. Mackenzie ?—Yes. 155. Mr. Maslin.] Did it become necessary to purchase further banking business through so large a sum as £2,000,000 coming into the bank through the issue of the guaranteed debentures of £2,000,000 ?—lt is always wise to get good business if you can. 156. But was it not a fact that having that large sum of money at disposal necessitated the bank increasing the earning-power of the bank to pay £80,000 a year on these debentures ?■—l do not think so. 157. I notice that in the report that was made to the Banking Committee last year there is a letter, signed by the directors and President, which says, "With the increased burden thrown upon the hank, caused by the two millions of additional stock and the readjustment of capital which is proposed herein, a very large addition to the bank's earning-power is essential." Is this correct ?—Yes ; but that was the two millions of 1894. You referred to the bonds. No doubt the acquisition of so large an amount of capital, at a comparatively high rate of interest, made it important that the earning-power of the bank should be increased. 158. Was it to the advantage of the bank to be burdened with the payment of interest on so large a sum —more than it could use in its legitimate business?—lt was a disadvantage to the bank to be restricted in the use of the second million. 159. Seeing that you could not use this second million profitably without acquiring additional business, if any additional business had not been acquired it would have been a distinct disadvantage to have this second million ?—ln the form it was at that time —that is, restricted in the investment of it. 160. If it had not been for the second million, and the payment of £40,000 a year in interest, there would not have been a necessity for acquiring the additional business ?—No doubt it influenced the position—not probably to a serious extent, but still it did influence the position. 161. Who, or what, first suggested to the directors of the Bank of New Zealand that the business of the Colonial Bank was a desirable purchase for them to make ?—I do not know who first suggested it. 162. When they brought in that report to the Banking Committee they thought it was necessary to acquire other banking business?— Yes. 163. You have stated previously that at that time the directors contemplated the purchase of the Colonial Bank: that was the bank they had in view when they made that suggestion. Is that right ?—Yes. It was the Colonial Bank that we understood was the bank likely to be bought. 164. And you do not know who, or what, suggested to you that this was a desirable business to purchase ?—I do not know from whom the suggestion first came. We were only careful that the bargain we made should be a good one. 165. Was it because you thought the business of the Colonial Bank was a prosperous one ?— We never troubled whether it was or not. Our trouble was to get the books, and to take the good business and leave what was not good outside. 166. You never would enter into negotiations for a business which was not a profitable one in your opinion ? —Oh, yes ; when you have an opportunity of taking what you know to be profitable and leaving what is not. 1,67. You did not know? —But we took care from the beginning to see that that would be done. 168. Had you any reason to suspect that the business of the Colonial Bank was not good ?— We had such information as was common to the public. *9—l. 6.
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169. You say you were acquainted with the balance-sheet of the Colonial Bank. You notice that this balance-sheet disclosed that the bank had been making a substantial profit year after year, paying dividends of 7 per cent., and carrying money to reserve. Judged by the balance-sheet, the bank was a profitable business ?—To those who were not able to read between the lines. 170. Then, the balance-sheet was not reliable ?—I think not. 171. Does the last balance-sheet presented by the Bank of New Zealand to the House come under the same category of bogus or doubtful balance-sheets—the balance-sheet of 1896?— I believe that it is quite reliable and trustworthy. 172. As bank balance-sheets are, as a rule? —No. 173. Is this an exceptional balance-sheet, then ?—lt is, perhaps, at present. 174. The first reliable balance-sheet issued by the Bank of New Zealand for many years ?—I am not going to say that. lam willing to trust this balance-sheet, and to say that it is trustworthy. 175. You stated that, in arriving at the value of the Colonial Bank's business, you practically took the bank to pieces ? —Yes. 176. From the facts that have since come to your knowledge, since you first agreed to purchase, do you consider the past management and the business of the Colonial Bank were satisfactory ?—I do not know whether I am called upon to express an opinion about the Colonial Bank management. 177. I think you have expressed an opinion in the decision you arrived at which will speak more forcibly than words?—l am quite willing to leave it at that. 178. You found, as a result of the investigations, that, after proper provision was made for bad and doubtful debts, the whole of the capital and reserves of the Colonial Bank were absolutely lost,, with the exception of £58,906 '?—I do not think I stated that. 179. You found it necessary to place a large sum at the credit of the "B " and " C " lists?- — But a good deal of that may become available to the bank. 180. But if full provision had been made for bad and doubtful debts that would be the sum ?— That would be the sum that would be secured to us. It does not follow that the bank itself would be called upon to make quite so full a provision. 181. Before Mr. Watson's appointment as President of the Bank of New Zealand, who held the position of chief inspector of the Colonial Bank ?—I believe he did. 182. As a matter of fact, you know he did?—As a matter of fact, I only know what everybody knows, and from the same source. Ido not know of my own knowledge. 183. You have no doubt in your own mind? —No. 184. Can you inform the Committee what are the duties of the chief inspector of a bank?—l am not able to inform the Committee what are his duties. 185. lam speaking in a general sense. In your experience of banking as a bank director, you should know what are the duties of the inspector of a bank in a general sense ?—I think my experience would not warrant me saying anything about Mr. Watson's duties. They might be quite different from my experience. I have no knowledge to warrant my defining Mr. Watson's position; as an inspector. 186. Has the Bank of New Zealand a chief inspector ?—No; not that I know of. 187-. You have inspectors?— Yes, we have three. 188. Do they all rank equal ? —I think they do, the three inspectors I refer to. 189. The Chairman.] There are no other inspectors than the three to whom you refer?— There are three inspectors in New Zealand who are inspectors in the ordinary sense of the term — Mr. Dignan, Mr. Buller, and Mr. Litchfield. There is an inspector also in Australia, who is in a different position, inasmuch as he is also manager of the bank in Sydney—Mr. Parfitt. While he is manager of the bank there, he has also the duties of inspection of the other banks over there. 190. The three inspectors here rank equally; there is no chief inspector?— There is no chief inspector. 191. Mr. Maslin.] An inspector is familiar with the branches of the bank he inspects?— Yes,, he should be. 192. He is familiar with the principal details ?—He should have acquaintance, no doubt, with the accounts of the bank. 193. Who does he make his report to ? —I do not know. Our inspectors send in their reports to the board of directors. They would be addressed to the General Manager, but they are always submitted to the board of directors and laid on the table. 194. The inspector reports to the General Manager, and he submits the report to the board of directors ? —I do not know what the custom was in the Colonial Bank; that is the custom with us. 195. What are the duties of General Manager—you were asked and gave us the answer the other day—in the Bank of New Zealand?—He is the chief executive officer in conducting the business of the bank. 196. And reports from time to time to the directors matters within his knowledge that it is desirable the directors should become acquainted with in the interests of the bank ? —Yes, that is so. 197. I suppose the General Manager is fully acquainted with the business of the bank —its soundness or otherwise ? —He should be. 198. Do you think a person occupying the position of chief inspector would be well aware of of the duties of the General Manager, and of the fact that he would be fully aware of the position of a bank?—A general manager would, no doubt, be assumed to know substantially the condition of a bank ; but to what extent an inspector might know the condition of a bank outside his own district I am not able to say. 199. You have told us that the directors had the appointing of the General Manager ?—That is so.
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200. Was Mr. Mackenzie's name the first name discussed for the position of General Manager? —There was no other name submitted to the board that I remember. It was from the beginning plain, as I said before, that Mr. Watson hoped and was anxious that Mr. Mackenzie should be, as soon as practicable, General Manager of the Bank of New Zealand. 201. There was no proposal before the directors to make the appointment from any of the principal officers in the bank ?—No. 202. Did Mr. Embling's name come up before the directors V—l do not remember it coming up in any serious form. His name was mentioned amongst two names —three, in fact—but there was no deliberate consideration given by the directors to any name but the one that was pressed upon us—that of Mr. Mackenzie. 203. You did not get the chance of discussing the appointment of Mr. Embling or any one else in the Bank of New Zealand. 204. The Chairman.] You said you had other names before the directors. Were those names submitted formally to the directors ? —No; there was no deliberate consideration of any names. We never reached the point at which other names became practicable. Mr. Watson, from the beginning, was anxious that Mr. Mackenzie should be appointed; and, as I have before said, the directors were not willing. 205. Mr. Maslin.] Mr. Watson raised no objection to Mr. Mackenzie being appointed General Manager of the Bank of New Zealand ?—Oh, no. 206. You have stated that the advances of £20,000 and £5,000, made practically by the President, for which the President was practically responsible, had become more than doubtful. Is that correct ?—I do not think that is what I said. 207. And you were advised by Mr. Larnach and Mr. McLean that unless these negotiations for the purchase of the Colonial Bank were completed these amounts would be a loss to the Bank of New Zealand. Is that correct ? —lt is not exactly as I put it. The statement to which I referred as having been made by Mr. Larnach and Mr. McLean defined the position of the advances, and obliged me to say that they had become more than doubtful. They were doubtful to a certain extent, .undoubtedly, before ; but the statement you refer to, and which I made, was the statement which compelled me to say they had become more than doubtful. 208. One of the reasons that you gave £35,000 for the Colonial Bank properties more than they were worth was the guaranteeing of these two amounts amounting to £25,000 ? —lt was a material inducement. 209. So that it amounts to this: that the Colonial Bank properties stand charged in the books of your bank at a sum of £25,000 more than their true value?—No; we have got a good business in exchange for the excess. 210. But you have stated that it was a consideration for getting these two amounts guaranteed and that you considered that the good-will was practically £10,000 more than the £75,000 set down as the sum given for good-will ?—That is right. That is, assuming that the £25,000 would have been entirely lost. 211. The Chairman.] Did you quite understand the last question ?—lt implies, as you say, that the £25,000 was inevitably lost. I do not say so; but when you have got dangerous accounts which you believe to be more than doubtful there may still be possibilities in connection with them, and it is not right to conclude that inevitably they will be a total loss; but, assuming that there would be a total loss, then the amount paid for the consideration of the business we got would represent a higher sum than the £75,000. 212. Mr. Maslin.] You stated before that it would represent at least £10,000 more?—l am quite willing to abide by what statements I have made, because I believe they are quite the same practically as I give to you now. 213. What must be the state of an account when bank directors consider it more than doubtful, taking the past history of the Bank of New Zealand of accounts considered good in their books ?— Well, some of the accounts we should write down as more than doubtful are already recovering, both in Auckland and on the West Coast, to an entirely unexpected extent. 214. I suppose that is due to the revival in the mining industry ?—Yes, I think almost, if not entirely so. 215. Is this £25,000 likely to be improved by the revival in the mining industry?—l do not think lam called upon to say anything more. I have already stated that I cannot give you any details in connection with the £25,000. 216. Do you admit that the Colonial Bank properties stand charged with any sum in consideration of the guaranteeing by the Colonial Bank of these two sums of £20,000 and £5,000 ?—I am not able to say more than that the guaranteeing of the amount was a consideration and inducement to our making the further concession beyond the amount we paid for good-will, involved in the payment of book-value for the buildings. 217. And if the Colonial Bank had not guaranteed these two sums, you would not have given so much for the bank properties?—lt is impossible to say what we would have done in the case of eventualities which did not arise. 218. Has this advance become a safer one or not, apart from the guarantee, since the amalgamation ?—I am not able to give any further information about it. 219. You cannot say whether it is safer now, apart from the guarantee, than it was before ?—I am not able to say any mere than I have done. 220. You have given evidence that there were considerable writings-off. I have already asked you, and you have answered Mr. Guinness : I rise to a point of order. We should not have questions put again after they have been answered. The Chairman : That is no point of order.
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221. Mr. Maslin.] You have explained to the Committee the process of writing accounts off: that you make an entry in the right-hand column of the ledger of the amount written off ? —You have got my explanation of the process that would be made when money became available for the amount. We should put the money available to the credit of the account. 222. You have given evidence that you complied with the terms and conditions for the purchase of the Colonial Bank by the Bank of New Zealand?— Yes, as we understand section 18 of the agreement. 223. You stated the other day that in respect of the " C " list you credited the sum of £98,382 in the " C " list with the sum of £53,233, the amount in the right-hand column of the said list ?— Yes, we had the money available to help the account, and we were asked to put it there, and did so. 224. That practically amounts to the crediting of that account in the right-hand column ?—For the time being it was a credit to the account. 225. Is that not a writing-off?—No, certainly not. 226. Can you explain any other process of writing-off?— When an account comes to be finally determined, then is the time when everything is used. Whatever resources may be available for an account of a suspended interest you write off, and the balance as utterly bad. Then, whatever the amount of the deficiency, you write it off. But in the case referred to we had nothing to do with the accounts beyond acting as agents. We had no power to interfere with the accounts, and we did not intend to interfere with them. 227. By placing the sum of £53,233 to the credit of £98,382, the debit would be reduced by the amount in the right-hand column?— The account is improved to that extent. 228. Or the debit is reduced by that amount ?—Yes; but ultimately it may not be required. It is not a writing-off. 229. Mr. Guinness.] Have you any objection to produce the written guarantee by the Colonial Bank to the Bank of New Zealand guaranteeing the advances of £20,000 and £5,000 ? —I could not possibly produce the guarantee, because it would disclose confidential business of the bank.. Names would inevitably appear on the document. 230. I understand that you decline to produce either the original or a copy of that guarantee ? —I could not produce that. 231. You know Mr. Butt, the Auditor appointed by the Government ?—Yes. 232. He was formerly an official in the Bank of New Zealand?— Tie was. 233. Was the consent of the directors asked to allow him to leave the Bank of New Zealand and become Government Auditor ?—The appointment was cordially approved by the directors, who have a very high opinion of Mr. Butt's capacity and integrity. 234. Did the directors release him from his engagement to the bank when he was appointed? —Yes. 235. Was there any understanding made by the directors and Mr. Butt that, in the event of his ceasing to act as Auditor for any reason whatever, the bank directors would again re-employ him in the bank ?—There is a written undertaking that he shall come back on certain terms into the service of the bank in the event of his giving up or losing Ids position as Government Auditor. He had" some claims, owing to long service, upon the pension fund of the bank, and I believe it was to conserve his legitimate and proper claims on that fund that the arrangement was made. 236. Did the directors ask, or were the directors of the Bank of New Zealand asked, to recommend any gentleman for the position of President ? —I have no knowledge of their being consulted at all. 237. You have told us that you were the only director who had recorded in the minutes of the directors, on the appointment of Mr. Mackenzie, your dissent to his appointment ?—Yes. 238. Did you propose or suggest any other gentleman to fill that position at any time during the negotiations or during the consideration of Mr. Mackenzie's appointment ?—There were two or three gentlemen mentioned amongst ourselves, but there was nothing done beyond the mention of the names. 239. You did not think it was your duty, or that it was necessary, to propose the name of any other gentleman against that of Mr. Mackenzie?—No; it was quite useless. 240. How long is it since Mr. Mackenzie has been appointed ? —He was appointed after the purchase of the Colonial Bank business —about eight or nine months since. 241. Since Mr. Mackenzie's appointment, has he given general satisfaction to the board of directors in the conduct of the affairs of his office? —I do not feel at liberty to speak for the other directors at all in the matter. They will appear before you, and you will be able to ask them. 242. Perhaps you will express your own opinion?—My own opinion is that a very much stronger and more capable man than Mr. Mackenzie is urgently required as Manager of the bank. 243. Mr. Tanner.] You have given particulars, in the early part of your evidence, with regard to the writings-off in 1888 and 1889 ; that is, as far as your knowledge extends. Can you inform us whether the whole of these writings-off took place with regard to properties included in the Globo Assets Company?—No; I could not give that information. 244. You do not know whether any properties still held by the bank as trading concerns were written down at that time?—l should think it probable that some were, but I have no particulars as to the history of the bank's dealings with those things at that time. 245. Can you tell us whether these writings-off took place immediately prior to the annual meeting of shareholders, or after that?—l do not know. 246. Has it been done in your own case with regard to the writing-off of £52,000 in 1895-96 ? Did that take place immediately before the compilation of the balance-sheet of 1896 ?— Yes; the arrangement was made in the compilation of the balance-sheet. 247. With regard to the £200,000 contingency fund, which was held as a reserve against debts
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which existed at the time of the passing of the Act, has the amount of money written down, which is some £28,000, been entirely confined to the properties still held by the bank, and the debts owing to the bank, or has any part of it been applied in any way to the properties transferred, to the Assets Realisation Board ? —I could not say. Mr. Butt is the only man who could tell you the actual amount. That amount was taken from the contingency fund in the writings-off in the balance-sheet of 1896. 248. You cannot distinguish between the amounts?— No. 249. With regard to the £54,000 written off last year, is that £54,000 debts which have perceptibly become valueless since, or does it, or any portion of it, apply to previous debts?— Nearly the whole of it applies to previous debts. A comparatively small sum, between £1,300 and £1,400, was all that was required to write off debts which had arisen since we took charge of the bank. 250. Are we justified, then, in assuming that the contingent £200,000 held over was insufficient for the purpose?—No; it is impossible to say until the final determination of a considerable number of accounts for which the contingency fund was meant to provide. 251. When you became a director, did you take a declaration of secrecy in the same form as Mr. Watson did ?—I believe the form was the same. 252. Do you remember its terms ?—I do not remember the exact words. 253. Have you any objection to producing a copy of it before the Committee ?—I know of no objection to be taken to it. 254. Will you undertake to produce a copy ?—I believe it is in the deed of settlement, and can be produced. 255. I wanted to ask a question or two with regard to an exhibit which you have laid before the Committee. That is the list of shares transferred on the colonial share-register belonging to the Bank of New Zealand ? —Yes. 256. You are aware that these shares have been transferred according to the list. I suppose the list is accurate, as far as your knowledge goes ?—As far as my knowledge goes, I believe the list is right, 257. Are you aware that in 1894 the House passed a short Act which was intended to restrain the transfer of bank shares in the colony ? —Yes. 258. And that it became optional with the directors whether they allowed shares to be transferred or not ?—Yes. 259. And you are also aware that, according to this list, many hundreds, I might say thousands, of shares have been transferred since that date ?—I do not know how many, but a considerable number have. 260. In these cases, have you had applications in writing for the transfer to be allowed to proceed ? — The applications for transfer are in charge of one of the clerks, and from week to week they are brought up by him before the directors for their approval. 261. May I ask what the method of procedure is in regard to these transfers? Do the directors ever object to any?— Yes, very much ; and often decline them. We have the most reliable information we can get supplied as to the character and position of the transferors and transferees in each case. 262. Can you give me a rough estimate of the transfers of shares which have been declined since the passing of this Act?—No, I do not think I can, without making special inquiry of the clerk who was in charge of the transfer books. 263. Am I right in assuming that all these transfers have been signed, as marked on the list ? —I should not like to say; but I can make inquiry, and get the information for you. 264. I will put it to you in this way: The list is made up with the date of the deed, the date of the registration, name of transferee, name of transferor, and number of shares; and it is said that the transfers have been registered since the beginning of 1893. Am I right in assuming from that that these have been registered as transferred ?—I should think so. The particulars you have got here are from the return that was given in from the deeds, and that is taken from the share-registers of the bank. 265. Did the directors have before them the amount of consideration given for those shares which are transferred ?—I cannot say that that is always the case ; but our object in consenting to transfers is always, where there is an opportunity, to get them in stronger hands. We decline to allow transfers if we have reason to believe that the transferee is weaker than the transferor. 266. Are you aware that the name of John Murray appears in the list as having transferred 100 shares for 10s. since the passing of this Act ? —I am not aware of it. 267. Is it not an unusual thing for a bank shareholder to part with 100 shares for 10s. ?—lt is not usual. We have been very careful in dealing with them. 268. You cannot give me an estimate of the number of applications you have had for transferring shares which you have refused?— No. 269. Is it safe to say they have been numerous? —It is safe to say we have refused a good number. 270. Has your attention never been called by the clerk in charge of this particular work to the fact that some shares have been transferred for more than £4, and some have been transferred for a few shillings, and even for a few pence? Does that excite suspicion in the minds of the directors? —It is not a matter that we are much concerned with. We are concerned more with the character and position of the man who is to have possession of the shares, in view of the liability. 271. And are you satisfied, in cases where you allow transfers, that you get more substantial holders ?—We have not allowed the transfer of shares without being satisfied that the transfer is to the advantage and security of the bank. 272. Here is one particular case: " John Studholme, jun., Mrs. E. Studholme, Miss M. Moorhouse, Miss E. C. Moorhouse, Miss A. J. Moorhouse," who transferred their shares. Do you no—i. 6.
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consider that you are getting more substantial holders by transferring shares like these? This transfer is to Mrs. Rhodes ? —I am not able to give you the history of the several transfers which have been made, so far as they have come before the directors ; but I can assure the Committee, with absolute confidence, that we have not permitted the transfer of any one share where the transfer is otherwise than to the advantage of the Bank of New Zealand. 273. You say that generally, without reference to any particular case ?—Without reference to any particular case. 274. Now, with regard to one or two matters connected with the Colonial Bank and the purchase. You said that Mr. Watson was invested with a power of attorney, did you not, on behalf of the Bank of New Zealand? —No ; he holds a power of attorney for the Estates Company. 275. For the Estates Company only—not on behalf of the bank?—No; he has no use for a power of attorney on behalf of the bank, so far as I know. 276. Can you give us the date when the President of the Bank of New Zealand purchased the £20,000 and £5,000 of debentures alluded to?—I cannot give you any particulars with regard to the advances. 277. Is it fair to ask that these debentures were in connection with the mining company?— That is assuming that they are debentures. I did not say that they were debentures. 278. Are you free to answer that question ? —No. 279. Can you inform us how many accounts were in what you term the "C " list ?—J can only say there were several. I cannot say the number. 280. There was more than one ? —Yes, there were several. 281. Can you give us the date when the Bank of New Zealand handed back that " C " list to the Colonial Bank? —I cannot give it to you from memory. On the 6th of February the bank elected not to take the " C " list. 282. Hon. Major Steward.] How long have you been connected with the Bank of New Zealand in your capacity as director? —Since September, 1894 —at the end of September. 283. In a previous examination you stated that the first knowledge of the position of the Bank of New Zealand —that is, its position as requiring some outside assistance—was first obtained by the Government in 1895 ?—Yes ; that was the second application. 284. Were the directors aware in 1894, when you were one of them, of the position into which the affairs of the bank had drifted ?—No. We became directors at the end of September, 1894; but you will easily understand that it was a work needing considerable time before we could make such acquaintance with the bank as would warrant our speaking with confidence about its position. 285. But, from the information you obtained at that time, you would be aware, I suppose, of the difficulties that had at the moment arisen, but which had been growing for some time past ?—Yes. 286. Are you aware whether any overtures were made to the Government prior to those which have been the subject of this investigation ?—I have no knowledge of any before the one to which reference has been made when we asked the Government to meet the directors. 287. That is your knowledge of the first approach by the directors to the Government ? —Yes. 288. You stated in answer to another question that a part of the directors' proposal, in regard to their scheme for the future, was the purchase of the Colonial Bank ?—Yes. 289. Why was the Colonial Bank selected as the bank to be purchased ? —lt was assumed all the time, probably from the fact that from 1894 the matter had been talked about; and it was generally understood that the Colonial Bank was willing to be bought. 290. The ground really was that you had ascertained, or had reason to believe, that the Colonial Bank would be likely to accept proposals for the amalgamation ? —Yes. 291. Is it within your knowledge that proposals of a similar nature had been made to any other bank in New Zealand ?—lt is not within my own knowledge., 292. You cannot say whether the National Bank was at any time approached with that view ?— I cannot say from my own knowledge. 293. It has been, I suppose to your knowledge, stated in Parliament and at various times during this inquiry that the National Bank had been approached?—l only know what is common knowledge. 294. There is no record in writing of anything of the kind in the bank ?—I have no knowledge of that. 295. You have stated that one of the reasons, or the real reason, why the Colonial Bank was approached was that it was within the knowledge of the directors that there was a probability of the agreement eventuating. Now, you have also stated in evidence —I think, to-day—that Mr. Watson was from the beginning anxious that the amalgamation with the Colonial Bank should take place ?—Yes. 296. Did Mr. Watson then recommend—before you approached the Government—to the directors that an offer should be made for the purchase of the Colonial Bank ?—I am not aware that he did. 297. If you turn to the balance-sheet of the 31st March, 1896, of the Bank of New Zealand, you find in the list of assets, on the right-hand side, certain investments stated. The last but one is "Municipal securities, £8,827 12s. 6d." We have a line, "Other securities, £378,061 12s. 5d." Gould you give to this Committee details of those securities ? It seems a very large sum to be lumped together ?—I could not give the details. That is a matter that we very carefully discussed amongst ourselves a few days ago, and we discussed the matter also with the Government Auditor. We do not see that, while there is no objection in the nature of things to a full disclosure of what they are, there is not the smallest reason for withholding information arising from the nature of the securities; but we came to the conclusion that to open up an item of that kind would be a very serious disadvantage to the bank; unless similar disclosures were made by other banking institutions: -..-.,-.-'■ ■;-.'■■ . .--v.----. - 1 .: ..-.-.-■•■'■'
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298. Well, then, can you give any general idea, since you do not care to particularise them, of what is meant by other securities? It is a very large sum? —Yes, it is; and in discussing the matter I went personally to Mr. Butt, and he gave me the full details. But I can only say generally that I believe they are entirely good and trustworthy. 299. Do these securities consist of bonds in Government bodies, or in Harbour Boards, in part or in whole ?—I do not feel at liberty to give any more definite information about them beyond saying that I satisfied myself that they were entirely good and trustworthy. 300. It is obvious, 1 suppose, from the word " securities" being used., that the line does not include any properties in the shape of lands or anything of that kind ?—I would not like to say anything further. 301. Then you are not able to give me any information as to what these figures represent of £378,061 12s. sd. ? —Only what I have already said ; after a personal examination of the details I was satisfied and am content to assure the Committee that they are entirely good. 302. Now with regard to the matter of writing-off. A question was put by Mr. Maslin this morning to which you gave a reply, from which I inferred that you consider that what is meant by the word " writing-off" is the passing of a credit entry? —That is all we meant and all that we did in connection with the " C " list. 303. Now do you or do you not wish to distinguish between a writing-off practically for no consideration and a writing-off which represents an actual payment of money ?—lt would not affect the position we occupy in reference to this "C" list. We are simply agents in connection with the matter and had nothing to do in determining the account in any shape or form. 304. We have a ledger account, and on the one side we have debited certain sums of money; on the other side we have certain entries of credit. Now, supposing I wanted to reduce the net liability as shown by a debtor to the bank, the ordinary course would be, would it not, to pass an entry on the credit side, and you see the balance by so much ?—lt might be. 305. That is so; it would not be practicable in any bank or mercantile institution to take a pen and draw aline through, and make a reduction on the one side and produce a result?— No. 306.. Consequently, the only mode in which an item could be written off would be by writing the sum to credit on the right hand side ?—That is what would probably be done if you were determining an account of your own. 307. Exactly. Now, then it is, of course, within your knowledge as a business-man that occasionally an entry may be passed to the credit of a person without really representing any sum of money having been paid by that person, the entry being simply intended to reduce the amount. It might be a bad debt to be deducted with regard to tradesmen's books ?—No doubt it is conceivable. 308. Well, if an entry were made up to the credit side, and not made in the other, conceivably then, in the other sense, it might mean a payment of money ?—lt might mean that. 309. Either the entry must be in good faith and represent a payment of money, or it must be otherwise ? —You would have to go to the directors of the Colonial Bank to find that out. We have nothing to do with it. 310. You have to write off a certain sum from an account ?—No, we do not have to write anything off. 311. But in the supposititious case I put it is desired to reduce the balance of any person. You say you do not strike out anything on the debit side ; you pass the entry to the credit side ?— That might be so. 312. Then, it does not follow that the entry to be made is to be taken as an actual payment of cash, though it might be so ?—Yes, it might be so. 313. Or it might not ?--It might not in a particular given case. 314. Exactly ; and we should have to go elsewhere to find out whether the entry represented a cash payment or not ? —As far as we are concerned it was a cash payment; we held the money.
Thursday, 13th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. Hon. Mr. J. McKenzie.] When did you first become connected with the Bank of New Zealand, Mr. Booth ?—At the end of September, 1894. 2. That is when you became a director? —Yes. 3. You told the Committee that you were appointed from London ?—Not to the Bank of New Zealand. The Estates Company appointment was from London. 4. Who first approached you with regard to taking a seat on the board of directors of the Bank of New Zealand ?—Mr. Murray. 5. Were you then a shareholder of the bank? —No. 6. How could you become a director without being a shareholder ?—Because, before I was appointed a director, I took up one thousand pounds' worth of the guaranteed stock. 8. You took up £1,000 of the stock guaranteed by the colony ?—Yes, the 4-per-cent. stock. 9. You were not a shareholder before the colony guaranteed the £2,000,000? —I traded with the bank for twenty-four years, but was not a shareholder before that time. 10. And you purchased this one thousand pounds' worth of debentures to qualify yourself as a director ? —Mr. Murray was anxious for me to take up the position of a director, and, after taking time to consider the matter, I decided to accept the position offered to me, and to invest £1,000 to qualify myself. 11. Then, I suppose you would have discussed the position with Mr. Murray before you agreed to accept the position of a director ? —When the Two-millions Guarantee Act passed Parliament I was
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in Christchurch, and knew nothing of the condition of the bank making the proposals necessary until I returned from Christchurch, and met Mr. Murray in Wellington. 12. You would then have a discussion with Mr. Murray as to the position of the bank before taking an active part in its management as a director ?—Yes ; he came to me as soon as I returned from Christchurch, and told me some of the circumstances of the case as it existed at that time, and asked me if I would consent to become a director of the Bank of New Zealand. He said very little to me as to the condition of the bank. As a matter of fact, I do not remember that he said anything beyond a fact publicly known at the time, that the difficulties of the bank had become so acute as to render this guarantee necessary. 13. Then, he did not tell you what the real position of the bank was at that time ? —No, he did not. 14. He did not say anything to you at that time about the £2,000,000 being sufficient to put the bank right ? —I have no recollection that he made any definite statement beyond this. My recollection satisfies me that, from his conversation, I took him to be in an entirely hopeful spirit as to the future of the bank now that the £2,000,000 had been provided. 15. Well, of course, it is impossible for you to remember everything that passed between you and Mr. Murray ? —I may say there was not much. Nearly all the time I spent with Mr. Murray then was occupied in discussing the persons who were likely to become co-directors with me. 16. I suppose, in taking such a responsible position, you made certain inquiries as to the chances of the bank being able to pull through ? —I do not think I can say more than I have said, that Mr. Murray was hopeful—that he spoke in a very hopeful spirit as to the bank being able to pull through now that it had got the guarantee ; and he gave me an assurance, before I could venture to take so grave a responsibility, that he had no doubt, in his own mind, that one day, or a little more than a day's time, given to the service of the bank would be found sufficient for all requirements. 17. One day a week, or one day a month ? —One day a week. 18. You were satisfied, then, with the assurance by Mr. Murray that, by good management and care, the .bank would be pulled through ?—That appeared to me to be the opinion which Mr. Murray held at the time. 19. I suppose Mr. Murray would tell you something about what led the bank into its trouble ? —No; I do not remember that he did. 20. Did he not say anything to you in connection with the past policy of the bank, and that it would be necessary to change that policy, or to pursue a different line of policy to that which the bank had been carried on in the past ?—I have no recollection of his discussing anything of that kind. 21. Did you consider it your duty to inquire into the past policy of the bank after you took office as director?— Only so far as necessary to understand the position. Of course, to open up that position took a very considerable time. The position became, as to its difficulty, accentuated soon after I became a director by the necessity for my taking the appointment of attorney in connection with the Estates Company, which I found to be practically a very extensive property of the bank, and a very complicated one. 22. Did you, as one of the directors, or in conjunction with the other directors, consider it desirable to alter the past policy of the bank when you took office ?—I do not know that we did, or that it was possible to come to any definite conclusion at once. You see, it is less than two years since the first appointment, and, when you consider the extent to which all the bank's affairs and the affairs of the Estates Company have been in continuous movement and change since then, you will see that there was no time to consider, and no opportunity of considering in any special way, an important change of policy. 23. I suppose you are aware that the bank got into great trouble in the past by the large advances made against landed estates ?—No doubt a very large part of the difficulty and loss which has come to the bank has resulted from those advances. 24. Have you altered that since you became a director—that is, the general management of the bank? —I think, so far as the advances are concerned, which may be regarded as dangerous, we entirely changed that, so far as it is possible for us to do it. 25. Owing to the advances made in the past against landed estates, I suppose that is the reason why so many estates fell into the hands of the bank ?—I am not acquainted with the particular circumstances connected with the various estates now in the possession of the bank ; but, from what I know, I think that is very likely to be the case. 26. Are you pursuing a policy of the same sort now ? —No. 27. Supposing an estate falls into the hands of the bank at the present time, do you dispose of it at once, or do you carry it on yourself?— Distinctly, our policy is to realise in every case as soon as possible. 28. You are not setting up a second globo affair, are you ? —No. 29. Have estates fallen into your hands since you became a director ?—Some properties have no doubt come into our hands since I became a director, so far as I know, the result of advances for which we have no responsibility; but in every case we do what we can to place them on the market, and get our money in exchange for the properties. 30. You are in every case prepared to dispose of them at their present market-value ? —I believe so in every case. 31. Have you refused offers for estates which have fallen into your hands ? —I do not think we have refused in any case an offer that could be said to be reasonably looked upon as a present value. I may say that we are distinctly anxious to place in the hands of the public all the properties which are now in the possession both of the Estates Company and of the bank. 32. Did you consider it necessary, when you became a director of the bank, to make yourself conversant with the past history of the bank ?—No, I did not.
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33. Do you not think it desirable for a director to know something about the past history of the bank?—To whatever extent I may have been anxious.from any motive to make myself acquainted with the past history of the bank, the present history from the time I became a director, and the necessities that have grown out of its position, have absorbed practically the whole time and energies the directors were able to give to it. 34. I should think that, knowing the bank had got into trouble through making advances on estates which were in the hands of the bank, you would make yourself acquainted with that part of its history, so as to avoid anything of the kind in the future ? —We did not know that there had been a policy of that kind, and it was quite impossible for us to find out all at once. 35. Your policy was to prevent losses to the bank ?—That is so, and we have not made any serious loss to the bank from the first day that we took office. 36. Before you became a director of the bank were you a customer of the bank ?—I have been a customer of the bank since I came to the colony—twenty-four years ago. 37. And Mr. Murray, in asking you to take the position of director of the bank, did so entirely for the purpose of desiring to get your services to reconstruct the bank ? —I do not know what were the motives prompting him to come to me; but some years before I had happened to meet Mr. Murray in Auckland, and he advised with me as to the position of a number of properties—trading properties — and as to the value of a number of landed properties, and I told him what I thought about them at the time, and he was good enough afterwards to say that he had found it important and of value to him to make a special note of what I said. That is almost the only acquaintance I had with Mr. Murray, if not the only acquaintance, before the time to which I have referred, when, after the Bank Guarantee Act was passed, he came to me and asked me to give my services to the bank. 38. And you consented, of course, believing that the £2,000,000 then guaranteed would be sufficient to pull the bank through ?—I had no reason for thinking then —being absolutely ignorant of the inner working, or policy, or condition of the bank—l had no reason for thinking that the arrangements which he and the other authorities were satisfied with were not sufficient. 39-. Then, you were satisfied, from what Mr. Murray told you, that the £2,000,000 would be sufficient ?—That appeared to be their belief. I was not warranted in being satisfied or forming an opinion without a further acquaintance. 40. If you had had any doubt as to the £2,000,000 being sufficient, would you have joined the directorate ? —lf it had been possible for me to have had an adequate idea of the responsibility and anxiety involved in what I was undertaking, I should have declined to accept the position. 41. That means that if you had known in September, 1894, what you knew in March, 1895, you would not have accepted the position ?—My other business engagements would not have permitted me to think of it for a moment. 42. But, putting your own business aside altogether, would you have cared to be mixed up with the bank after you had known that the two millions were not sufficient to put it right ?—I am not able to say what view I might have taken of the position, assuming that I had been less occupied in private business and public business than I was at the time. I might have been willing if I had had more leisure. 43. Before the directors, of whom you were one, made application to the Government in 1895, last year, you had then satisfied yourself that the two millions was not sufficient ?—Yes ; I think we had all become satisfied that the two millions as arranged to assist the bank was entirely inadequate. 44. Had not Mr. Murray an opportunity before the appeal to Government in 1894 of knowing what you came to find out during the last twelve months ? —I do not know ; but Mr. Murray must have had a great deal of information about the bank of which I knew nothing. But, judging from the conversation I had with Mr. Murray, and to which I referred as taking place some years ago, it seemed to me that Mr. Murray, in common, I think, with most, if not all, the leading men in Auckland, had been cherishing ideas as to the value of Waikato lands and other properties which I thought almost amounted to infatuation ; but it was evidently a belief of theirs, on which they were not only prepared to spend the bank's moneys, but also to spend their own moneys. 45. By what means do you think they came to that conclusion with regard to those properties ?—I am not able to say how the extraordinary belief in a large extent of that country grew up in Auckland. We know, in the case of the Piako swamp lands, the extraordinary persuasion many people entertained, and that they spent large sums of money in connection with those lands. 46. I suppose they would have reports in the bank from the officers who reported on those estates ?—I should think that was very likely. 47. Would those reports be available to Mr. Murray?—l am not able to say, but I should think it very likely he would have access to, and full knowledge of, them. 48. And is it not the same class of officers who have since been reporting to you on the same estates? —No; we declined from the beginning to accept any of their statements about the values of properties in the Estates Company. One of the first things we did was, as soon as possible, to go and see as far as we could for ourselves the lands and properties of the Estates Company, and to make inquiries as to the management of the estates. 49. And you discussed, then, the reports of the various officers ? —I do not remember that we had any considerable feeling of distrust as to the bulk of the properties in the South Island; but I had a strong feeling, and had had for years a strong belief, that many Waikato lands were not at all of the value which most people in the North had been, as I thought, placing upon them for years. 50. That means that you had an idea that these properties were not up to the valuation put upon them by the responsible officers of the bank whose duty it was to keep the bank directors informed as to their value?—Of course, I do not know what their reports were; but, so far as the reports went to support them, I have always thought that exaggerated ideas prevailed about the value of the properties.
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51. I suppose that the records of the bank would show the values put upon them by the officers whose duty it was to look after them ?—I should think the values rested to a considerable extent on the reports coming to the bank from year to year from its officers. But we felt called upon to look at and examine the properties for ourselves. 52. And, as a matter of fact, you did discount those valuations by reducing them?— Yes ;we found that they were, as we thought, largely in excess of their real and marketable values. 53. Have you got the same officers in the bank yet ? —I am not able to say to what extent we have the same officers. There have no doubt been very large changes, and lam not in a position to identify any part of the valuations of the Waikato properties with any officers of the bank. I expect that they have been changed in different parts of the country. In some cases the men have died, and others have been retired. It would require a special investigation to find out what you indicate. 54. In the ordinary business of the bank outside the estates, have there not been losses made to the bank?—l believe that practically all those losses were outside the ordinary business of the bank, and that at a certain period—somewhere about 1890 or 1891—the accumulations became so great, and the burdens so heavy, that they found it necessary, at a very great cost, to put all those properties together and form a company to take them over. 55. Were there not losses outside what was going into the globo account in the ordinary business of the bank. For instance, there were some writings-off from time to time, you said in your evidence, and you separated the writings-off as made in connection with the Estates Company and those made in connection with other accounts in the bank ?—I think it was very likely there were large losses on accounts that were determined after the formation of the Estates Company, and that necessitated a good deal of the writings-off. I think that is very likely. 56. For instance, you have told us in your evidence that £200,000 was set aside as a suspense account for the purpose of meeting bad and doubtful debts outside the Estates Company altogether ? —When the directors came to Parliament last year, after absorbing the provision made by the bank for bad and irrecoverable debts, the bank wanted £376,000 more, and asked for a further provision of £200,000, because the provision was likely to be required in connection with a number of accounts which it was imprudent, as it would involve inevitable loss, to have suddenly determined. 57. But were these accounts ordinary accounts outside the Estates Company or not?—l believe they were almost, if not quite entirely so. 58. Then, the officers of the bank were responsible for those accounts, were they not ?—The officers and the management were no doubt responsible ; but I think it is only fair to say, so far as lam able to judge, that the management of the bank at head-quarters has, as a rule, been responsible for the dangerous and disastrous condition of many of the accounts. 59. You mean by that that the advice given by the responsible officers was on occasions set aside ?—That must have been so in a number of cases ; but the character of the management.and oversight from head-quarters must, I think, be held responsible for the condition of the bank. 60. And not the officers ? —And not altogether the officers. And that is why I made the statement the other day that a more adequate provision must be made, in view of the special character —indigenous to the colony, no doubt —of colonial banking, with a view to secure the safety of the bank, and with a view to provide to a much larger extent than is commonly done for probable, and in many cases inevitable, loss. 61. You, then, as a director of the bank, feeling satisfied that the losses of the bank in the past were not clue to the officers but past directors, felt disposed to continue the present officers ?— I do not think I would like to put it quite so strongly—not in so definite a way —without a special inquiry that would cover a great deal of ground and involve a good deal of difficulty. I would not like to say to what extent the officers were responsible further than to say that a large part of the responsibility has always rested with the management at head-quarters ; and I would not like to say to what extent the management at head-quarters is blameworthy, because to get warrant to say that I should want to know the special circumstances. 62. Is it not necessary that you and your co-directors should have full faith and confidence in the officers who report to you from time to time ? —I think it is absolutely necessary. 63. You are satisfied that those two gentlemen who were in the bank at the time the losses were made are still worthy of the confidence of the directors ?—So far as I know, the officers who are in charge of the accounts, and who are charged with the inspection of the banks, I am quite willing to give them all the confidence which ought to be given to any officers in their position at any time. Ido not feel free—and, I believe, all the directors think with me—to leave them to say and to do what they like. We feel called upon ourselves to deal with their reports, and to carefully examine for ourselves the grounds on which their opinion with regard to particular accounts and advances are formed. 64. But is it not impossible for the directors to know in some cases what security there is as against advances unless you are prepared to take the reports of your officers?—To a considerable extent we are obliged to trust them ; but I feel strongly that what I stated the other day should be provided. The audit we now have, and which is of great assistance to the directors—which is carried on by an officer in whom we have complete confidence as to his integrity and good faith— to cover the ground fully, ought to be strengthened, and there ought to be another one to assist him, as it is more than one man can be expected to cover in view of the present position of the bank. 65. Supposing you have a manager in a certain place in the colony, and a proposition is made to him to get an advance from your bank which would pay you good interest on certain securities, and that it is desirable in the interests of the transaction that an immediate reply should be given to the proposed customer. What chance—unless you are prepared to accept the advice given to you by your local manager or inspector —have you of knowing for yourselves anything as to the security offered in that case?—We, of course, examine for ourselves the request with the condi-
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tions attached in connection with the circumstances, and we deal with it according to the best of our judgment; and, if there are any elements in connection with the case that plainly makes it necessary that a special report or a special examination should be made in connection with it, we take care to get it done. 66. Supposing you have two managers, one who has on various occasions made losses in his branch, and another who has never made a loss. In whose report would you place most confidence when it came before the board ?—Undoubtedly, of course, we should place most reliance in the judgment of the man who has not made losses. But in an extreme case the man who never makes a loss may be the most unprofitable man to a bank ; but I think that is not a case to which you are referring. 67. No. What I mean is the case of a man who has done good business for the bank?— Undoubtedly we should attach a very much greater weight to the judgment of a man who had shown to us by experience that he was competent. 68. Then, do you not think it was your duty as bank directors, knowing the surroundings by which your officers had lost millions of money to the bank, to inquire into the transactions and reports upon which the officers advised the bank ? —No doubt that would be an advantage, assuming that one could do everything at once ; but we have not been able to do that. But we have been able to take care that, whatever connection certain officers may have had with losses of the bank in past years, they have had no opportunity to make losses since we have had charge of the bank. 69. Have you made that inquiry yet? —It is one that will be made from time to time. 70. You are aware that the only information the Government had when it agreed to ask Parliament to grant the two-million guarantee was what you supplied to the Government from the bank. In your opinion, after being eighteen months a director, was it possible for the Government at the time to make any inquiries that would have been more satisfactory than it got. That is, it had only eight or nine days to decide whether the bank should be put right or be allowed to go down ; and was it possible in that time to make more inquiry than it did at the time ?—I should think, under the circumstances, that it was inevitable that the Government was in the hands of the gentleman from whom the proposal came. Ido not see how any examination by the Government could have-enabled them to form a safe conclusion upon so complicated a matter. 71. You are prepared to admit that the Government was in exactly the same position as yourself when you took the directorship? —Undoubtedly. 72. Could you give us the history of the Globo Estates Company ? —I am not able to do that. The only witness that can do that is Mr. Hanna, who was an officer at the time it was formed, and was connected with the Estates Company from the time of its formation. 73. You could tell the Committee whether the bank purchased these properties in the open market, or whether some came to them through advancing money on them ?—So far as I know, they did not buy properties, but properties fell into their hands. 74. In the ordinary way advances had been made against them ?—I think that was so. 75. And that account was made into what is called a consolidated estates account?— They were gathered together and formed into the Estates Company. 76. Before that did they not appear in the books of the bank as the " Consolidated Estates Account"?—l think there was an account of that kind in the books of the bank, but I have no knowledge of it. 77. Well, if they appeared in that position, they would appear in the names of the original owners ? —Originally, I presume, they would be in the names of the original owners. 78. Then, the names of the original owners were only wiped out when the properties were put in the Globo Estates Company ?—I have no knowledge of what was done at that time. 79. You are very particular in not mentioning names in connection with any writings-off. Is it not possible for any one with sufficient intelligence to go into the matter now, with the information made public, to find out a large number of those people to whom these advances were made ? —I think it is very likely that good guesses could be made, and have been made. 80. For instance, I know of a property at Glentui. I know the man who was the owner of that estate. It never passed into anybody else's hands, but went into the bank ?—I can take no excep-, tion to that. 81. Then, why all this secrecy about keeping the names of these people quiet?—lf I were not a director of the bank, and was talking with you outside, probably I might have some knowledge also. 82. I am wanting to show the cloud of absurdity about the matter when it is public property now. I was accused last year in the House of getting information from some of you gentlemen, and I wish to ask you, Have the present Government in any way ever interfered with you as a director, or with any of your co-directors ? —I have not the slightest knowledge of any attempt to interfere ; I have no knowledge of it myself. I think I might make this statement stronger by saying that, while I have no knowledge, I believe that there has been no interference. 83. You stated yesterday that the arrangements of the directors with their servants in the bank were that three months' notice was to be given?—l believe that is the rule. 84. Is there any deviation from that rule ? —lt is not easy to say. That is the rule in the bank, that we require three months' notice, or we give three months' notice. The bank does not draw a hard and fast rule in connection with changes upon the staff, because there are sometimes special circumstances of hardship in connection with cases which lead to some modification of the terms upon which a man may be dismissed, or may be permitted to leave the service of the bank; but that is the rule, that three months are required and three months' notice is to be given. 85. Were there any deviations from that rule during your time as a director?— l have no recollection of any at present, except such modification as I have already indicated.
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86. Are there any officers of the bank at the present time, holding high positions, who have a special agreement with the directors that, in the event of their losing their positions, they will be entitled to sums of money? —There was a special agreement after Mr. Watson's appointment, and with Mr. Butt after his appointment. 87. Can you tell the Committee what that special agreement was?—l have not a very distinct recollection of the terms; but I think, in substance, the agreement with Mr. Watson provided that, so long as he remained President of the bank, the bank would continue to pay the salary agreed upon; and, with regard to Mr. Butt also, I believe they were advised that—both he and Mr. Watson— the agreement to which I have referred, and which Mr. Watson had considered was desirable, was necessary —the agreement was necessary, in the case of Mr. Butt, to protect the position he held in the bank, which entitled him to a pension and some other consideration in the event of his retiring from, or being dismissed from, his position as Government Auditor. The two agreements provided for these things, as far as I remember. 88. In the case of Mr. Butt, you know that he became a Government officer?— Yes. 89. And that he was Government Auditor?— Yes. 90. Do you think it was a proper thing to make a private agreement with him that, if dismissed from the Government service, he should be retained in the bank at a certain salary?— Well, we had some reason to think afterwards that it was a matter about which the Government ought to have been consulted. But the papers were brought to us by the President of the bank, and we were asked by him and by Mr. Butt to accept these papers on the assurance that they were proper and necessary papers to be signed—as arranged by their legal advisers—in order to make their arrangements with the Government complete. 91. Do you not think that in doing so you sapped the independence of the Government Auditor ?—I do not think the Government Auditor is a man whose independence would be sapped or interfered with by that. 92. The question is—you admit that the directors have done so —do you not think the Government should have been consulted before their officer was tampered with in this way ?—I do not think it is fair to say that we interfered with them, or that we interfered with their position in relation to the Government. It was the President of the bank who broached the matter to us, and who had— no doubt, as he thought, very properly—taken legal advice as to the security of the appointments from the bank. He brought the matter before us, and, with this assurance from their legal adviser, we felt no difficulty in acceding to their wish. It did occur to us afterwards, because of some dissatisfaction having been expressed and reported to us, that it would have been, perhaps, better to have gone aside from the President, and reported the matter to the Government. 93. Do you not think it would have a tendency to destroy Mr. Butt's independence ?—ln his case I think not; but I think the natural tendency would be ordinarily to interfere with the independence of an auditor. 94. You were aware that the Government Auditor reported to the Government, in connection with the Estates Company, that debentures had to be given to the Estates Company to something like £200,000 more than other officers that had been asked to examine into the amount that the Estates Company was entitled to get ? —Yes, I am aware of that. 95. Without in any way imputing anything to Mr. Butt, do you not think that, even in a case of that sort, his actions might be misconstrued ?—I think the inquiry that is being made will satisfy the Government that there was nothing approaching to partiality in favour of the bank in the report that Mr. Butt made ; and, substantially, it was entirely a misapprehension on the part of the special auditors—a natural one, perhaps, arising out of the fact that they were not familiar with the special, and perhaps peculiar, arrangements or conditions under which the accounts had been presented to them. 96. 1 suppose you will admit that it is very hard for a man to serve two masters ?—We do not think that he is serving two masters. 97. You told us in your evidence that you purchased from the Colonial Bank the " A," " B," and "C " lists?— Not entirely so. We purchased the "A " list and the "B " list, and the other part of the business, which, of course, could not be embodied in the lists. 98. You told us in your evidence that you gave so much for good-will, so much for the buildings, full value for the "A" list, and in connection with the "B" list you wanted cover. Then, with regard to the "C" list, you were simply acting as agents for the Colonial Bank?— That is so. 99. Is that all the business you got from the Colonial Bank?—We had some London business; their exchange business, their deposits, and their note-circulation. 100. And in what list was the London account put ?—I do not think I could give you any particulars about that without going to the books. 101. Would you get the particulars about the London accounts?—l could get and supply all particulars about it that would not infringe the confidential relations of the bank with its customers in London. 102. Is it not possible that you may have got an account transferred to you in London that is not included in the " A," " B," and " C " lists?— Outside of those accounts, the value of which we are able to determine, we took from the Colonial Bank a guarantee which covered all undisclosed business. 103. What do you mean by undisclosed business ?—There were moneys on the way from New Zealand to London, and from London to New Zealand, and there was business that we were not able to examine, and we took a guarantee from the Colonial Bank that what we could not examine for ourselves would be made secure to us. 104. Have you got the names of the people who are in London ?—I think everything we provided for has been attended to.
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105. Was it possible for you to take over an account in London on which a large advance had been made to a customer in the colony here ? —I believe no difficulty has arisen in connection with any undisclosed account. 106. Can you tell us whether there is such an advance ? —I could not tell you. 107. I should fancy, from the care you took in the bank, that you would make yourselves acquainted with the account in London ?—We took what was more effective—we took a guarantee that undisclosed business should be made safe. 108. Could you not have done the same with the " 0 " list?— Practically, I think we did so. We took a complete guarantee for the " C " list. 109. And a complete guarantee for the account in London which did not appear in the " A " and " B " lists?— Whatever was undisclosed and was not open to our examination. 110. Now, you told us in your evidence that there were no writings-off to the directors of the Bank of New Zealand. Do you mean by that present or past directors ?—So far as the present directors are concerned, there has been no approach to anything of the kind. With regard to past directors I have no knowledge. 111. Did you ever hear that there were large advances made to the old directors of the bank? —I have no knowledge of that matter. 112. Did you ever hear that such was the case ? —I am not able to give any information about that. 113. I find here in a document before me that it was actually submitted to a meeting of shareholders by Mr. George Buckley, in which he makes this statement: " And finally, we find that advances have been made to some of the directors upon insufficient securities, and from those advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for some specific action." Did you ever hear of that statement before ? —I am not able to say, as a director of the bank now, anything upon the subject. 114. In you answer to a question the other day, in which you said there were no writings-off to directors, you meant the present directors of the Bank of New Zealand ? —I can say that of my own knowledge. 115. And that does not refer to past directors? —No. 116. After you took office, as one of the attorneys for the Estates Company, you visited the properties in various parts of the colony ?—Yes. 117. And I suppose you made personal valuations for yourselves of each estate ?—To a certain extent we did—to an extent sufficient to satisfy ourselves that there would be a very serious deficiency to cover. 118. After making that tour of inspection yourselves, you and Mr. Johnston were able to give information to your co-directors which led up to your coming to the Government a second time ?— That is so. 119. And, until you had made that inspection, you were not aware that things were not as they were represented to you when you took office ? —That is so. 120. Mr. Hutchison.] With regard to the matters that were held over, Mr. Booth : The first that was held over was the particulars as to the Consols ?—I am advised that I cannot give the particulars asked for as to the Consols, because the matter is irrelevant to the present inquiry, and is outside the order of reference. 121. Hon. Mr. J. McKenzie.] There was another question I wished to ask you, Mr. Booth : Are there other officers of your bank with whom you have made an agreement to pay a certain salary over a certain number of years? —We gave an assurance to the two inspectors who examined for us, and reported to us upon the Colonial Bank business—Messrs. Litchfield and Buller—that their position and their payment should not be interfered with for three years. 122. Then, so far, you deviated from the general rule of the three months' notice ?—We had the sanction of the Government for the arrangement at the time it was made. 123. Have you that in writing ?—-I have no recollection of its being in writing, but the President of the bank, I understand, obtained it. 124. That is Mr. Buller and Mr. Litchfield. Mr. Embling, in Christchurch, has not got the same ?—No ; he had nothing to do with the negotiations. 125. Mr. Hutchison.] This is the question with regard to the Consols. You have already told us, Mr. Booth, the fact of the bank having purchased one hundred and fifty thousand pounds' worth of New Zealand Consols. What was the date of such purchase ?—I could only give the answer which I have got here, that I am advised that I cannot give any particulars, inasmuch as the demand for such particulars is irrelevant to the present inquiry, and is outside the order of reference. 126. Hon. Mr. Seddon.] I rise to a point of order, Mr. Chairman, and ask your ruling as to whether the question is relevant or is outside the order of reference ? Discussion ensued. The Chairman : The question standing alone seems unimportant, but as a prelude to others indicated by Mr. Hutchison, and which I think would not come within the scope of the order of reference, I must rule it irrelevant. 127. Mr. Hutchison.] I marked on the report you handed in the three passages I indicated to you. Do you find that the President made the statements I quoted ?—-Yes. I would like to say, in reference to the first one, " We found, on making a careful examination of the bank's affairs, in which examination we were ably assisted by the Government Auditor, that there were losses to be provided for somewhat exceeding £300,000." We found them on further examination to amount to, as reported to the bank, £376,000. With regard to the other two statements, "We have satisfied ourselves that when this call is paid, and provided we can work on the lines we have laid out •11—I. 6.
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for ourselves, of which we have every expectation, then the earning power of the bank will be placed beyond doubt, and no further call will be necessary " : and, "It is well known that the bank has to carry a load in the Bank of New Zealand Estates Company's affairs. The assistance from the Government both in guaranteed capital and legislation is calculated, however, to enable us to clear up that dependency." I have only to say that, at the time this was written, it was entirely impossible that we could be acquainted with the frightful gap which required to be filled up in the Estates Company, and that it was owing to the discovery which developed from week to week as our inquiry proceeded into the Estates Company that we became satisfied it was impossible to work on the lines laid down and referred to here ; and it was impossible, without the assistance of the Government, to provide adequately for the further requirements we discovered to arise from the condition in which we found the Estates Company. There is nothing of what took place subsequently to this meeting, at which this report was presented, inconsistent with the statements which we made in that report. 128. Do you suggest that any one hearing those statements made, or reading them as you have read them now, could suppose at the time that there was this big gap to be disclosed ?—I think it is not likely they would, because we were as much surprised—probably more —as many people outside the bank. 129. But you put this statement as a result of careful examination ? —Of the bank's affairs, not the Estates Company's affairs. 130. Was any one to suppose there would be such a disclosure in reference to the Estates Company's affairs ? —We did not expect to be under the painful necessity which afterwards arose. 131. But it is the public impression that would be made on the minds of investors by seeing or hearing such statements as these ?—The responsibility for this must rest upon those who created the condition into which we are inquiring. 132. Now, in reference to the payments made to Mr. Murray: Have you the particulars of those ? First, as to the payment of £500—was it paid here or in London ?—I believe some further particulars-have been discovered, and further inquiries have been made, which may lead to a complete explanation and complete information upon the subject. I believe they will have completed the search to-morrow morning. 133. By to-morrow you will be in a position to give the information ?—I think so. 134. Can you produce Mr. Hanna's reports on the Estates Company from 1895? —I am not able to produce them. I should be obliged if you would ask that question of Mr. Foster. 135. But you are a director and attorney of the Estates Company. Have you not got those reports ?—We have not got them in the bank. 136. You have them perhaps in the company's office ?—We have a meeting of the Estates Company this afternoon, and, if you will be kind enough to defer the matter until to-morrow, I will see that the matter is laid before the attorneys this afternoon to consider. 137. Could you also inquire and get a copy of the Profit and Loss Account of the Estates Company up to March, 1896 ?—I will make a note of that.
Friday, 14th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. The Chairman.] Are there not still some documents which you had to produce, Mr. Booth ? I do not remember the names of them ?—Will you be kind enough to indicate what they were ? 2. Mr. Hutchison.] The particulars of payment to Mr. John Murray of some £500 odd for expenses ? —Here it is. 3. Will you give us the date of the payment of the £500 gratuity ?—I think it was given yesterday. The answer I gave was that the money was paid to the credit of a trust account in London, and was drawn by Mr. Murray from that account. 4. Can you give the date ?•—That is all the information we have. 5. Then, you were to see if you could produce the balance-sheet of the Estates Company for March, 1896?— That is the Profit and Loss Account. The balance-sheet was handed in before. Itis ready; we had it yesterday afternoon, but it appears to have been omitted from the papers supplied. Mr. Cooper has sent down for it. 6. You were to say if you could give us a copy of the articles of association of the Estates Company ?—That is handed in. It is the only copy we have in the colony. 7. The Chairman.] And you ask for it to be returned to you ? —Yes. 8. Mr. Hutchison.] There is one other matter—Mr. Hean's report ?—We looked into that matter yesterday, and, although there are copies in our possession, we find that they would disclose so much of the private and confidential relations of the bank with clients' accounts that it is impossible to give it to the Committee. 9. You decline for the reason previously given, that it would divulge confidential business ?— Yes. 10. Could you not prepare a copy, leaving out those parts which you might consider are treating with confidential matters ?- —I shall be very glad to take care that question is submitted to the attorneys, with a view to consideration. 11. The Chairman.] Mr. Booth, in consideration of your convenience, and the attention you have given for so long a time to the Committee, as well as because a great deal of the information which has been elicited in evidence I know to be contained more compactly in the documents you have handed in, I do not propose to add very much to the time you have given to the Committee; but I want to refer to one subject upon which you were examined at considerable
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length by Mr. Hutchison. It was with reference to the discrepancy between your statement of the total amount of the good assets taken over from the Colonial Bank and the statement contained in 27-A of last year on the same subject, and submitted to Parliament by the President (Mr. Watson). Mr. Hutchison examined you as to the details of the amount. You stated that the good assets were £2,568,191, and the liabilities against those assets you gave at £2,509,284? — I think the only difference is the amount which was paid for good-will. 12. But you remember, at the close of Mr. Hutchison's examination, he asked you if you could account for the difference, and you replied you could not do so then. You are able to account for it now ?—Yes. 13. The difference is, of course, what you now state—namely, the amount paid for goodwill—because Mr. Watson stated the total of good assets at £2,643,190, and the liabilities he gave were the same as stated by you. The balance, according to Mr. Watson, of the property of the shareholders in those assets was £133,906, the exact amount the Bank of New Zealand paid to the Colonial Bank, while the difference between your statement of assets and liabilities was £58,906, to which you have to add the amount paid for good-will—£7s,ooo—to make up the amount of the discrepancy between the two statements ; you did not include it in your statement of the assets, while Mr. Watson did ?—Yes, that is so. I did not quite see at the time the meaning of the question, or what it was referring to ; but that is a perfect explanation. 14. You stated, I think about the first day of your examination, that the assets over liabilities in the Bank of New Zealand amounted to £1,560,861. Is that correct? —I have not a distinct recollection of the figures, but no doubt it will be right. 15. You also stated to the Committee the amounts that were written off for each year between 1888 and 1894 ?—Yes. 16. The total amount of writing off from 1888 to 1894, adding the several sums together, was £1,563,848?—Ye5. 17. So that the bank wrote off as bad in those six years an amount more than equal to its total assets over liabilities in 1888 ? —That appears to be so. 18. And during that period, while the bank wrote off an amount which was more than its total capital, it carried to the credit of profit and loss, as net earnings of the bank, a sum of over half a million ?—That appears to be so from the figures, of course ; but the Committee understands that I have no responsibility for any of the figures. 19. But, according to the balance-sheet that is a fact ? —Yes. 20. While they have written off a sum more than their total assets, they have still carried to profit and loss more than half a million during the same time ?—Yes. 21. And from that amount they have paid in dividends £265,688 ?—Those were about the figures. 22. Notwithstanding all these writings-off, the bank appeared in 1894 to still possess a capital of £900,000 ?—Yes. 23. This, I presume, was largely made up of the £525,000 derived from the issue of new shares and the difference between the total sum carried to profit and loss and the amount paid in dividends ; these would amount altogether to about three-quarters of a million ?—The exact origin of the £900,000 capital which appears in the balance-sheet of 1894 arises from the payment upon 100,000 shares of £5 ss. per share, £525,000; and from a payment of £7 10s. per share on 50,000 shares, which amounts to £375,000. That is the origin of the share capital which appears in the bank's balance-sheet of 1894—£900,000. 24. Shortly, it is the result of the issue of new share capital ? —That is so. 25. Although it appears as £900,000 capital in the balance-sheet of the bank, in reality the shareholders had no property in that; that was gone, was it not ?—I am afraid that was so. 26. It did not exist except in the balance-sheet ? —I am afraid that was so, from the disclosures that were made last year. 27. It must have been so, because, after you had written off the amounts I have named, and after you bad got the guarantee of the colony for the two millions of money, you immediately, between 1895 and 1896, wrote off between the bank and the Estates Company a further sum of over a million and a half ?—That is so. 28. Mr. Maslin put a question to you the other day to the effect that, having got so much money as two millions, it was necessary for you to look around you and see what you could do with it?— Yes. 29. You had no difficulty to see what you had to do with a large portion of it ?—Our chief difficulty arose from our not getting the free use of the second million. 30. But a large part of the two millions had to be applied or made use of to enable the bank to write off what only existed in name ?—We could not use the money for that purpose, but there was, as disclosed in 1895, a deficiency in the bank amounting to a very large part of that sum ; but we could not use that money to fill up the gap. 31. But the two millions guaranteed enabled you to write off the capital and keep on your business, whereas, if you had not got that guarantee, you would have had to go into liquidation ?— The two millions enabled the bank to keep its doors open for a time; but the result of our examination, as disclosed in 1895, showed that, notwithstanding the addition of capital from the guaranteed two millions, the bank was still in difficulties, and was not likely to be able to keep its doors open without the further assistance that was applied for. 32. That refers to the second time you applied to Parliament ?—Yes. 33. The two millions was not sufficient—of course, we know that. I want to ask you a question with reference to the Profit and Loss Account in 1890. Have you got a copy of the balancesheet before you ?—Yes. 34. First of all, to show what I mean, I would refer to the Profit and Loss Account shown for
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September, 1889. In that account the bank shows a balance undivided profits of £55,386? —Yes. 35. And a net profit for the current half-year of £40,961 ? —Yes. 36. On the other side you show a dividend paid of £39,375 ?—Yes. 37. And the balance is shown to be carried forward —namely, £56,972 ?—Yes. 38. In the next Profit and Loss Account that balance is brought forward, and Profit for the half-year added—namely, £42,810 —and the total amount—£99,7B3 —is stated to be carried forward ?—Yes. 39. The same process occurs in every Profit and Loss Account, and the balances are carried forward, except in one particular year. If you refer to the next Profit and Loss Account—that is, for 1891 —you will see it does not show that amount as being brought forward. It only shows the net profits for that year. I want you to explain why it was apparently dealt with differently to all the other statements of the Profit and Loss Accounts ; and explain, if you can, what has been done with that £99,783? —I am not able to explain; but I expect the statements made by the chairman of directors at that time would disclose what they did with the money. It does not appear in the balance-sheet itself how it has disappeared. 40. Does it not seem strange to you that it should not appear as being brought forward and shown in the account how it was dealt with?—lt does appear strange, but you will observe that the balance-sheet of 1890 was a colonial balance-sheet, and the next one is the first balance-sheet that was issued in London ; and I think it would be necessary to go to the report and statement of the chairman of directors for that year to find out what they had done with the money. 41. You have stated that that £99,783 disappeared. Do you not think it is remarkable that the balance-sheet does not show what has become of that amount ?—lt does appear strange. There is no note in the balance-sheet to account for it. 42. You do not see any note to account for that. With reference to the £45,000 balance of Reserve Fund in the statement of accounts of 1895—you will find it under the Profit and Loss Account in the statement before you—in that statement the reserve is brought forward as £45,000, and.carried.forward to 1896, where it is shown to have been written off. That is how the missing sum of £99,783 should have been shown if it was required to be written off, is it not?— That is how I should have expected it to appear. Of course, I can say nothing more than what the figures indicate. 43. You agree with me that it is strange that it should be so ? —lt does seem strange. 44. I should like to ask a question or two with reference to the " A," " B," and " C " lists. You have repeatedly stated distinctly that there have been no writings-off in regard to the " C " list by the Bank of New Zealand ? —That is so. 45. You are aware also that some members of this Committee are apparently under the impression that because the £55,233 —the cover for the " C " list —was placed to the credit of that account by your bank that that practically amounted to a writing-off. You are aware that that appears to be the impression on the minds of some members of the Committee ? —lt seemed to me to be so. 46. Well, take the first list. The "A" list was £926,197. This account you accepted with all risks ?—We did. 47. And you paid to the Colonial Bank the difference between the assets and liabilities taken over by you ? —Yes. 48. You took over the accounts in that list absolutely ?—Yes. 49. In addition to that, you took over the " B " list of £604,695 ? —Yes. 50. But you only accepted that on condition that the Colonial Bank allowed you to retain £272,072 of the purchase-money as cover for possible or probable losses on those accounts ?—That is so. 51. Then, we come to the "C " list, amounting to £9*8,382. You had the option of taking that over ?—We had for three months with the cover provided. 52. With the cover of £55,233 ?—Yes. 53. You accepted that list provisionally, and had three months to decide whether you would take it over or not ? —We never gave any acceptance beyond a promise to act as agents in the working of those accounts for three months. 54. But at the end of three months you declined to take over that account ?—Within the three months. 55. And it was handed back, then, to the Colonial Bank liquidators ?—That is so. 56. And therefore you are responsible to them, then, for the £55,233, part of the purchase price which you had retained as cover ?—Yes, they were entitled to that. 57. Have they got it—has it been paid to them?—l cannot give you the exact details of the subsequent arrangement; but, if they have not got it, it is at their disposal. We are not able to retain a shilling of it. It is not our money. 58. That being so, if there are or have been any writings-off in connection with any of the accounts in the " C" list, it will be for the Colonial Bank liquidators to show that, and not your bank, seeing that you have handed back the " C " list to the Colonial Bank?—lf any writings-off have been done, they have been done outside the Bank of New Zealand, and the Bank of New Zealand has no knowledge of them. 59. Hence your reason for saying there have been no writings-off the " C " list—that is, so far as the Bank of New Zealand is concerned? —Yes. 60. They have been handed back to the liquidators, and become their property just as much as the " D " list, which you never took over at all ?—Yes. 61. If there are any writings-off, they will have to be shown by the liquidators of the Colonial bank ? —Yes ; we have nothing to do with them.
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62. Hon. Mr. Seddon.] You have been aware that there have been rumours about, and statements made, in regard to the bank and its management which must inevitably prove to be injurious to the institution. Have you heard 3uch rumours prior to the commencement of this session in reference to the officers of the bank or the institution generally ?—I am afraid it is so, and I received a painful impression of it from a remark that Mr. Maslin made yesterday. I was very sorry to have previous rumours accentuated as was done yesterday. 63. Now, do you not think, when rumours are afloat as to a financial institution such as a bank, that the only sure and safe way of setting aside those rumours is by an investigation ? —lt is not easy to say to what extent the rumours would warrant an investigation; but it is easy to see that, in reference to an institution like a bank, when the rumours are sufficiently serious to warrant an investigation, it should, I think, be conducted within limits different from those which have been unfortunately arranged for in the present inquiry. 64. Is there anything within your knowledge that would warrant you in saying that it was detrimental to the interests of the Bank of New Zealand to continue the present management ?—I would like to put an answer to that question in this way : When we, after great and anxious care, made the agreement which was submitted to Parliament last year, I, at any rate —and I believe, as far as I know, the other directors—think that we provided completely for two things. Parliament having given us authority to buy another bank, and we took care to show in the agreement submitted to Parliament —first, that we bought from the other bank only what was good business; next, we meant, and I think made it clear, that the bank we dealt with, whose balance-sheet showed a credit to the Profit and Loss Account of £19,000, when examined by us, had one series of accounts good amounting to £900,000 ; one series of accounts of £600,000, which required to make them good £270,000 of cover ; one series of accounts of £102,000, which we were not able to take at all; and another series of accounts amounting to £98,000, which with cover provided of £55,000 we were not able to take. We made that clear, and I think that intelligent gentlemen like the present Committee, with that information, should be satisfied that the responsible management of the bank —the chief inspector and the general manager —could not be gentlemen likely to have the confidence of the public if transferred to the management—authoritative management —of the Bank of New Zealand. That I think we made clear; and, having done that, it is a painful and very trying experience, and has occasioned me the bitterest distress, to answer apparently necessary questions put by members of this Committee to make further reflections upon gentlemen with whom I have been working in confidential relations for some time. That, I would like the Committee to understand, is the only reason why in questions that were in my own discretion I have been unwilling to give answers. 65. What is your opinion of the officers in charge of the institution you are now in charge of, who, from 1888 to 1896, had caused losses to shareholders and writings-off amounting to over £4,000,000 ? Do you think they are competent officers, or do you apply your previous remarks to them ? —ln so far as any officers are concerned who are fairly responsible for that, I do not know, in view of the distress which has arisen to large numbers of innocent people—l do not know language strong enough in which to condemn what was done. I am sure that, if the Committee knew the melancholy stories that have come to us from time to time from people involved in the bank's losses, they would agree with me that a profound calamity has overtaken large numbers of men, women, and children. 66. You have stated, yourself, that a very serious fall in the price of property and produce took place, and occasioned very heavy losses ?—I think that is true, that for some years past there has been to a considerable extent a more or less continuous fall in the value of most properties from those which were commonly accepted during the period of inflation which prevailed in the colony from 1872 to 1879 or 1880. 67. Now, from 1892 till 1896, is it not a fact that very low prices were obtainable for our staple products?—l think that is true. 68. Would you hold the general managers, or the inspectors, or the directors of any institution responsible for that fall in prices? —I think not. 69. Would that fall in prices not affect the accounts and the advances that had been made?— "Yes ; it would be likely to affect many of them very seriously. 70. Accounts that would be previously good at the ruling rates of staple products would, if the rates had been maintained, be still good ? —ln some cases they would. 71. Can you tell the Committee, in reference to those accounts of the Colonial Bank in the various lists, at what date the £600,000 became doubtful, and required, in your opinion, a reserve to be placed against them ? Did you commence at that account and trace it back to see when it came to be in the position you found it ? —No; it was impossible to do that with the accounts. It was quite plain that many of the accounts had been doubtful to a serious extent for a considerable time. 72. Going, then, further on, when you made the inquiry, how long had the President of the bank, who had been inspector of the Colonial Bank, been away from the Colonial Bank?—l think it was in the latter part of 1894 when the President left the Colonial Bank and came to the Bank of New Zealand, and at the time of the examination we made the date of the balance-sheet of the Colonial Bank which we had was August of 1895, which would be a later date to the extent of nine or ten months. 73. Did you make any inquiries to find out whether or not, when holding this position of inspector of the Colonial Bank, he had made his directors acquainted with the condition of those accounts ? —We did not make inquiries upon that subject. It was not at the time our business to do so. 74. If, in the course of inquiry, it was ascertained that he had made his directors aware of the condition of those accounts, would the blame you now attach to him lie ?—-It would be very
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much modified; and I think the gentlemen, in reference to whom this strong feeling outside points, are entitled, before this Committee, to make out the best case they can for themselves. I think that is only just, and is an important service which this Committee can render to them. 75. You are a just man, as far as you are able to be just ?—I hope so. 76. Do you not think that what you have said condemning the Inspector and General Manager is somewhat premature ?—So far as I am concerned, I do not think it premature, because I gave it in reply to, and to satisfy, a question which was asked of me. We disclosed the truth about the Colonial Bank to Parliament last year. We were responsible for doing that, because Parliament gave us power to buy; but we did not express any opinion, assuming that Parliament was just as well able, if not more so, to form a judgment from the facts that were disclosed to them. 77. But is it correct to say, from the answer you gave to my first question, that you base your opinion, in respect to the gentleman who is now the General Manager of the Bank of New Zealand and the President of the bank, upon the condition of the accounts you found in the Colonial Bank ? —I do not think that at that time I had taken the liberty of forming any definite opinion upon that subject at all; but my experience since satisfies me that the management indicated, confirmed by my subsequent experience, would not justify me in approving of either appointment in connection with the Bank of New Zealand. 78. So far your management has been so good that you have only lost about £2,000 in the Bank of New Zealand ?—I would not like to make any claims for the management, because I think it is too soon. Since we took charge of the bank, unfortunately there has been no opportunity for what you might call settled management at all. The changes, the magnitude of which you are as well able to judge as I am, being compressed within so short a time, would not permit of any definite expression of opinion as to the settled policy of the Bank of New Zealand. I have used the opportunity afforded by this Committee to point out the directions in which every business instinct I have got, and every experience I have had over nearly forty years, points to the further provision necessary to guard not only the interests of the shareholders who have still, I believe, a valuable property in the bank, but to guard also the interest of the State, which, I think, wisely and generously topk up a position of grave responsibility in connection with the bank. 79. You admit the gravity of the situation, and the gravity of the opinion you have just now expressed ?—Yes. 80. Are you prepared to give the Committee any further information as to what has led you to that conclusion ? —I do not think I can give to the Committee more in reference to the disclosures of last year than what they have, and about which they are as competent to judge as I am. Any further matters upon which my judgment is formed in connection with the management of the bank I could not, for the reason stated, give. I am compelled, owing to the restraint under which I speak, to ask the Committee to accept my judgment, whatever they may think it worth. 81. Without giving us the evidence upon which it is formed?—l could not do that without going into details, and making disclosures in connection with private and confidential business. 82. You, Mr. Martin Kennedy, Mr. Walter Johnston, and Mr. Macarthy are the present directors of the Bank of New Zealand ? —With Mr. Watson, who also is on the board of directors. 83. Where is Mr. Martin Kennedy now ? —He is in England. 84. How long has he been away?—A few months—l think about six months. lam not able to give the exact time. 85. Who have you to rely upon chiefly in respect of the management of the Bank of New Zealand ?—ln the management of banks and companies the directors necessarily have to rely very largely upon their executive officers. It hardly ever happens that they can be more than a board of advice. They must be largely in the hands of their executive officers. 86. Who has done the financing of the bank? Has it been done by the President or the executive officers —the investments, and so on, of the Bank of New Zealand—since you have been a director?—We have arranged, and have continuously endeavoured, to supervise ourselves at the board meetings the advances which have been made ; but we find the work so great, and requiring so much time, that I am impressed with the importance of the advice I gave, that the audit should be strengthened so that we could have an additional power which we could use and have in continuous exercise, with a view to guard against the drift which is apt to come from a thousand different causes to the variety of accounts such as are dealt with by banking corporations in the Australasian Colonies. 87. But I have asked you the question, Who has practically had the charge of the investments —the financing of the bank ? Has it been the executive or the officers ?—The directors and the executive officers. 88. For instance, there was an operation in London, such as in connection with Schroeder, contained in the legislation recommended in the report of the Committee last year. Who would take the initiative of bringing that matter before the directors—would it be the executive or the President ?- -In most matters the President has brought them before the directors and submitted them to the directors for decision. 89. Your answer to the question as to who has had the initiative and control of the financing is that it has been the President ?—Practically that is true since we took charge of the bank. 90. Has he shown any incapacity in respect to that, or has the board of directors found it necessary to differ or disagree with his proposals, or carried out the proposals which he has submitted? —Generally speaking, the directors have willingly carried out the arrangements the President has proposed; and I would like to say that it does not follow at all from what I have stated that those gentlemen to whom reference is made have not rendered very important assistance in the management of the Bank of New Zealand up to the present time, and very important service to the bank. 91. Then, I take it from that that your opinions are formed more in respect to what occurred
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in the past, in reference to their management and position in the Colonial Bank, than to anything that has occurred in the Bank of New Zealand?—l can say this : that the opinions I formed, so far as I felt at liberty to form any from my acquaintance with the Colonial Bank and its management, and the opinions which I have given to the Committee, have been confirmed by subsequent experience in the Bank of New Zealand. 92. You have just stated that your subsequent experience has been in their favour. How do you reconcile the two statements ?—I do not think I have said anything in the statements I made that is inconsistent with the fact that ought to be admitted, that Mr. Watson has rendered important services to the Bank of New Zealand. 93. Well, now, you have stated to the Committee that Mr. Watson was practically responsible for the investment of some twenty thousand pounds' worth of debentures. Have you refreshed your memory or made inquiry as to whether that statement is correct ?—I have refreshed my memory, and renewed the discussion we have had from time to time with the other directors; and while, perhaps, they would not agree with me as to the extent to which the advances had become absolutely unsafe or lost—there may be some difference of opinion as to the extent of danger—l know of no difference amongst us now or in the past which would vary the statement which I made to the Committee. 94. Would it surprise you—would it alter your opinion—if, on the records of the bank being turned up, it was found that the transaction was authorised by minute in the books of the bank ?— The advance ? 95. Yes ? —No. One of the directors himself wrote out the minute which was placed in the book, and which authorised the advance. 96. The Committee are informed that it was authorised by resolution of the directors ?—lt was authorised for a given reason, and guarded by certain precautions. 97. Then, it was not done without the knowledge of the directors, and solely by the President of the bank?—ln that sense it was not. 98. Was it passed by resolution?— There is a resolution, as I have said, written out by one of the directors, and copied into the minute-book, upon which the advance rested. 99. Was it put to the meeting, and were you present at that meeting? —Yes, I was present. 100. Why did you not tell the Committee this the other day ? According to your answer to the question the other day, it was inferred by me and the rest of the Committee that it was done entirely on his own motion, and without the knowledge of the other directors ? —I never made that statement. 101. The words you used were that it was practically done on his own responsibility?—No; my language was guarded, and I repeat to-day the language I used then. 102. Will you state it now, if you can, from memory? Your answer was, "The President of the bank was responsible for the advances." Is that correct? —I think not. The question arose 103. I will read the report of your evidence which you have sent in and not corrected in that respect: " The President of the bank was responsible for the advances, and we found, and were told by Mr. Larnach and Mr. McLean, that, in the event of the negotiations falling through, there would be nothing left in the securities upon those for the advances " ? —When I see the reply in the evidence—the reply was first given in answer to some question by Mr. Maslin—l shall know then what the words were. 104. The Chairman.] Here is the transcript of the reporter's notes. But you subsequentlyanswered the question, and you said that the President was " practically responsible." 105. Hon. Mr. Seddon.] Is that what you stated, or do you want to qualify it?— Undoubtedly the language which, I think, ought to be used is that he was practically responsible. That is what I meant to convey, and what I think I ought to say. 106. The Chairman.] It is what you did convey subsequently ?—Yes. 107. Hon. Mr. Seddon.] Then, you qualify that answer by what you now say?— That is so. 108. The Chairman.] That is, you repeat the qualification you have already given ?—That is so; and the reason why I was not able to give any further particulars—you refer to my having left the matter so—is that a further answer was not possible by a mere Yes or No ; that it would have inevitably disclosed the confidential relations to a greater or less extent of the bank with individual accounts. That is why I was not able to say anything more. 109. Hon. Mr. Seddon.] We will put it as qualified. Instead of the President being responsible, we will put it as "practically responsible." Now, who were present at this meeting of directors, to which you have referred when the advance was authorised by resolution ? —I know that Mr. Macarthy wrote the minute which was inserted in the book, and Mr. Johnston, and, I believe, Mr. Kennedy was also present. 110. You were all present ?—I believe so. 111. Did you ever take divisions on any question before the board of directors?—l do not know that we have found that necessary. 112. It is practicable? There are five of you. When a proposal is submitted, are they asked Yes or No with regard to the proposal ?—We have, as a rule, been able to agree upon what should be done. 113. Then, if the five are present, and they do not divide, and a proposal submitted to the five is carried, do you in every case consider that the President is practically responsible ?—No, Sir. Practically in no case do we hold him responsible. We are responsible. But if, after we have made an arrangement, the executive fails to secure the arrangement, or if the arrangement is made on information which we subsequently find was incorrect, then we are not responsible. 114. I think we have got it now. It is not that he was responsible in the first instance, but that he did not make it in the way you intended. Is that so ?—I think that is, perhaps, what it would amount to.
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115. Am I to understand that your answer now is that he is practically responsible for the advance becoming insecure ?—I do not think I can say anything more about it without disclosing the whole matter. 116. Well, you have given us an instance where you yourself dissented to a proposal which was submitted, and had your dissent entered in the minute-book of the bank. Did you or any other director enter his dissent against the advance of this £20,000? —No. 117. You were present? —Yes, I was present. 118. And it was entered in the minutes of the proceedings of the board of directors of that date, and there was no dissent entered ?—I think we all were of one mind, and stated at the time that on ordinary business lines we should not make the advance. That was the position Mr. Macarthy took up, and he intended to guard specially, from the care he took in writing the minute, that it should be clear. But on certain representations we agreed to the advance, and we provided that certain safeguards should be taken in connection with it. We had subsequently reason to believe that the information was inaccurate, and that the safeguards—that failure had arisen in connection with the safeguards—and we became satisfied that the advance had become doubtful. Subsequently, when concluding negotiations for the purchase of the Colonial Bank, we had this matter in mind, and we took the opportunity of removing all doubt and making the advance safe by stipulating that, before we concluded the bargain, we should have the advance guaranteed by the Colonial Bank, and we got that. The Committee will understand readily that it would be a very difficult matter, as well as a painful matter, to quarrel at the board table with the President of the bank; and, if we had reason to think that, in connection with any part of its business, we had not been treated with entire candour, the Committee will see how difficult it would be to pursue inquiries with a view to get at facts under circumstances of that kind. And it is from some experiences of that nature that I found it necessary to advise that the directors should have the power, without being forced to enter upon an inquiry which could only be attended with great difficulty and very great unpleasantness, to require the Auditor of the bank to call the attention, when necessary, to any particular case, of the Colonial Treasurer for the time being. . 119. We have two points clear —one is that this is the ground for your recommendation as regards the Auditor ?—That is one of them. 120. The second is that it is owing to this that you have expressed the opinion you have in respect of the President of the bank ? —That is one of the incidents. 121. You have told us previously that your co-directors did not agree with you as to the insecurity in respect to this advance ?—I think there may be some difference of opinion. Mr. Macarthy, for example, thinks that Mr. Larnach was only bluffing the directors when he talked as he did. 122. And you took Mr. Larnach as being serious ? You stated here in your evidence, notwithstanding this, " we were prepared, rather than allow the negotiations to fall through, to pay the price." Is that so ?—That is so. 123. But you managed, notwithstanding that, to get the guarantee ?—Yes ; it was so much to the good. 124. Would not that be evidence to prove, when you got the guarantee of the Colonial Bank, that Mr. Macarthy's view with regard to Mr. Larnach was correct, seeing that you were prepared to pay the price without the guarantee ?—I do not say that we were prepared to pay the price without it. 125. You said you were prepared to pay the price rather than allow the negotiations to fall through ? —Yes ; having got the guarantee we were content. What we should have done if we had not got the guarantee I am not able to say. 126. At all events, at that time you were prepared to pay the price rather than allow the negotiations to fall through ?—lf we got the guarantee. 127. Are you prepared to say that if the guarantee had not been given the negotiations would have fallen through ?—I am not able to say what course we should have taken. We did get the guarantee, and we were contented having got it. 128. The Colonial Bank, in giving the guarantee, at all events did not consider the security bad, or it would not have given it. Would that not follow as a natural sequence ?—Not necessarily. We were not in their confidence, and did not know what their views were in the matter. 129. As a fact, there had been no loss in respect of the advance, nor is there likely to be any loss ? —We have a guarantee which secures us now. We shall make no loss. 130. Are there any other directors that differ from you besides Mr. Macarthy as to the value of this security ?—I cannot say ;it is impossible for me to say. 131. Mr. Macarthy does not agree with your view as to the insecurity of the advance?—l do not think he takes so strong a view as I do as to the danger. 132. And you said that he considered it was a bit of bluff on the part of Mr. Larnach?—That particular statement Mr. Larnach made. But, apart from Mr. Larnach's statement, the advance had become doubtful from other causes. 133. What was Mr. Johnston's view—does he agree with Mr. Macarthy or with you in respect to that ? —I do not know ; but the Committee will find out, no doubt, both from Mr. Johnston and Mr. Macarthy. 134. But you use the words " other directors " ? That is why I ask the question? —I do not happen to know exactly what is Mr. Johnston's view, but I have knowledge that his view is not substantially different from ours on the matter. 135. What is the President's view upon the question? Does he say it is secure or insecure, or that it is a safe advance to make ? Has he altered his views, to your knowledge, that it was a proper advance to make ?—I do not think lam able to say further than that he was very anxious
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to make the advance, and urged us to make it. No doubt he was satisfied in his own mind. I have no reason to speak differently, and I have no reason to think that he is of a different opinion now to what he was then. 136. We will come to a pertinent question put by Mr. Hutchison, and one about which I wish to have very full information, and that is taking the £54,000 and charging it to the Profit and Loss Account. You have submitted a balance-sheet to Parliament, in which you show there is £52,000 as the profits of the year ? —Yes. 137. Do you say that that is a true statement of the account of the bank ? Why was this not disclosed in this balance-sheet—the £54,193 which had been written off this year and taken from the Profit and Loss Account ?—Because it is not usual to disclose the amount set aside as provision for bad and doubtful debts. 138. It is not usual ?—No. 139. Had it not been for that writing-off the profits for this year ought to have been £106,000? —I do not remember the exact figures, but they were something over £100,000. 140. You had £200,000 that was set aside for the purpose of meeting any writings-off necessary for contingent liabilities ?—Yes. 141. Were the £54,000 accounts calculated to require writing-off in that contingent list ?—I do not think I can say, because there never was any attempt made to define the exact accounts for which the £200,000 Contingency Fund was meant to provide ; but nearly the whole of that provision had become necessary on accounts which were outside the advances made by the present directors, and we thought it wise—and I still think it was wise—that advantage should be taken to the fullest extent of providing further cover —larger means for writing-off—than was in our possession. I think, to make banking safe, very much larger provision should be made in the colonies for bad and doubtful debts, and possible losses on accounts in the banks. 142. Your answer is that your reason for not carrying out what the Legislature intended was that you were taking this amount as a means of strengthening the bank ? —We took it as a means of strengthening the position of the bank, but we had no thought of not carrying out the intention of the Legislature. 143. Was this £54,193 writings-off in connection with accounts that were in existence prior to the legislation?—lt was, with the exception of a very small sum. 144. Supposing the £200,000 put there as a Contingent Fund is proved in the adjustment of Estates Company not to hold good, would that not mean that you have no means whatever provided for paying the £50,000 a year to the Assets Realisation Board ?—With reference to an item that went to make this surplus available in the balance-sheet, there has been some difficulty and discussion owing to a misunderstanding; but I think Mr. Butt and Mr. Watson are the proper parties to give to the Committee, what no doubt they will be able to do, the explanation of that. 145. Was not that balance-sheet submitted to the directors for their approval?—lt was. 146. And you have been a party to withholding this information from Parliament, although directed by Parliament to give a balance-sheet showing full particulars to Parliament ?—No; I have been no party to anything of that kind. I believe the Government Auditor has disclosed whatever difficulty has arisen to the Government. 147. This is what I call attention to: " Net profit of year ended 31st March, 1896, including recoveries, and after provision for ascertained bad debts, and making which is considered ample provision for possible losses on doubtful debts, but contingent upon the approval by the Colonial Treasurer of the above adjustment —note A—£52,192 lis."?—l do not understand what is wrong. 148. You have shown here a possible profit of £52,576 2s. Id.; but you have said that is contingent upon the approval by the Colonial Treasurer of the above adjustment—note A. If the Colonial Treasurer does not approve, I want to know where you are going to get the money from to pay the £50,000 to the Assets Realisation Board, so that they can pay interest on the debentures ? —If the difficulty arises, we shall have to consider then the change involved. 149. Have you made any provision for that ?—I am not able to say what is the course we should take in the event of our not getting the consent of the Colonial Treasurer to the arrangements there. 150. But, in the meantime, you have kept the asset of £200,000 set aside for the purpose of meeting bad debts, and left nothing to pay the sum of £50,000 to the Assets Realisation Board ?— Only in a certain event. Of course, we could use the whole of the profits to meet the case. But then for the writings-off that had become necessary we should have to go to the Contingent Fund and weaken it by so much. 151. Was it not intended to be weakened if the necessity arose ?—Yes ; but, in our opinion, the necessity has not arisen. 152. But it has arisen to the extent of £54,000, because you have actually written that off?— Yes; but the necessity for resorting to the Contingent Fund has not, we think, arisen. 153. Altogether you have written off £54,000 which you have taken from the Profit and Loss Account of last year? —I am free to say that, as to this matter of £45,000, if we had provided for that, we should have had to go to the Contingent Fund, and I was willing to do that. My feeling was a preference to do that, for the simple reason that we shall have to make provision for writingoff that £45,000 in note A. 154. £54,000 you mean ?—No, the £45,000. If we could provide for that and write it off at once, I think the only difficulty would be removed that prevents us immediately liquidating the Bank of New Zealand Estates Company, and to secure that object, which would enable considerable savings to be made, I was willing to provide for it, although we had to trench for the provision for bad and doubtful debts upon the Contingency Fund; but it was not thought desirable or prudent. *12—I. 6.
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155. Then, am I to understand this : that of the £54,000 you have written off the £45,000 mentioned for which no provision had been made? You can say, surely, Yes or No, whether in the £54,193 written off there is this £45,000 for which no provision has been made ?—The £45,000 is altogether outside the £54,000. It is quite open to question whether the bank is called upon to at once provide money to write off the £45,000. 156. Is the £45,000 included in the £54,193 ?—No. 157. Then, what bearing has your reply to my question ? I asked whether the £54,000 has been written off in respect to accounts prior to the Contingency Fund provided. Your answer to that was " Yes " ?—Yes. 158. Very well; I now ask you a question with regard to this £45,000. How are you going to pay the £50,000 to the Assets Realisation Board if the Colonial Treasurer does not give his consent ? —I do not know if the Colonial Treasurer requires immediate provision. That is a contingency we have not considered. The Government Auditor put the note to the balance-sheet here, and if that difficulty arises we shall have to consider what is best to be done. 159. How much of the £45,000 has been written off in the £54,000 ?—I am not aware that any of it has been written off. Ido not know whether you quite understand that I was referring to the £45,000 in note A, which you find is in the balance-sheet. 160. You say some of it has been written off. How much has been written off?—l cannot tell you how much has been written off. This balance of cost of debenture conversion has arisen since the provision for writing-off made last year. 161. Has any been written off?—l am not able to say how much has been written off. 162. Does any portion of the £54,000 include the £45,000? —I am not aware that it includes any of it. 163. Does the £29,000 contingent include any portion of the £45,000 ?—No, I am not aware of it. 164. Then, there has been no writing-off in this £45,000 in the Bank of New Zealand?— The note here means that there is £45,000 which has yet to be provided for. It has yet to be provided for from some source. 165. Were you holding back the balance of the £200,000 which is now left and intact with the view of meeting this £45,000 ? —No ; we do not recognise that we are at liberty to use any of that fund for this amount. I think it will have to be written off from the profits of the bank by instalments, just as we propose to write off the good-will of the Colonial Bank. 166. Are you not aware that you have claimed from the Government debentures for this same £45,000 under the adjustment for the Realisation Board ?—I am aware that it was not included in the claim that is made for the debentures which the Government agreed to give to us. 167. Are you aware now?—l do not understand that it is included. 168. Have you seen the certificate given by Mr. Butt? Have you seen Messrs. Kemble and Smith's report ? —Yes, I have seen it. 169. Well, you say that the £45,000 is not included in the adjustment made by Mr. Butt ?— There must be some misunderstanding about the matter which places us at cross-purposes. I think you are mistaken about this £45,000 being referred to in the special audit. The amount referred to in the special audit report belongs to a totally different matter. That £45,000 refers to the balance of the station accounts which were subject to adjustment. This £45,000 in the bank balance-sheet is a totally different matter, and I am not aware that it came under the special audit at all. 170. The £45,000 adjustment to the Realisation Board did not come under the special audit ? —Yes, that did; but this £45,000 in note Ais another sum altogether. 171. I understand that there was a loss on the conversion of the debentures of the £45,000? — Yes ; that is the amount which has accrued since last year, and which is not yet provided for. 172. There was no provision made for that. Was not that provided for by the £200,000 ?— We had no thought of providing for that out of the £200,000. 173. Do you say that this £45,000 loss on the conversion was not brought before the Committee last year ?—So far as I know, it was not included in the balance-sheet submitted to the Committee. 174. If it was included in the balance-sheet submitted to the Committee there was £200,000 provided to meet contingencies, and this is a contingency. Why should it not be taken off the Contingency Fund of £200,000 ?—At the time when that arrangement was made with Parliament this deficiency had not arisen. 175. Well, then, to put it so that you will understand it, by the consent of the Colonial Treasurer being given this brings £45,000 into the Bank of New Zealand Account, does it not ? It arose in respect of the Estates Company in connection with the debentures, and now you are bringing it into the bank if the Colonial Treasurer consents to it ?—Yes. 176. That would practically have to be provided out of the £200,000 by the bank ?—lt would need to be provided by the bank in some way. 177. If you left it as it was it would be provided by the Estates Company as a shortage of that company ?—That is so.
Saturday, 15th August, 1896. Examination of William Booth, Director of the Bank of New Zealand, continued. 1. The Chairman.] Have you any documents to hand in, Mr. Booth?—I have to hand in the Profit and Loss Account of the Estates Company for the year ending 31st March, 1896. 2. You were asked to get a report of Mr. Hanna's, excluding private matter. Have you got that ?—I have to say that Mr. Cooper has examined the report, and the only part of the report that could be produced is the address and signature.
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William Watson, President of the Bank of New Zealand, recalled. 3. Mr. Montgomery.] What was the date of your appointment as President, Mr. Watson? Mr. Cooper : I shall advise Mr. Watson not to answer any que Jtions when there is not a full quorum of the Committee present. 4. Mr. Montgomery.] You can do what you like when you are asked. [To witness.] What was the date of your appointment as President ?—I am very sorry, but lam advised not to answer questions until there is a quorum of the Committee present.
V Monday, 17th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. Mr. Montgomery.] What was the date of your appointment as President, Mr. Watson?— 12th October, 1894. 2. You had previously refused the appointment?— Yes. 3. Will you mind stating the grounds—l will not press it ? —The grounds for my refusal were, in the first place, I did not like to leave the service I was in just then for many reasons, and the directors of the Colonial Bank increased my salary by £400 a year at the time. 4. How was it that you changed your mind?—l was offered higher pay. 5. After Mr. Coates's refusal, did you apply to the Government, or did they make the offer again to you ? —I did not apply to the Government. I have got here copies of the correspondence which took place, and which I handed into the other Committee. I got these copies from the Colonial Treasurer's office. 6. You can, I presume, certify that they are copies ?—They are correct copies, I believe. I have not got copies myself. 7. You have the original of letters addressed to you ? —I am not sure that I have. I read them over to the other Committee, and the shorthand writer took them down :— " • " Colonial Treasurer's Office, Wellington, 25th September, 1894. "I have the honour to inform you that the Government yesterday decided unanimously to offer you the position of President of the Bank of New Zealand during good behaviour. Salary, £2,000 (two thousand) per annum; and I shall be glad to know at your early convenience whether the position is accepted by you. " I have, &c, " J. G. Ward, Colonial Treasurer. "William Watson, Esq., Inspector, Colonial Bank, Wellington." To which I replied : — " Sir,— " Wellington, 25th September, 1894. " I have the honour to acknowledge the receipt of your letter of this date, and to tender my thanks to the Government for the offer of the appointment referred to. I shall at once proceed to Dunedin, and forward to you a definite reply as soon as possible. "I have, &c, "The Hon. J. G. Ward, Colonial Treasurer, Wellington." " W. Watson. Then I wrote from Dunedin on 29th September :— " Sir,— " Dunedin, 29th September, 1894. " I have now the honour to inform you, in reply to your letter of the 25th instant, that lam obliged to decline acceptance of the position therein offered to me. In doing so I would again beg to express my thanks and gratitude to the Government for the high honour conferred upon me by the offer. " I have, &c, " The Hon. J. G. Ward, Colonial Treasurer, Wellington." " W. Watson. The next was a telegram, dated the 6th October, 1894 : — " W. Watson, Esq., Colonial Bank, Dunedin. " I beg to offer you position President Bank of New Zealand, salary two thousand two hundred and fifty per annum during good behaviour. If accept, can you come on here by to-day's express? Reply. "J. G. Ward, Wellington. " 6th October, 1894." To which I replied by telegram of 6th October:— " Hon. J. G. Ward, Wellington. " Accept offer with thanks. Cannot go by express to-day, but will leave Monday morning. " Dunedin, 6th October, 1894." " W. Watson. 8. Did you, before accepting the offer of President, make any inquiries as to the position of the bank? —I had several conversations with Mr. Murray after Mr. Murray knew that I had received an offer in the first instance. 9. Will you kindly tell us the substance of those conversations ?—The substance of them was this : that I knew that he was going away, and I tried to get his views about things as much as possible. I told him that I had heard remarks outside that there were heavy losses impending to the Bank of New Zealand on several accounts, and mentioned some of them, and he did not seem to think that the losses were likely to be anything so heavy as I suspected. He seemed to think that with care things might pull round much easier than afterwards turned out to be the case. 10. Were the statements he made to you in accordance with the facts which you afterwards discovered ? —He took a more sanguine view of affairs than I did after going into them thoroughly ; but I understand that Mr. Murray for several years was not closely connected with the bank, and was dependent for his information upon others. Certainly Ido not think he gave me any information which was misleading or of a wrong character.
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11. Did he give you any information which would lead you to suppose that the legislation of 1894 would not be final ? —I do not think so. He certainly was of the opinion, as I was myself, that it would be a good thing to separate the estates entirely from the bank, and also to acquire the business of another bank—either the-National or the Colonial Bank —to make up for the depletion of business which had taken place in the Bank of New Zealand owing to the heavy locks-up in properties, and to make up for that depletion of the business it was absolutely necessary to increase the bank's earning-power by getting more business. It was impossible to do that except by purchase of the business of another bank. 12. Did he never suggest that application would have to be probably made to the Government again?—No, he did not. On the other hand, I remember very well that when he was going away I said, "When shall we see you back, Mr. Murray?" He said, "I do not intend to come back again unless you absolutely require me. I hope you will never do that." That makes me certain that he never expected any possibility of having to go over the same ground for assistance. 13. Did he inform you what information he had laid before the Government for the purpose of the banking legislation of 1894 ?—No, he did not tell me anything about that. 14. Did you ask him ?—No, I did not. 15. Have you any records in the bank of any memorandum of the information which was laid before the Government ? —No ; I know that a search was made just recently to see if there were any records, and they did not find any. The Wellington office was only a branch of the bank at the time, and Mr. Murray had a room there, but his memoranda did not belong to the office. 16. Are you aware from other sources what information was given to the Government ?—No ; I never heard anything of it. 17. Did you ever inquire?—l think it is possible I might have asked Mr. McLean what information he had before him when the legislation went through; but I have nothing in my mind that I ever got any knowledge of any. 18. Did you ask the Colonial Treasurer what his knowledge of the position was ?—No. 19. Or any member of the Government ?—No. 20. You were aware that the position would require careful investigation by whoever was President? —Oh, yes. 21. Did you proceed to make that investigation?— Yes. 22. How did you go about it ? —I got all the branch returns and records of the bank, and went over them as carefully as I could. I got the Government Auditor, who is an old officer of the bank, and he went over them along with me. We got the reports of the different managers and inspectors on the accounts, and everything we could. 23. And you studied the balance-sheets, I presume? —Do you mean the past balance-sheets? 24. Yes, past ones ? —No, I never looked into them. 25. Did you come to any conclusions as to the position of the bank from this study of the reports ?—Yes. 26. What were they?— Well, in a month or two I came to the conclusion that there was something between £300,000 and £400,000 short in the bank itself; but I was not in a position to come to any conclusion with regard to the major matter —the Estates Company's losses —until after their balance-sheet of 31st March, 1895. 27. Did you have fresh reports made by the branch bank-managers as to the position of accounts? —Yes, we had. 28. Were their reports less favourable than you had reason to expect ?—No, I cannot say that; as far as the deficiency in the bank itself was concerned, I was very much surprised. 29. Did you find that the reports prior to 1894, which you had read, showed the position of the bank to be what you found it subsequently ?—I never had time to go into the whole of the reports prior to 1894. The history of one or two accounts had to be studied in order to deal with them. I did get some back reports to look at, but never went back to the former reports as a whole. 30. Did you find that some of the reports had been misleading ? —I should not like to say that. In the light of after events they were not borne out, but I should not like to say they were misleading at the time they were written. 31. Do you think they were correct at the time ? —I have not studied many reports previous to 1894. 32. Did you read the chairman's statements of the position of the bank from time to time ?— In the newspapers. 33. From any investigation prior to 1894, did you come to any conclusion as to the truth and accuracy of those reports—l mean the statements made by the chairman at the annual meeting?— I would like to say this : that since hearing some evidence given here I have given a great deal of consideration to this matter, and I have come to a belief myself that those former directors in the Bank of New Zealand acted up to the best of their knowledge and belief at the time. 34. They did ? —Yes, I believe so ; and if the Committee would allow me I would like to put the case to them in this way : It has been stated here that the present balance-sheet of the Bank of New Zealand on 31st March, 1896, is a correct and truthful balance-sheet. I believe it to be so ; but I would ask the Committee if they could imagine such a thing as ten years of depression from this time forward, and at the end of that time, with wool and produce at prices 50 per cent, lower than they are now, that somebody who did not know much should be asked to state whether, in his opinion, the balance-sheet was a correct one or not. Such an individual might easily say that he himself would have made a more correct balance-sheet; but, given ten years of depression, still I say such an individual would not be justified in saying that our balance-sheet of 1896 was a wrong balance-sheet. That is what has happened. The values of wool and other things have gone down to half their former prices, and it is very easy to be wise after the event. But I maintain that the directors at that time were justified in making these balance-sheets.
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35. Let me take the position in 1889. You are aware generally of the terms of the statements which lead to the committee's investigation in 1889 ? —Yes. 36. And you are aware of the result of that shareholders' committee's investigation?— Yes. 37. Did not that committee prove to your satisfaction, reading the report over as past history, that the statements of the directors were entirely contrary to the facts ?—Well, I think too much was made of it. Instead of blaming what they should have done, the collapse in values, they cast themselves about to put the blame on men. I was aware that at that time properties in Dunedin, where I myself was doing business, had fallen to one-half their value, and I think the fall in values would very well account for the deficiency in the Bank of New Zealand at that time. 38. Would the deficiency have arisen since the publication of the balance-sheet ?—No ; but I believe at that time in Dunedin, when we were making up the balance-sheet, we were not in the habit of stating the values of properties at the then saleable price, as they looked at it as a period of transition, and they thought that period of depression would pass away, and therefore f do not know that the directors of the Bank of New Zealand were to blame. 39. Hon. Mr. Seddon.] They put the properties down at their book-value ?—Yes. 40. Mr. Do you consider that any of the bank directors are acting rightly in putting a value upon estates which they would not fetch in the market? —In a certain sense, yes, because there are times when you could not sell a thing in the market at all, and what would you put that down for ? 41. Then, you do think that the directors were right in putting a value upon them far exceeding their saleable price ?—At a time when things cannot be sold —when there are no purchasers—it is a mere matter of opinion what is the value of anything in a small country like this. 42. You might go so far as to say that it is right to put a value of the Estates Company's properties down at their book-value when the bank's own officials came to the conclusion subsequently that they were over £800,000 less in value ?—No, I would not go so far as that; but that has taken place after years of knowledge. 43. But has it not been known for years that the Estates Company's properties were far above the value any valuer would put upon them ?—I am not able to express an opinion upon that, but I know that during the last four years they receded in value. 44. And yet they have been kept at the same value on the balance-sheet ?—I believe they have. 45. Do you believe the directors doing that were justified in devoting the proceeds—the money of the shareholders —I am alluding to the bank—to the payment of dividends ? Of course, the Estates Company was an asset of the Bank of New Zealand at that time ?—I am not sufficientlyconversant with the past working of the Estates Company to give an opinion on that. 46. Have you any reason to believe that, taking, say, the last five years, the directors thought the book-values placed upon the Estates Company's properties would be realised ? —Very sanguine views were held on the part of some of those gentlemen, and I should not like to say they were not sincere in holding them. 47. Do you think they were sincere?—l have come to the conclusion that the directors acted up to the best of their knowledge and belief. I cannot conceive that such men as Mr. Glyn and other gentlemen of high character I know, and who had nothing to gain by doing otherwise", would do anything else but act according to their best knowledge and belief. 48. They were shareholders, were they not ?—Not to any great extent that I know of. I might say I knew that Mr. Murray had always a very sanguine view of New Zealand. He always thought it was only in its infancy, and that some day it would burst forth and do great things. He had that view, and honestly believed it. 49. Speaking from memory, Captain Colbeck was a member of the shareholders' committee in 1889?— Yes, the shareholders' committee of 1888. W. H. Colbeck, I presume, means Captain Colbeck. 50. Then, Captain Colbeck was a member of the shareholders' committee which reported that the properties of the bank were very heavily overvalued, was he not ?—Yes ; he says here, " It is obvious to us that for years past it has been paying a rate of dividend which ought not to have been paid," and so on. They probably thought that the properties were good, and were in hope of a recovery. 51. He was a director, was he not?—No; I think this was his first connection with the bank. He became a director afterwards. 52. Would you go so far as to say that still, in the face of the report of the shareholders' committee, which states, " It is obvious for years past the bank has been paying a rate of dividend which ought not to have been paid. Securities have been held and accounts kept going in the vain hope of a recovery of the value placed upon them in what was, in fact, a period of inflation " ; and, again, " In Adelaide money appears to have been advanced, or, rather, squandered, in a way which can be only characterized, as reckless and disastrous " ; and, again, " and, finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action " ?—When you asked me about the balance-sheet I did. not think of anything prior to 1888. When you spoke of the balance-sheet of the bank I thought you referred to the balance-sheets between 1888 and 1896. My remarks would be more applicable to the London board of directors than to the previous board. 53. I presume you would have no hesitation in expressing your opinion of the directors through whom the bank had lost £160,000? —I have no knowledge of it. 54. But still you think the directors have acted perfectly straightforwardly ? —I think they acted as they thought for the best interests of the bank.
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55. I want you to carefully distinguish that. I presume you will admit that it is not in the best interest of the bank to make statements which are incorrect ? —Well, I am of the opinion that they acted up to their best knowledge at the time in making those statements —I mean the London directors. 56. For instance, in 1891 the chairman reported that the net profits, after making provision for bad and doubtful debts, amounted to £59,000. Do you consider that was to the best of their knowledge?—l am really not competent to pass an opinion on the figures, seeing that I have had nothing to do with them at all. I have had absolutely nothing to do with those figures myself. 57. But you were aware that the Estates Company's properties were overvalued at that time in 1891 ?—I have heard people say so. 58. Have you any doubt upon the point ?—Well, I think this : that, if the values had gone up 50 per cent, instead of going down as they did, we should have heard nothing of overvaluations. 59. Do you think any directors would be justified in basing their statements upon a possible rise of values of 50 per cent.?—l think this : that they would not be justified in wrecking the Bank of New Zealand in order to write off a loss of what they might consider was owing to some little variations in the valuation of properties in the Estates Company for any one year. 60. Am I right in saying that you considered the Estates Company, or any other properties in the bank, should not be written down to their value from year to year ?—I cannot understand how they could be writing them up and down every year. I think it is better to keep them regular. 61. You write the stock up and down every year ?—I was not aware of it, unless you mean this year. 62. In your trading concerns, is not the stock valued every year? —Yes ; that is a very different thing. Each stock stands on its own footing. All stock is taken every year as any ordinary busi-ness-man takes it. 63. Do you not consider that station stock should be written up and down according to market-values? —I should not like to say in a large concern like the Estates Company. If, for instance, during one month stock happened to be very cheap when balancing, and they thought that it would go up again, I think they would be justified in not writing it down drastically. 64.' Then, you think directors are right in writing up stock according to their sanguine expectations ?—No, I do not think that. 65. At over 50 per cent, on market-value ?—That is a different thing. The directors, I understand, had the estates in their books at certain figures. Produce rapidly fell from 1888 to 1894 in an unprecedented manner. They had no fund out of which to write the properties off, and the question was whether they should keep them at their values in the books or leave a tremendous deficit in the Profit and Loss Account. Well, they chose to let things stand as they were instead of doing that. 66. Do you think they were justified in paying dividends year after year in the bank?—l am not talking with an actual knowledge. 67. I am asking whether the directors of the bank, knowing that the Estates Company's properties, which were practically simply an estate of the bank, and which were very heavily overvalued, were justified in paying dividends year after year ? —Nothing would be easier than for me to say I believe they were not justified, and they were wrong; but that is not my belief, and I cannot say it. I cannot believe it, and do not believe it. 68. You think they were justified ?—You cannot draw a hard-and-fast line like that. These men had vast interests in their hands, and the question was whether they should conserve those interests. I believe they acted in accordance with their lights. 69. lam putting a case. On the 31st March, 1894, a dividend was declared of £22,500 in the Bank of New Zealand ? —Yes. 70. At that time the Estates Company's properties were overvalued by at least £800,000 ?— Do you mean taking the trading concerns in ? 71. Yes, the globo assets? —I should think, looking at it in the light of the present day, that is so. 72. That is, they were placed on the balance-sheet at a fictitious value of over £800,000 more than actual value ? —I should not like to say that they were not placed in the balance-sheet at anything over their value, but when they were placed there at first they were put down at what was believed to be their value, and afterwards they did not write them down to meet the bad times. 73. You told us that you were aware that the actual value of the globo assets properties was at least £800,000 less than the value which was stated on the balance-sheet ?—I say it would appear to be so in the light of after events. 74. That is to say, a fictitious value exceeding £800,000 above actual value was put on the balance-sheet ? —I should not like to say that. I say in the light of after events. 75. Do you say as a matter of fact that was not so? —I am not prepared to say so. I say in the light of after events. 76. You know what they were valued at in 1894. They have not kept at one fixed value ?— You will find that they were added to and subtracted from. 77. As sales were made?—l am not aware. 78. Were they ever written down ? —I do not know. . 79. Have you not told us that they were not justified in writing them down ?—No, I have not said so. 80. Have you not said that they had no funds out of which to write them down ? —I said that. 81. Do you consider that properties should be written down only when there are funds to meet that writing-down?—No, I do not consider that should prevent their being written down if for other reasons it was found necessary to write them down.
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82. I want to get this point: Do you consider that properties should be valued at their actual value in balance-sheets, or do you maintain that they should be put down at a fictitious value ?—I consider at the actual value ; but the difficulty is in assessing what is the actual value. I do not think they should be put down at their saleable value. 83. From your knowledge of the facts, do you think that the actual values placed on the properties of the Estates Company at 31st March, 1894, were the actual values ? —I am not in a position to answer that. 84. Why not ?—Because I do not know. 85. You have a knowledge ?—I have a knowledge now. I had no knowledge then. It is very easy to be wise after the event. 86. Have you any doubt in your mind as to whether the book-value in 1891 was or was not the actual value ? —I cannot say that. 87. Have you any doubt in your mind?—l believe they were competent men who were engaged in those valuations, but I have had nothing officially to do with them. 88. I ask you whether you have any doubt in your mind whether the book-value was above the actual value? —Well, I have no opinion to offer upon that. 89. Have you any doubt in your mind, is what I ask ? —I have no opinion on the subject. 90. I ask whether you have any doubt on your mind?— There is nothing hardly that a man might not have a doubt about; but I have nothing to warrant any doubt. To what time do you allude ? 91. I am speaking of now. Have you any doubt that the values placed upon the Estates Company's properties in the balance-sheet of 1891 were fictitious values—that they were not the actual values ?—I have no knowledge to warrant me having such doubt, and I do not entertain doubt unless I have some reason for it. 92. Then, you have no doubt that they were the actual values ?—I would not like to say so. I have no knowledge to justify me in entertaining any doubt one way or the other on the point. 93. Coming to 1895, before the banking legislation, you are aware that the book-value is still maintained of the properties at the 31st March, 1894 ?—I am not certain that the same bookvalues were maintained, because lam speaking from memory. I recollect that the debit to profit and loss had got up to something like three or four hundred thousand pounds, and I am not certain that there were not any writings-off in the time. 94. You know, as a matter of fact, that between the 31st March, 1894, and the time of the banking legislation of 1895, the properties were discovered to be at least £800,000 less than the value placed upon them in 1894 ?—Yes. 95. Then I ask the question again : With that knowledge, have you any doubt in your mind that the properties were overvalued in 1894?— I really cannot make any statements about what occurred before I took part in the management. lam very much averse to anything I might say misleading the Committee. I have no knowledge on the subject to enable me to make any statements or to express any opinions on anything which took place prior to myself having to do with them. 96. Do you consider that the directors of any bank are justified in dividing an alleged profit amongst the shareholders when that profit has not actually been made if the assets had been written down to their values ?—No ; I do not think they are justified in such circumstances. 97. They are not justified? —But it is a question of values. 98. To their actual values ? —Selling-values do you mean ? 99. What they would be valued at by impartial valuers? —I have taken a legal opinion as to that very point, and as to what should be considered proper values for directors of a company to place upon estates in their charge during a time of depression, and when estates are very difficult of sale, and I have been advised by the best authority I could get that directors in such a contingency were not obliged to place panic values upon securities —that they should put such values on those securities as in the best of their judgment would be borne out with time. 100. Was there a panic in 1894 ? —I knew about land in some districts of the colony the owners of which were then willing to sell at several pounds per acre less than they would want to-day. 101. Is not the rise in the value of property due more to the fall in interest ?—I think it is due more to the rise in the prices of wool and wheat. 102. Do you consider that it is right to keep up present fictitious values in view of their possible recovery in the future to the level of the figures written down ?—I have only to say that I have taken a legal opinion as to that for my own guidance, and that is what we have been advised; and we have been referred to certain cases where Judges in England have held that to be the proper course to take—not to place panic values on properties or valuations made by persons for selling purposes at a time when sales are very difficult, but to put such values on them as to the best of one's knowledge and belief would be borne out by time. Therefore lam very diffident in expressing any hard-and-fast opinion as to the course pursued by my predecessors. 103. Is the basis on which the directors value the property in the Bank of New Zealand that basis? —Certainly. The directors of the Bank of New Zealand would be very glad to part with all the trading concerns, and everything else they have in their hands, if they could get proper values for them ; but people, knowing that the bank is anxious to sell, will not give the proper values all at once, and time must be taken to realise them. 104. From the facts within your knowledge, if the directors of the Bank of New Zealand had sold these properties at the market value in 1890, would not these properties have realised more than they will now? —I am strongly of opinion that what you now suggest is an impossibility. There are not people enough in New Zealand to buy up these properties in one year, and it would not have been possible to sell at anything like the valuations such properties as were held by the Estates Company in a small country like this in any one year.
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105. Have the Estates Company's properties that have been sold been equal to the valuations of Mr. Hean in 1891 ?—I believe some of them were. I. believe some left a profit. 106. On the whole ?—On the whole. Things have been going down and down ever since that time until the rise last year. 107. And do the directors still anticipate a rise of 50 per cent. ?—Well, the directors of the bank are not now in control of those properties. 108. Coming to this balance-sheet of the 31st March, 1896 : You have told us that you considered that properties should be written down to their values every year ?—Yes. 109. Were the Colonial Bank premises written down to those values ?—No ; but a special note was made in the balance-sheet. 110. Why were they not written down ?—The deficiency was looked upon as part of the good-will, and good-will is an asset that need not be written down in one year. 111. No special note was made that they were part specially of the good-will ? —No; but it was clear from the balance-sheet information was given that the properties were book-value. 112. Actual value was not mentioned in the note? —No; the actual value is difficult to ascertain. In fact, the real actual value can only be ascertained when sales are made. 113. The directors formed an estimate, did they not?— Yes, they had formed some estimate. 114. What was the estimate ?—Well, the estimate—l am not talking of anything that was definitely minuted, or anything of that kind; I am talking of conversation—we thought they were worth, perhaps, something like £30,000 less than they were valued at. They were overvalued to that extent. 115. As a matter of fact, nothing has been written off good-will or the properties ?—Not as yet. 116. There is nothing to inform the Government, or the colony, or the shareholders that that book-value is £30,000 above the estimate ? —No ; and there is no actual estimate. I am merely relating to you what was in my mind as probable. 117. Would it not have been more explicit to put the whole estimated amount of good-will under the heading of " Good-will," and the properties at their estimated value ?—Then we should have had to make an estimate, and it costs money to make valuations. 118. You made a sufficient estimate to buy them; it was accurate enough for that? —Yes, that was so ; and we considered, I suppose, that we made a good bargain then. 119. Do you not consider the purchaser should make a sufficiently accurate estimate of the properties in buying them to put them down at that estimate in the balance-sheet?—l think we were quite satisfied that we got a sufficient surplus in our bargain to cover any possible deficit in that. 120. I did not ask you that. I asked you whether, when a purchaser made an estimate for buying properties, that was not sufficiently accurate to appear in a balance-sheet. If, in buying a considerable property like the bank premises, you make an estimate sufficient to buy them, do you not think that estimate is near enough to appear in the balance-sheet ?—As I told you, there was no formal estimate made. As regards this particular transaction, there was no reliable estimate made. 121. Am I to understand that you, as the President of the Bank of New Zealand, consented to the purchase of properties of which no reliable estimate had been made?— Knowing that we had the best of the bargain, I was quite content to do that. 122. Then, you purchased these landed properties having no reliable estimate of their value?— As a matter of fact, I knew that these premises had cost more money than they were down for, and that it was only a question of realisation and what sort of times we had to realise them in. 123. Do you not think that it is the duty of the president of a bank, in purchasing over one hundred thousand pounds' worth of bank premises, to have a reliable estimate made?—As part of the bargain that was made, I am perfectly satisfied I have done my duty. 124. I ask whether you did not think it necessary?—l did not think it necessary to make any further estimate than I had made in my own mind. 125. You are aware that in the amalgamation agreement of the 11th September, 1894, clause 7 states that " the present premises of both the Bank of New Zealand and the Colonial Bank to be valued by the new board on the basis that they are going concerns; and if these values be agreeable to the appointees of the relative banks, then such values be adopted, and the premises so agreed upon be taken over by the amalgamated bank. If the appointees of either bank disagree with any such valuation of the new board, then the board and the appointees so disagreeing shall in each case appoint an umpire, whose valuation shall be final." There was very careful provision made in that ?—Yes. Hon. Mr. Seddon : Mr. Chairman, may I ask you to intervene here ? That is the draft agreement. 127. Mr. Montgomery.] I think that is an agreement?— That is, as a going concern? 128. Yes? —As a going concern, I do not think the premises of the Colonial Bank were overvalued at the sum of £125,138 12s. 2d. If they had to buy those premises at the present time they would have to pay that for them. But this is very different, as it is a liquidating concern. 129. But they were going to be valued in the agreement of 1894 : why were they not valued ? —Because that agreement was not carried out. 130. Have you the balance-sheet for 1896 before you there ?—Yes. 131. What do you make the capital of the bank from the balance-sheet ? Do you consider the eserve liability a part of the capital ?—No, Ido not. It is not put in here as capital. 132. It is capital called up under the Bank of New Zealand and Banking Act ?—No. 133. It is called capital ?—lt is not extended in the outer column.
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134. It is called capital? —It is called reserve liability further down. 135. I ask you what the balance-sheet shows as capital ? —lt shows, including the guaranteed stock, £2,547,423 6s. Bd. 136. That is, including part of the reserve capital ?—No. 137. Is not that under the head " Capital," called up under " The Bank of New Zealand and Banking Act, 1895, " part of the reserved capital ?—Yes. 138. You are including part of the reserves ?—lt was not paid up at that time. 139. You do not consider anything unpaid as capital?—No, it is under reserved liability. In the case of the £500,000, this capital was called up, but not paid, except as regards £47,423 6s. Bd.; in the case of the other £500,000, it is reserve liability. 140. Then, this reserved liability is only a note showing the reserve capital of the bank ?—Yes, in the note. 141. You have, in 1896, separated the deposits and other liabilities?— Yes. 142. Why were they not separated in 1895 ?—We thought it was better to show them in this way in 1896 as being more explicit without hurting the bank in any way. 143. What do the other liabilities consist of, in general terms ?—There are various things. There is interest accrued on fixed deposits but not paid up to date, rebate of discount on bills discounted —you cannot take it into profit at the time if the bills have not run —and other things of that kind. 144. Looking at the investments classed there of the second million, I see " Other securities." What class of securities would they be? —I cannot give you the particulars of those securities. 145. But what class of securities are they?— They are all good securities. 146. Are they securities of landed properties, shares, or gold-mines ?—I do not think there are any shares or gold-mines. 147. Will you tell us the class?—l cannot say anything more than that they are perfectly good securities. 148. You do not know?—l know. 149. You decline to answer? —Yes, I must decline to answer. 150. On what grounds?— Because I cannot give the particulars of such securities. 151. Ido not ask for particulars. I ask for the nature of the securities—whether they are secured on land or not?—l cannot answer your question without going into particulars. 152. You cannot say whether any of these securities are advanced upon land? lam not going to ask you to whom the advances are made ? —Some of them may indirectly be so. There were no mortgages—nothing that one would consider a direct mortgage in this country. 153. Would they include trading concerns? —No, 154. Would they include overdrafts on securities ? —No. 155. I mean overdrafts where you had the deeds and so on in the bank?—l do not think so. 156. Would they include shares in companies ?—No. 157. Or debentures of companies ?—I cannot answer that. There are no debentures in any local companies, anyhow. 158. Were some of the investments in England ? —Yes, nearly all in England. 159. Do you think it would injure the bank in any way to say what would be the nature, apart from private accounts altogether, of the investments ? —I think it would; it would be exposing the business of the bank in a way that no other bank is called upon to expose it; and I think, if the Committee feel doubt about these securities, I may say that I think they have nearly all been repaid since. Within a very small amount all these securities have been realised since that time. 160. Now, under this heading, " Other Advances and Securities and Debts due to the Bank," can you give us the particulars of the class of advances ?—Yes; these are the total ordinary overdrafts and advances of the bank on current accounts, and firms' and individuals' accounts dealing with the bank all over the colonies. 161. Could there not be some particulars given in the balance-sheet ? —Not without exposure of the bank's business. 162. Would it do harm to say ?—lf all the banks did it it would be very different. 163. You will understand that I am not inquiring as to any private customer's account ?—Yes. 164. The Profit and Loss Account is £52,576. That is after providing for bad and doubtful debts ? —Yes ; except in such cases as are shown on the balance-sheet by notes A and B. 165. Then, from the facts that are within your knowledge you can tell us, so far as you are aware, whether there are any bad and doubtful debts not provided for ? —Yes, that is so. 166. Have you a Bad Debts Account in the bank in your book-keeping?— Yes. 167. All banks have it, I presume? —-I do not know. 168. In your experience ? —They have, in my experience. 169. And these amounts you have practically written off in that account ? —Written off in that account, and provided for them in the Contingency Fund. 170. I am supposing that you have a Bad Debts Account, showing all bad and doubtful debts ? —Yes. 171. Against certain of those you placed part of the Contingency Fund ?—We retained the whole of the Contingency Fund. 172. Against certain of the accounts, and against others ? —We make a clean writing-off from the Profit and Loss Account. 173. How do you differentiate between accounts covered by the Contingency Fund and accounts which have to rely upon the profit for cover ?—We have written off amounts from the Profit and Loss Account which, on a careful estimate being made, were sufficient, we believe, to bring the bank out; but there are other accounts where we cannot form such an estimate. We can only make a very rough estimate as to these. It was computed that if we retained £170,000 in the Contingency Account and wrote off everything known ample provision would be made. •13—I. 6.
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174. £29,000? —W T e wrote off more than £29,000. If we wrote everything known as bad off profits we should, we considered, be arriving at a true state of affairs so far as we know now. If things get better we shall not require so much, but if, on the contrary, in future years things get worse, we shall require more; but, according to our knowledge at the time, that was a correct basis. 175. Are you basing these on a possible recovery of values ?—No. On the other hand, we are not taking securities in Melbourne at the panic prices of the day, because prices are going up now. It was with regard to that very point that I got that legal opinion which I just now mentioned. 176. My question is, What is the value you are placing on the different classes of bad and doubtful debts ?—Well, if a man goes through the Court, and his estate pays so much in the pound — say, 2s. —we write off 18s. from that debt. If, on the other hand, he has got a business, and he is making headway in that business, but is not quite able to pay off all his debts, then we make a provision for possible loss, not actually incurred, which is not such a certain thing. 177. And certain assets are based on a probable future recovery in value?—No, I do not say that. We hold a provision probably against any loss, but we are sanguine that there may be no loss. We hold provision for what we think probable losses on business of that kind. 178. Let us suppose that your bank accounts were, as Mr. Booth said, taken to pieces like the Colonial Bank, and that these bad and doubtful debts were in, say, a" B " list: if you were purchasing the business of the Bank of New Zealand, would the cover be such a substantial one as you demanded from the Colonial Bank?— Nothing like it. 179. Nothing like it ? —There is a difference between a concern in liquidation and a going concern. Where would there be people in New Zealand who would buy up things sold from a liquidation of such a bank as ours ? 180. But if this Bad and Doubtful Debts Account were a very large one ?—A good deal of that is written off altogether. In the case of bankrupts it is written off. 181. I asked whether it is a very large globo asset- —equivalent to the " B " list ? —ln the event of another bank purchasing our business in the same way as we purchased the Colonial Bank, many of our accounts that we consider perfectly good accounts would have margins held against them on the same principle. 182. Let me come to the question again : Is this collection of accounts which require cover a very large account —a large proportion of the accounts of the Bank of New Zealand ? —I cannot enter into accounts like that. 183. lam not going into the accounts, I assure you. Are the covers required against them half the accounts of the bank ?—I cannot answer that. 184. You mean that you decline ? —Yes. 185. Does that involve any disclosure of private accounts ? —lt may lead to it. We consider that we have made ample provision. 186. What I want to discover, to tell you frankly, is this : How far the present business connections of the Bank of New Zealand are with sound financial people. I will not press it. -Can you give me any information on that point?—l cannot enter into particulars of accounts or anything of that sort, but I consider the business is very clean and good, and that the £171,000 which we hold in the Contingency Account is quite sufficient, with the writings-off, to meet any probable losses. 187. The fact that there is only £171,000 would lead to the natural inference —considering there are seven millions of securities—that the proportion of doubtful customers was a small one ?—Yes, because we have written off considerable amounts of money. 188. I want to ask you whether it is not a fact that the proportion of customers who are doing business now with the Bank of New Zealand whose debts were bad and doubtful, and whose accounts are undesirable, is a small one ? —Yes ; a small one. 189. Comparatively a small one ? —Yes. 190. As your experience of banking business goes ? —Yes ; that is, after the application of all the money of recent years. 191. That is, after the washing-up the present customers are a large majority of good customers —customers you want to keep ?—Yes. 192. And there is only a small proportion you would like to have off your hands ?—Yes. 193. You have discovered that some accounts of customers have been unsound beyond those estimated by you last year ? —Yes. 194. I deduced that from the fact that you have been obliged to write off £54,000 ?—Yes. 195. Is the £54,000 a matter of new discoveries of present customers, or of discoveries of bad debts which were not known last year ?—The question is a little ambiguous. 196. I will put it again. Your estimate last year was that £200,000 would be sufficient to cover doubtful debts. Have you since discovered that you actually require more ?—We have discovered that on accounts which were in the bank prior to 1895, by far the greater part of that £54,000 had to be applied to those accounts. 197. How is it you did not discover them in 1895?— Well, some realisations were effected during the year, and the prices we had hoped to get were not borne out owing to the Australian crisis. I may say that the principal amounts were in Australia. I have got an abstract here in one of the printed exhibits [No. 11]; £43,988 of that was Australian. In' New Zealand, £10,085 of it, I think was for current business, and the rest probably for old accounts. 198. Have you got much Australian business now? —No; it is very much narrowed down now. 199. Is it sound ?■—Well, we have made ample provision to make it so. 200. It required it, did it not ?—lt did require it. 201. What part of that seven millions that appeared as deposits are in Fiji—what part of the advances ?—There is not very much in Fiji. 202. A comparatively small amount?— Yes.
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203. Is it safe?—We think so. 204. Did it require much cover ?—No; not so far as the bank business was concerned. 205. How did it require cover? —Well, the Estates Company's business required it. 206. Have you much English business?— Yes, by way of exchange; and persons going from the colony to England keep their accounts with us there. 207. Have you any trading concerns in England ?—No. £08. The English business is very sound ? —Yes. 209. Lucrative ?—Yes. 210. You have had nothing officially to do with the Estates Company?— Yes ; I am one of the directors of the Estates Company. 211. Can you give us the history of the Schroeder debentures? —No; I cannot. I was not then connected with it. 212. Or generally, of the costs of raising money by the Estates Company ? —No ; I do not know exactly about that. 213. We can get that from whom ? —I do not think there is anybody here who can give you that information. The Estates Company is a London company, and Mr. Hanna was never connected with the head office of it. He was only colonial manager. The finances of the company were conducted at that time entirely by directors at Home, and it was not until I took office that the finances were managed from here. 214. Will you describe the circumstances leading up to the legislation last year in your own words fully?—l think I had better probably begin at about June. 215. I am speaking now not of the amalgamation legislation, but of the legislation of the Government guarantee ?—Well, it was about June of last year before we got the Estates Company's and the bank's balance-sheet in such form that we could deliberate upon them and consider the position properly. The Colonial Treasurer was then on his way out to this colony, and immediately after he came here—he was very busy at the time he came—l made a point of meeting him and told him 216. What was the date ? —I am not very sure about the date, but I think it would be within ten days or a fortnight of his coming here in July. I cannot say as to the date, as I have taken no note of it, but I remember meeting the Colonial Treasurer and telling him roughly how we had found matters, and he seemed very much startled and surprised at the magnitude of things, and said, " You do not mean to say it is as bad as that," or something like that. I said, " Yes, it is, and there is no getting away from it," or something like that; and I said I thought, as Mr. Murray thought, that two things were absolutely necessary : One was that the estates, or at all events the bulk of them, should be removed from the bank altogether in some way, and he said, " Why?" I said, " Because the creditors of the bank will never have confidence—the depositors and others— in the bank so long as there is a chance of their money being lost in these estates, and through the connection of the estates. Therefore, to my way of thinking, it is absolutely necessary that these should be removed, and it is also necessary—as the earning-power of the bank has fallen very low, owing to the calling up of advances, which took place in the last year or two—to get fresh earningpower, which can only be done by buying the business of another bank." 217. Did you speak of the discovery of bad debts ?—Yes, I spoke of the discovery of bad debts, and told him that it would take about £400,000 to clean up the bank itself, and that further provision would have to be made for possible losses in the future, and that it would take about a million and a half to clean up the Estates Company. 218. How much ? —A million and a half. 219. You subsequently made it less, did you not?—No; we made it more. 220. Will you explain. Was it not £800,000 in the properties taken over by the Assets Board? —Yes. 221. And about £440,000 of the trading concerns ?—Yes; but there was a deficiency in the Profit and Loss Account of about £400,000 more. 222. Yes; that was so? —Roughly speaking, I think I told the Colonial Treasurer that there was about £2,100,000 to the bad by our way of computing. 223. You say there was a million and a half in the Estates Company?— Yes; and about £376,000; then the £200,000 Contingency Fund, making £576,000. 224. And the secret reserves ?—I took those in. I made the net amount. Well, he seemed to be put about with regard to it a great deal, and I think I saw him again, when he advised that we should tell the Government. I had a sort of an idea that he did not like the task of broaching the subject to them. However, he said we should at once tell the Government, and he thought the best way was to ask for a conference. Well, we did ask for a conference. 225. Was this the first communication to any member of the Government on the affairs of the bank made by you?— No. I had to send in returns to the Government, but they were based on book-values subsequent to that time. 226. I mean the first communication about the altered position ?—No ; I do not think it was the first communication about the position of the bank, but it was the first communication in which they were told that the bank could not go on as it was. 227. Were other members of the Ministry made aware that the bank's position was not as Mr. Murray represented ?—I do not know what Mr. Murray represented. I could not have told them that. 228. The representations that you thought the bank's position was worse than you expected ? —I did not do that, because I had not formed any expectations. 229. Were there any representations made as to the position the bank was getting into, as you made discoveries from time to time ?—There were representations made shortly after I took office with regard to some things, but not representations which would bring home to the Government the
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necessity for legislation ; and no legislation was asked for by the bank until the time I am now speaking of. 230. When you say " some things," can you be more particular?— No. There were some confidential communications to the Treasurer which I do not feel at liberty to speak of, but they were not communications which had anything to do with the legislation of 1895. 231. Before we come to the conference, I want to know how far other members of the Government had been made aware of the position of the bank ?—No other members of the Government had been made aware. We did not know ourselves. The Estates Company was the key to the whole thing. It was only £600,000, so far as the bank was concerned, and we had £900,000 of capital, but the Estates Company we did not know anything about until about June, 1895, when we got the 31st March, 1895, balance-sheet, and examined our officers thoroughly and got the records transferred to the colony. The office here did not know anything about some of the entries in the books lying at Home. I do not think they knew anything of the amount in excess of Mr. Hean's valuation and other things that were put before the Committee last year. We did not know of these things out here, and we could not have got the information. 232. Will you go on with the conference?— Then the Government were good enough to allow us a conference, and the whole Cabinet, with the exception perhaps of two, attended at the conference. 233. The date?—l believe it was the 4th August, 1895. 234. Who else were present ? —I think all our directors were present, and I think the Government Auditor. 235. What took place ?—We told the Premier, and the rest of the gentlemen present, the state we had ascertained the bank to be in. 236. Was it similar information to that which was put before the Committee last year ?— Perhaps not quite so full; because the Premier immediately said, " I want certain information," and he asked us for certain things that were afterwards useful for the Committee. 237. Did you recommend the Government- to take any course?— Yes, we did. 238. What was it ? —The scheme which the directors put before the Government was before the Committee last year. I remember one particular of it was, that we asked for one million preference shares instead of the 500,000 which we got, and several other things. 239. As set out in the papers ? —Yes. 240. It was recommended at the conference ?—No ; nothing of that was said, as far as I remember, at the conference. 241. Were there any subsequent conferences with the Government previous to the legislation? —I do not remember any other conference with the Government. 242. Any correspondence ? —Yes, very likely correspondence; lam not sure, though. In fact, the bank has always corresponded with the Colonial Treasurer. 243. Officially?— Yes. 244. Is there any unofficial correspondence?—No unofficial correspondence ; but there is confidential correspondence, and correspondence which is not confidential. 245. Did you assist in drafting the Bill of last year ?—Yes. 246. Did you then consider that the colony was undertaking a dangerous financial responsibility ?—No. 247. What were your views ?—My views were these : That the colony had already guaranteed two millions of money for the bank, and if the bank were allowed to collapse at that time I thought the colony would lose that money. But, on the other hand, if safeguards were taken to prevent collapse, and if what I thought might be done was ably carried out, I considered that the colony would run very little risk indeed, because the only risk that we were likely to run would be on account of any deficiency there might be in the estates and properties which would be handed over to the Assets Board, and for that they could have certain securities which I thought would amply cover them. 248. Are you of the same opinion still ?—Yes. I do not think now that if the Bank of New Zealand is ably and properly managed the colony will ultimately lose money by it. 249. Are you of opinion that the position of the bank is now safe?—l am of opinion that, if the bank is let alone to carry out its business, and with able management, it is safe. 250. Do you contemplate that any more legislation will be necessary—have the directors any reason to think so ?—I do not contemplate that there will be any more legislation for the purpose of helping the bank financially, or anything of that sort. lam not able to say that legislation will not be advisable in other directions. 251. What other directions ? —I am not quite prepared to state them. 252. What is your reason for declining to answer? —I incline to the opinion that it would be beneficial to the bank to have its directorate increased. That is, it would not be inadvisable to increase the directorate. 253. With a view to making them more representative of different parts of the country ?— Mostly that. 254. Are there any other changes for which legislation will be required ?—I have not thought this subject out sufficiently to give my opinions. 255. Is the auditing staff sufficiently strong ?—I think the auditing is very well done. 256. Is the staff sufficiently strong?— Well, I think if I were Auditor, I should have another assistant or two. I have told Mr. Butt that I think he should have another assistant. That would not require legislation, I think. Mr. Butt has one assistant at present; he might have two. I am not prepared to say which would be best, because I have not given the matter sufficient consideration. 257. Could the nature of the audit be altered in any way? —At present I do not see any necessity for that.
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258. lam alluding to the evidence given by Mr. Booth. You recollect that he stated that the Auditors should have power to report to the Treasurer for the time being. Do you agree with him ? —I should like to make a statement. On that day, I heard him say he alluded not to a matter of opinion, but to an ascertained fact. I puzzled my mind over this for a very long time, and then I had a meeting with Mr. Butt, and I asked him if he knew at any time of anything which he thought should be communicated to the Colonial Treasurer and that I had not communicated, and whether he knew anything of this ascertained fact that Mr. Booth mentioned ; and he said he had also been puzzling his brains about it and could not understand it. I asked Mr. Butt to step across to the Club in order to ask Mr. Booth what he alluded to in that matter, because it seemed to me that he spoke not only for himself, but for the other directors; and it seemed to me that if Mr. Johnston knew anything—he being also an appointee of the Government, like myself —that should be communicated to the Colonial Treasurer, and never gave me a chance of communicating it; and that if he knew of it, and did not communicate it to me, that he was falling short in his duties. We went round to the Club, and Mr. Booth would not tell us what the ascertained fact was that he had alluded to. He said we had better have a conversation with the directors, or something of that kind; and I asked if he would appoint eight o'clock on the following night for the meeting, and he said he would. I found that I could not get the directors for that time, but I saw Mr. Johnston afterwards, and had a conversation with him, and asked him if there was any ascertained fact that he knew of, and he said that he did not know anything at all. lam not able to discover, either, from Mr. Macarthy, what the ascertained fact was to which Mr. Booth alluded. Therefore Ido not know that any necessity has arisen for anything like what Mr. Booth says. 259. You know of no special reason why a special report should be made ?—I know of no reason—l have never refused to report. 260. Have the directors ever asked you ?—lf so, it has always been laid before the directors. Whenever there have been deliberations of the board, and we have to come to a conclusion to lay before the Treasurer, it may have happened that other directors than myself have initiated it. It has always been laid before the Treasurer. 261. It. appears to suggest itself from Mr. Booth's evidence that, in one instance, there was an advance of £20,000. Did any director suggest that any matter should be laid before the Treasurer in connection with that?— No. 262. Or that the Auditor should make a report ?—No. 263. There was no conversation on the subject ? —Not that I remember. There is a minute, but I do not think there was anything about a report to the Colonial Treasurer. 264. Have you any other suggestions for improving the management, or efficiency, or well-being of the bank ? —I have no other suggestions that cannot be compassed within the bank itself. We have, from time to time, made a good many improvements since the present board took office. 265. Are you well satisfied with your staff of officers? —As a whole, I am very well satisfied. Of course, in a large staff like ours, there is always one or two weak spots; but upon the whole I am pretty well satisfied with the staff. 266. Have there been many changes through retirement, or retrenchment in the staff? —Yes, a good many changes have taken place. 267. And chiefly you have replaced them by Colonial Bank officers?—No, I think the chief changes which took place in the Bank of New Zealand took place long before the purchase of the Colonial Bank. As far as I remember, the chief changes took place early in 1895 —about April or May, or about that time, as soon as we had time to overhaul the staff. 268. There is one question on the reporting I wanted to ask you. You present monthly reports to the Government ? —Yes. 269. When was the last one sent?—l think for June. We have got the Fiji business, which somewhat delays reports. 270. What is the nature of the reports ? —The general nature is giving pretty full information as to how the bank is going on. 271. Does it include any reference to particular accounts ?—No, never. 272. Have you ever communicated with any member of the Government with regard to any particular account? —Not otherwise than when a member of the Government was authorised by the party having the account in question to procure such communication. I have known a case where a member of the Government had authority from the party having the account to get the information. 273. That was an isolated case ? —Yes. 274. Has any member of the Government made any inquiries with regard to any accounts ? —No. 275. Or with regard to any Estates Company's matters? — : I dare say they have asked questions about estates. 276. Not such as would involve private matters ? —Not such as would involve knowledge of the business of any individual firm or company. Perhaps Mr. Mackenzie and I have talked about certain properties suiting the Lands Department. 277. Has any communication been made by you to the Government with regard to writings-off at any time ?—No. 278. Previously to 1894 ?—I do not know anything previous to 1894. 279. Was there any communication made to the Government by yourself or to our knowledge with respect to writings-off previous to 1894 ?—No. 280. Have the Government interfered in any way with the management of the bank?— Not beyond what they are empowered to do in the Act. Ido not think they have. 281. What do you refer to in the Act? —The Governor in Council has certain things to do, and the Colonial Treasurer has certain things to pass. 282. Official passing? —Yes. For instance, they had to draft the Auditor's instructions and regulations ; and I think that I myself had to take certain instructions.
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283. Have they ever made suggestions to you as to what should be the policy of the bank, for instance, with regard to realising on its properties?—No ; I should not say that. It may be that the Premier—l think the Premier once sent for me and told me that he had heard from Australia some rumours about our business there, and asked me if it was all safe, and wanted me to look into it. 284. It was quite general business ? —Quite general. 285. The Premier has never made any specific inquiries?— Never. 286. Are you now supplying information in any way to the Government for the purpose of this inquiry ?—No. 287. Not in any way? —No. 288. Or any other members of the Government ?—No. What information do you refer to ? 289. For instance, the Premier asked if certain matters were entered in certain minutes of the bank. The Premier asked Mr. Booth ?—I do not know. I would like to be very careful of this. When they were talking I certainly said to Mr. Cooper, when Mr. Booth left it to be inferred that the directors had not passed an advance, and that I had passed it without the directors—l think I told Mr. Cooper that the directors had passed that and that I had never passed any advance of the kind. It is just possible a Minister might have heard that; but I have given no information to Ministers about private matters. 290. Have you directly or indirectly given information to the Premier in regard to that question ?—No, unless he got it from somebody who heard me talking. 291. Now, coming to the amalgamation question, would you in the same way as you gave the sketch of the proceedings leading to the legislation of 1895, give us a full sketch of the proceedings leading up to the purchase of the Colonial Bank during 1895 ?—-Yes. 292. When did it first come within your knowledge—l mean prior to your appointment ?—Mr. McLean asked me to enter into negotiations with Mr. Murray, but he told me 293. The date ? —lt was after the legislation of 1894. 294. Was there nothing previously?— Nothing previously, or at any rate I had nothing to do with it. I have heard casually that as far back as 1889 or 1890 some negotiations had been entered into, but I had nothing to do with them; but as to the time Mr. McLean spoke to me, I think it was in July, 1894. 295. It was shortly after the legislation ?—Yes. Mr. McLean told me that Mr. Murray was anxious, in order to re-establish the Bank of New Zealand, to get the business of another bank, and that the Colonial Bank would suit him best, because it was the greatest competitor for business, and he wanted me to enter into negotiations with Mr. Murray. Well, we did enter into the negotiations, and I believe we were five or six weeks at it. 296. That was before you were appointed President ? —Yes. I was then in the Colonial Bank, and acting under the instructions of the Hon. George McLean, who was chairman. Probably we were five or six weeks with these negotiations. 297. Who were " we" ? —Mr. Murray and myself. 298. Just the two of you ?—I have referred to Mr. McLean and Mr. Mackenzie for instructions at various times, and we came to an agreement at last, which Mr. McLean signed on behalf of the Colonial Bank, and Mr. Murray signed on behalf of the Bank of New Zealand, which was afterwards—l believe from memory —put before the House. Well, that did not go through, and I think it is a pity it did not. 299. A pity for whom ?—A pity for every one concerned. A pity for the Colonial Bank and its business decidedly. 300. It was more profitable to the Colonial Bank than subsequently ?—The business then would have been taken over as a going business, guaranteed by the uncalled capital, without any absolute unnecessary loss occurring ; whereas it was taken over at its liquidation or market value, and the liquidation has been conducted in such a way that severe losses have been entailed on the shareholders. 301. Did you assist in drafting this agreement in 1894 ?—Yes; I did. 302. That is, the 11th September ? —lt would be about that time. 303. What was Mr. Murray's position with regard to the Bank of New Zealand?—l believe he was acting under instructions from the directors in London. 304. Do you know if the directors here had any say in the matter ? —I do not think there was any directors here. There was an advisory board. 305. Attorneys ? —I do not think Mr. Murray took any instructions from them ; -and Ido not think they had any power to give him any. 306. Mr. Murray has been connected with the bank for many years, has he not ?•—Yes. 307. This agreement of 1894 was going to give the Colonial Bank shareholders 400,000 fully paid up " B " shares ? —Yes; I think so. 308. That would be very much more advantageous to them than the present arrangement ?— That would be the case, there was a certain tribunal to be fixed, and in taking over the business the majority of the tribunal were to be appointed by the Bank of New Zealand shareholders and vice versd, as regards the Bank of New Zealand business. 309. That was on the 11th September, and you were appointed President on the 12th October ? —Yes. 310. Then, when did the amalgamation come before you again?— The idea was never out of my mind about that. I thought it was an absolute necessity, because I had already begun to form schemes; and, as the time went on, I got information about the Estates Company. I may say that it came gradually. Mr. Hanna had given me some, and I had formed certain ideas from the previous balance-sheet of 1895, but not sufficient to enable me to say anything about the matter. About March and April I had begun to form ideas as to what would be necessary to be done to
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keep the Bank of New Zealand going. As I told you, the two points in my mind were—firstly, that the colony should relieve the bank of these globo assets; secondly, that the bank should guarantee and pay back, out of its profits, a certain amount to the colony yearly, to make up the deficit in values. I did not see my way, and Ido not see it now, how the bank could have done that without acquiring the business of another bank. It could not have done that. 311. You conducted the negotiations personally throughout?— Yes, principally. 312. Did you act under instructions from the directors?—l always acted with their approval. 313. Did you receive instructions to endeavour to negotiate the purchase of the Colonial Bank ? —Yes, the directors were all willing that that should be done, 314. Unanimously ? —Unanimously, up to a point. 315. What was the point ? —The point was after the first legislation of 1895. 316. What was the point ?—I say up to a certain date. 317. How was it they diverged ? —I cannot tell you that. I never diverged. 318. What was the difference of opinion?— There was no difference of opinion in my mind. There was no change of opinion in my mind. 319. I want to know the difference among the directors?— There was one director in particular who seemed to change his mind. 320. To change his mind as to the advisability of the purchase ?—That was evident to me. 321. Was it as to the terms? —I had reason to think he had changed his mind as regards the purchase. 322. Were the directors unanimous as to the terms of the ageeement—the purchase ?—No, they were not unanimous as to the purchase. 323. As to the purchase or terms of the agreement; were they unanimous as to the desirability of purchasing ? —I do not know that. They were not unanimous at the point when it came to the purchase on those terms. 324. What was the point that stuck them up?—l have my thoughts, but I would rather not impute motives to any one. They only amount to conclusions of my own. 325-. Who was the member of the directorate who objected ?—Mr. Booth was the one who seemed to object most. 326. Did Mr. Macarthy object ?—I think Mr. Macarthy would have liked to hold out for a harder bargain; but Mr. Booth seemed to be indisposed to negotiate at all for the Colonial Bank. Mr. Macarthy, I believe, on the other hand, earnestly desired to purchase the bank, because he has told me since he considered it a necessity. 327. Have these gentleman since given you reason to believe that they approved of the action of purchasing?—l think Mr. Booth thinks it is a good thing now for the Bank of New Zealand. 328. I presume some of the directors wanted different conditions in the agreement, did they not ?—No, Ido not think there was any dispute as to conditions. I do not think it was a case of any director wishing to get any condition put into the agreement which he could not get put in. 329. Did you agree about the good-will ? —With regard to the good-will, I was myself firmly of opinion that the Colonial Bank would not give way another step beyond what they had done, and I wanted the purchase concluded on the terms which you now see. Mr. Booth was against the purchase being concluded. 330. I asked you whether you agreed as to the amount of the good-will—the whole of the directors ? —I say, I myself was in favour of it, and some of the other directors were, but it was not a unanimous agreement at the time. I have heard them all express satisfaction since. 331. What was the amount estimated for good-will ?—£75,000, and the buildings were to be taken over at the values placed against them, £125,000, and the stationery of the bank was to be taken at about two-thirds value on the cost price, or something like that. 332. You told us that you estimated that the amount added to the bank buildings was about £30,000? —I told you we did make any estimate by taking out the items and putting values opposite them, or anything of that kind. We thought them out roughly in our own mind ; but, as bank premises are not suitable for other purposes, we thought we might make £30,000 of a loss. 333. Very well, in taking the good-will you would add that on ? —Yes. 334. You got the stationery at market price?— Under market cost—about £3,000 was knocked off the £9,000. 335. Then, you would add that on to the £30,000 ?—Yes. 336. Did you take that out of good-will ? Am I correct in stating it is so ? —I suppose so. 337. Were there any other factors besides these except the premises of £30,000 over the probable value of £75,000, which were worked out in the transfer ?—There was an agreement that certain advances were to be secured. 338. That was not stated in the agreement laid before the Committee ?—No. 339. It was a secret condition ?—lt was a private agreement. 340. Hon. Mr. Seddon.] Did you tell Mr. Montgomery that the loss on the buildings of £30,000 must be added to the good-will ?—Mr. Montgomery put it that way, but I said I did not compute it so. I meant that we paid £75,000 for the good-will, and we agreed to take over the buildings at the amount at which they were standing in the books of the Colonial Bank — £125,000 —and agreed to take the stationery at the amounts stated in the books. 341. Mr. Montgomery.] Supposing at your estimate there was £30,000 loss on the buildings. Do you consider the good-will to be £75,000, phis the £35,000? —No, but I consider the good-will is worth £105,000. 342. I asked at the time, was not the consideration £75,000, plus £35,000, less certain guarantees for advances ? I want to know whether that was the good-will estimated by the directors ?—I say that we did not compute it that way. 343. You could have done that ? —Probably we could.
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344. Would not the computation made that way make what you paid for the good-will £105,000 ? —lf we had computed it that way it would have done. 345. Was the £30,000 in contemplation at the time as part of the good-will ?—No. 346. It was not contemplated as part of the good-will ?—What I contemplated was that we gave £75,000 for the good-will, with the buildings taken over at book-value, and the stationery at a certain price. I did not contemplate anything further in the matter. 347. You did not contemplate that the £30,000 was practically part of the good-will?—No; but I contemplated this, that we could very well afford to make that loss owing to having got such a valuable business. 348. Is it not playing with words ? Can you say that you could afford to lose that amount, or that when you gave £30,000 more that you did not contemplate that as part of the good-will?—I have given a plain answer, as plain as I can give it, and I do not think I can make it any plainer. I say the way we computed the thing was this :We agreed to give £75,000 for goodwill, and agreed to take the premises at their book-value—namely, £125,000 —and still, above that, we agreed to take the stationery at a discount on cost price. I cannot say anything plainer than that. We never contemplated anything beyond that. 349. The Colonial Bank, as part of the consideration, guaranteed advances amounting to £25,000?— Yes. 350. Which Mr. Booth described as practically valueless. Do you agree with him?— No. 351. Can you give any reason for your difference of opinion with Mr. Booth?— Yes, I can give a very good reason. When it was made we got a security for the advance worth 20s. in the pound ; and even now that security is perfectly good, and known to be good. 352. After being guaranteed ?—Without being guaranteed. It never was bad. 353. Then, why insist on the guarantee?—l thought there was no harm in it. Why should I object if the other directors wanted it. 354. Mr. Booth has told us that it was practically worthless? —Yes, I know; but I do not think any one else will tell you that. 355. Had directors of other banks refused to make that advance on the security ? —I am not aware.' 356. I mean on that security did they refuse to advance a similar amount ?—I do not know from my own knowledge ; but it may be that I heard that another bank did not care for a similar advance. 357. And refused to take it ?—-An advance on similar security. 358. In spite of that you considered the security good? —I did, and consider it so now. 359. Was it good at the time of the amalgamation ? —Perfectly. 360. Worth 20s. in the pound?— Worth 20s. in the pound. 361. Can you say whether the other directors agreed with you as to the value of the security ? —I believe they considered it good. 362. Mr. Macarthy ?—Yes. If he had not considered the security good, I do not suppose he would have helped to pass the advance. 363. Did Mr. Macarthy say that no business-man would make an advance on such a security ? Mr. Booth has given us words to that effect ?—He might have said that in itself it was not the best class of security. He might have expressed that opinion. 364. The Chairman.] Was Mr. Macarthy a party to this advance ?—Yes; Mr. Macarthy was a party. 365. Mr. Montgomery.] Mr. Booth, as you are aware, thought you were practically responsible for the advance. Is that correct?— No. It is correct that I recommended the advance, so far as the £20,000 goes. It is incorrect entirely to say that I was in any way responsible for the £5,000. 366. You were responsible for the £20,000 ? —I was responsible, so far as recommending the business was concerned. I may say that the directors are frequently responsible for recommending business to the bank. Sometimes persons go to the directors in connection with advances and directors put the matter before the board. lam responsible for that. 367. Would you make the same advance again ?—No, I would not make the advance again, owing to the light of subsequent events. I have the authority of the party in connection with this to explain about the £5,000 if the Committee wants it. 368. Who were present at the meeting of the board, and what took place with regard to the £20,000 ? —I think, as far as I can remember, the full board were present. 369. You recommended this ?—-Yes, I recommended it. 370. Was there any dissent? —There was no dissent recorded, anyhow. 371. Was there any dissent at the time?—l do not remember that there was any dissent. Of course, the thing was freely discussed, and everything that could be brought out about it was brought out and discussed and deliberated upon. 372. There was a minute made? —There was. 373. What was the minute?—l cannot give you the particulars. 374. Was it that this advance be made, or to that effect ? —Yes. 375. Anything further ?—Yes. It was further minuted that the matter should be carried out according to the advice of the bank's solicitor- —that security should be taken, according to the advice of the solicitor, as regards the £20,000. 376. Mr. Booth has led us to infer that you rather misled the board in this matter. I think I am right in assuming that. Is that correct? —No ; it is very incorrect. Mr. Booth is a suspicious man, and probably thinks that I knew things then that I did not know of, because they were found out and told by myself to the board of directors months afterwards. 377. Am I right in saying that circumstances have transpired since that would have affected your action had you known them ?—Yes, certainly.
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378. Would they have affected your action to such an extent that you would not have recommended the advance ? —Yes. 379. Will you please distinguish between the advance if made as a safe financial transaction or as an advisable one, apart from the question of the advance ?—I think it would be perfectly safe to make the advance on that transaction, but it would not be advisable to make the advance now. 380. Will you give us the nature of this security ? —I would rather not do that. 381. I understand that, so far as the £5,000 is concerned, you have authority to disclose that transaction?—l have. 382. Will you make the statement ?—When making the advance of the £20,000 there was a condition that the party getting the money should give to the Bank of New Zealand one-third of good bills of exchange, drawn on first-class London credits. I may tell you that at this time the acting general manager, Mr. Andrews, had gone Home to London, and that the bank was being managed by a junior officer; but that everything of importance which took place was seen to by Mr. Butt, the Auditor, and myself. Mr. Butt came to me one day and said, "We are not getting those exchanges promised us under that arrangement—the bills of exchange in London. What do you think we should do ? " I said, " The best thing would be to write to the manager of the branch, and ask him to demand the bills of exchange, according to our agreement." This was done. I believe the manager of the branch demanded £10,000 of exchanges. He got £5,000 ; and he got it under a credit from one of the best London houses doing business with these colonies. There were some hitches which occurred afterwards, but I cannot be held responsible for them; and Mr. Booth was entirely wrong when he led the Committee and the public to believe that I was responsible for that advance. 383. I did not gather what the nature of the advance was?—lt was bills of exchange, under a first-class London credit. Had a hitch not occurred, you can see that there would have been no possible doubt about it. The bill was paid by the Home house. 384. It was paid before the amalgamation was arranged ?—Yes. Some difficulty arose afterwards about the terms of the credit, but I am not responsible.
Tuesday, 18th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. Mr. Watson: I would like to make a short statement. It is in reference to the question asked by Mr. Montgomery yesterday, as to whether I had given any information to the Government for the purpose of this inquiry. There have been communications, written and verbal, with the Government, where I, in my capacity as President of the bank, had to bring certain confidential matters to their notice. Mr. Cooper has accompanied me on some of those occasions. I wish to say that the communications were made in the interests of the bank and not in relation to any private accounts or anything that should not be communicated to the Government. 1. Mr. Montgomery.] Are you willing to give any further information whatever on that subject ? —No. There was a reference to some adjustments, and the state of the bank and other matters perhaps, which I cannot quite call to mind ; but, at all events, there was nothing improper or anything which could influence any member of this Committee in any way. 2. Nothing concerning any of the lists—" A," " B," " C," and "D " ?—No, nothing concerning those lists. 3. When we left off yesterday you were making an explanation concerning the £25,000, and, particularly, the point which I was drawing your attention to was the advance of £5,000: Was this a bill of exchange discounted?—lt is not a banking term to apply the word "discounting" to a bill of exchange. There is no discounting. It was purchased at a certain rate of exchange. That was done. 4. And it was paid at maturity ?—Yes. But a hitch afterwards occurred with regard to the terms of the credit. 5. Can you explain to us the history of it ?—-No. 6. Can you tell us through whose fault the hitch occurred ?—No; I do not wish to impute blame to anybody with regard to it. 7. Was somebody blamable? —I do not know. It might have occurred as a misfortune. I was not to blame. 8. I suppose these losses and hitches occur in exchanges occasionally ? —Yes ; there are often hitches concerning credits and bills of exchange. 9. The bank has from time to time made losses of this sort ?—I do not know that there were any identical; but the bank has had losses with regard to credits and bills of exchange. 10. Why should the Colonial Bank guarantee a loss in which no one was blamable?—l regret that I cannot answer that. I must decline, as it is leading up to private business. 11. I will ask you why it should be part of the business of the Colonial Bank to guarantee this £20,000 ? —That is going into private accounts, and I cannot do that. 12. Was this advance of £20,000 reported on by the officers of the bank ?—I do not think so ; it was made at the head office. 13. Who was the bank's officer at Invercargill at the time ?—I cannot be quite certain about that. 14. What was the date of the advance?—-I have not got that. I cannot speak with regard to private advances. lam not going to give any particulars about these advances. 15. I wanted to know who was the officer at the time ?—-I cannot tell you exactly. 16. Who was the officer in February?—l cannot tell you who was the officer at the time without looking it up. The Chairman has ruled that any inquiry about this particular advance is irrelevant, and I cannot reply. They are leading questions, and I cannot reply to them. *14—I. 6.
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17. Who was the officer at Invercargill in February, 1895 ?—I can give you that later on. 18. Was it Mr. Birch?—l do not think so. 19. At any rate, no officer made any report ?—I am not sure about that. I would not like to say so without making inquiries. 20. Can you inform us of the date when the offer was made to you ? I think you said an offer was made to you to take over the advance and security ? —I was then talking about the goodness of the advances, and I said an offer had been made which, if accepted, would have rendered that security perfectly good ; and I consider it good still. 21. Then, you did not mean to infer that it was a special offer for this account?—l said an offer was made which, if accepted, would have rendered that perfectly good; and it is still perfectly good. 22. You are prepared to say who accepted the offer?—l am not prepared to enter into details, 23. Was the offer made ? —Yes. 24. Who made the offer?—l cannot say. 25. Do you mean that you decline to tell ?—I decline to be led into talking about business of a private nature. 26. Can you tell us what connection the £20,000 had with the £5,000 ?—No. 27. You have told us that with the party getting the money it was a condition that he should give to the Bank of New Zealand one-third of bills of exchange drawn on first-class London credits. I think I am right in inferring that the exchange business was with the people to whom the advance was made ?—I cannot help your inference. I made no wrong statement. 28. Did you make an arrangement about the bills of exchange ? —The arrangement, I told you, was made. I was at the making of it, but I did not specially make it. I did not buy the bill of exchange. I did not purchase the bill of exchange at the branch under the circumstances in which it was made. 29. Who was at the branch ?—I cannot tell you. I have only to clear myself in this matter. I am not going to give any information with regard to the advance for that purpose. 30. You said yesterday, "Some difficulty arose afterwards about the terms of the credit not being properly arranged, but I am not responsible " ? —That was so. 31. Who would be responsible for the terms of credit not being properly arranged?—l am not going to mention that. I decline to say anything more about that advance beyond what I have said to take away the imputation cast upon me. lam not going to make any statement by which the advance can be traced. 32. Some one was responsible?— Probably, but I decline to go into particulars about the thing. 33. That is not a particular ?—I decline to state it all the same. 34. Do you say any one was responsible in connection with the terms not being properly arranged ? —I decline to give any information about the private business of the bank. In going so far as I did it was entirely to clear myself of the imputation cast upon me, and I had the leave of the party to the transaction to go that far and no farther. 35. You have the leave of the party; have you leave to name the party ?—I have not. 36. When was the arrangement made for guaranteeing the advance ?—I decline to answer. 37. Was the guarantee of the two advances —one of £20,000 and another of £5,000 —part of the agreement for the purchase of the Colonial Bank by the Bank of New Zealand ? You have told us that it was part of the terms of the agreement. Mr. Seddon : I rise to a point of order. Mr. Montgomery asked the question yesterday and received an answer, and it is a waste of time when Mr. Montgomery has got the answer before him. Discussion ensued. The Chairman: Ido not think I have any power to prevent Mr. Montgomery repeating his question. 38. Mr. Montgomery.] The directors of the Colonial Bank agreed with the directors of the Bank of New Zealand for the purchase of the Colonial Bank ? —That is so. 39. Some of the terms of that agreement were laid before the House, and some were not; is that so ? —The general terms of the agreement, in so far as they did not refer to private accounts, were laid before the House, I believe. 40. There were other terms, then, that were not laid before the House?— Referring to private accounts, Yes. 41. Who proposed that this guarantee should be a term of the agreement?—l do not recollect that. I think two of the directors of the Bank of New Zealand have different opinions about that, and I myself am not clear on the point, as it arose during a general conversational discussion at the time, and was not settled immediately, but formed the subject, probably, of several discussions before the ultimate arrangement was arrived at. 42. Did the Colonial Bank directors object to the insertion of this condition in the agreement ? —I do not think so, Sir. Ido not think it could have been inserted in the agreement, for, if my memory serves me right, there is a clause in the Act preventing any particulars of the lists being inserted. 43. There was a clause in the Act saying that you could not take over bad accounts. Can you find any reference to that in the Act ? —Well, it must have been in the Auditor's instructions by the Colonial Treasurer, because it was in my mind. 44. Why was not this term of the agreement laid before Parliament ?—Because it referred to an individual account. 45. You assisted in preparing the lists " A," " B," " C," and " D " ? —Yes. 46. Were there always four lists in the negotiations ?—No ; Ido not think so. I think there were three at first.
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47. Was the "C " list omitted at first?—l think so. 47a. Why was it subsequently inserted ? —Because during the negotiations the accounts in the " C " list had become of a doubtful character, and were not considered by the board of the Bank of New Zealand to be proper accounts to be taken over by the Bank of New Zealand, or that the bank should be responsible regarding them. 48. Then, at the beginning of the negotiations it was proposed to take over that last account ? —-At the beginning of the negotiations the matters I referred to were not known ; they became known during the progress of the negotiations. 49. Was it proposed to take this account over at the beginning of the negotiations, before the "C" list was formed?—l think that at the beginning of the negotiations these accounts were in the "B"list. 50. Who proposed that they should be put into a separate list ? —I do not remember that. I could not tell you whose first idea the making of the fourth list was. It was a very general discussion, extending over considerable time, and we have no minute of it. I may have done it myself. 51. Why did you not put it in the " D " list?— The accounts in the " D " list were not operative accounts at all. They were accounts, some of them, very well secured, and worth a good deal of money ; they were what we call " dead accounts," and these accounts in the " C " list were not of that character. 52. Had you decided at the time you made the agreement not to take over the accounts in the " C " list?— No. Three months were allowed for the bank to make inquiries regarding them, and we did not decide until close upon the end of the three months. 52a. Were the directors unanimous in deciding not to take them over? —I think so. There was no dissent recorded that I know of. 53. If you will refer to clause 18 of the agreement you will see that, at the end of it, it says, " The selling bank may require the purchasing bank to realise or liquidate any account or accounts which the purchasing bank refuses to take over, and any deficiency that may arise shall be made good by the selling bank." —Yes ; I see that. - 54. How was it you did not liquidate the accounts as the purchasing bank ?—This is going into particular accounts again. I cannot answer with regard to particular accounts. 55. I did not ask you anything about accounts. I asked why you did not liquidate accounts in the " C " list in accordance with law.—Because other arrangements were subsequently made. 56. But the Act says, The selling bank shall require the purchasing bank to realise or liquidate ? —Yes ; but it also says that " The selling bank shall be entitled to take over the account or require the other bank." 57. Do you read this that the selling bank—that is, the Colonial Bank—was entitled to liquidate ?—I do not know whether it was entitled to liquidate or not; but, with regard to the agreement between that bank and the Bank of New Zealand, it was entitled to take over the account from the Bank of New Zealand. Ido not know what its powers are; I have never entered into that. 58. You consider that you were acting in accordance with law in allowing the Colonial Bank to liquidate ?—All I know is that we have made an agreement here, and that we have carried out the terms of that agreement. I do not know what they may do with the accounts, nor have I considered that question. 59. The Colonial Bank did take the accounts over ? —May I ask what you mean ? 60. I am referring to clause 18.—Do you mean by that that they have paid all the money and taken them over, or that they are getting us to act as agents ? 61. What do you mean by it? —The Colonial Bank have taken over the responsibility of the account and cleared us from liquidating or carrying it on under the three months' arrangement. 62. What did the banks mean by taking over the accounts ? —I suppose they meant taking over all responsibility with regard to them ; so that we have no longer to liquidate or carry them on under this arrangement for three months. 63. You have nothing to do with it ?—No, except acting as their agents. 64. Still?— Yes. 65. Is the account still in the Bank of New Zealand?— Yes. 66. And appears on the books ? —Appears on the books. The accounts appear in the books under these terms: that we are just merely working them for the Colonial Bank. 67. Why should you work them as agents for the Colonial Bank? Can they not work their own accounts best themselves ?—There is a clause —26 of the agreement—which says, " Agency . . . detrimental to its own business." It is under the terms of that clause. 68. You do not consider this detrimental ?—Well, they have no clerks or counter-work of their own. They have an office for the purpose of the liquidation, but have no counter-work. 69. This account can be drawn upon by cheques against it?— There is more than one account. 70. Two small accounts and a large one? —I could not say that. I must refer you back to previous information, because you cannot get any information from me about it. 71. What was the amount standing in the right-hand column of the " C " list ?—Speaking from memory, £55,233. 72. You were called upon by the agreement to immediately write off the amount standing in the right-hand column. Did you write it off? Mr. Hutchison : I rise to call attention to the fact that questions are answered by the witness as suggested to him by Mr. Cooper. Mr. Cooper : I claim my right to do it. The Chairman : I want the witness to recognise the seriousness of this inquiry, and to answer the questions of facts which are put to him as far as he can himself. 73. Mr. Montgomery.] When did you write off the £55,000 ?—I think we wrote it off shortly after the agreement became law,
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74. Mr. Hutchison.] Shortly after ? —Not shortly after the agreement taking effect. It took effect from the 31st August. 75. Mr. Montgomery.] I just want to ask you a few general questions before I conclude. I want to ask you about the prospects of the bank. As President of the bank you have gone into and no doubt formed opinions as to its prospects. Can you make a statement as to the future that lies before the bank as a financial institution, and as, to a certain extent, a responsibility for the colony ?—Yes. I think that, given expert management and careful and efficient working, the bank has a very good future before it. I think that my estimate given to the Committee of last year will be borne out, except so far as the Government business in London is concerned, which has not yet come to the bank. 76. Do you think that the profit to be made from the Colonial Bank business will be borne ou t ?—Yes ; and I think it has been borne out. I should very much like this Committee to call upon the chief accountant of the bank to give his estimate, as my estimate has been somewhat lightly set aside. He made an estimate of the Colonial Bank's profit to me for the time, and he made out that it was about £6,500 a quarter ; and he did not take the exchange operations of the Colonial Bank into account, which would fully make up the difference of £1,000. That would make £7,500 a quarter, which was up to the £30,000 per annum. Mr. Booth chose rather to accept an estimate formed by the late general manager, Mr. Andrews, but he did not know the Colonial Bank so well as I did, and he estimated that the Bank of New Zealand would lose 25 per cent, of the Colonial Bank's business. That has not been the case. 77. Can you state how much has been lost? —I should think about 2or 3 per cent. 78. And no good business lost ?—Some good accounts have gone away from the bank; but I am still of opinion that the Colonial Bank's business is worth £30,000 per annum, and I think on examination it will be found to be so. 79. Could you prepare us a return in figures, not giving any details; it is a most important point ? —lt is a very difficult thing to do that. I would rather you got the statement from the accountant himself. Mr. Gibbs is the best man—the chief accountant. 80. Do you think the cover in the "B" and "C" list is sufficient?—We do not take any responsibility for the " C " list. 81. The cover was there ?—ln the " C " list we are not responsible in any part of the account, and I do not say whether there is any cover or not. 82. Have you confidence that you have made sufficient cover for the " B " list ? —So far as we can be confident of anything. The accounts have not turned out worse than we expected. I think there is more than sufficient cover, and that the majority of the accounts are good. 83. Why did you have a joint cover for the " B " and " C " lists?—We did not join them in that way, but we had to state in Parliament how the amount was made up that we gave the Colonial Bank, and we retained £327,000; so it was just stated in one lump what money was retained. 84. You have stated in one of these papers that it is estimated that the Colonial Bank would recover a considerable part of this £327,305 cover for the "B" list? —I forget whether I stated that or not; but I hope they will recover part of it. 85. I will just read what you stated, it is in your letter to the Colonial Treasurer in 8.-27 a : " The examination by the directors, Auditor, and officers of the Bank of New Zealand was of a most searching and exhaustive character ; and I may here state that the directors of the Colonial Bank anticipate that, in addition to the £133,906 agreed to be paid in cash, they will receive out of the £327,305 a further sum for distribution amongst their shareholders." Do you agree with the view expressed there from your knowledge of the accounts ?—I gave no statement there. I have been careful all along not to prophesy anything. 86. Are you prepared to prophesy anything now ?—I say, with careful management—that is, lenient management —if you rush in to liquidate you do not get so much as by nursing. No man who had a debtor would rush in to liquidate if he knew by giving a little time he would get more of it. In this matter—l do not know if lam right in mentioning this—but a nasty phase of the matter presents itself now, which I must own escaped me at the time the agreement was made, or which I did not think would come to such a head. For instance, a man may be solvent and have a large business. He may have £1,000 or £2,000, or, perhaps, more capital; but if he has a very large business an ordinary bank does not care to take over that large business with only a margin of the £1,000 or £2,000. Therefore the Bank of New Zealand does not care to take over accounts unless the persons having those accounts possess such capital as would provide for any risk of loss in the business. Now, it is just as obvious that the liquidators of the Colonial Bank cannot make a present to a man of sufficient capital to let him go to another bank as a good risk through his having sufficient capital. Consequently, there is a great risk to many worthy people in the colony of having their accounts thrown into liquidation ; and that I am very sorry for. I should like to see a change made, if possible, by which some of these worthy people who have but little capital might be allowed time and facilities to restore their capital, which has been reduced through losses in the past bad years. 87. How far has the exact position of doubtful accounts in the "B" and "C" lists been ascertained —how far have you used the cover and settled accounts—l mean the "B" list?—l think the business has gone to some considerable extent in cleaning up such as you now ask about. I know that a reserve had accumulated from good accounts either taken over or which have left the bank, but, unfortunately, a large discrepancy in another account recently discovered has made a large hole in that reserve. That was an entirely unascertained fact, both by the Colonial Bank liquidators and by the manager of the Bank of New Zealand managing the account for three or four months. 88. An account in the "B" list?— Yes. I cannot, of course, give you any particulars; but
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you asked me how the liquidation was proceeding, and until that discrepancy had been discovered a surplus had accrued, which we thought might go to the Colonial Bank. 89. When you speak of the liquidation proceedings you know these accounts are not in liquidation?—No; but they can be taken over into the Bank of New Zealand or removed into another bank. That is what I mean-—releasing them, or putting them out of the "B " list. 90. How long do you think you will be in getting the accounts into such a state that you will not want cover? —Under clause 16 of the agreement there is an arrangement made as to what is to happen at the end of two years. 91. Will it be necessary to continue the liquidation of any accounts in the " B " list for any term; it would be unfortunate for some people?— No. I mean by liquidation of the "B" list that some accounts would be taken over by the Bank of New Zealand that would not be unfortunate, but some accounts would be liquidated. 91a. My point is that the agreement at clause 16 states, " In the absence of any such arrangement, the purchasing bank may proceed to liquidate all or any of the accounts mentioned in the said ' B ' list " ?—That is in the event of another agreement come to for carrying them on between the liquidator and the bank. That would be that the liquidator would want the bank to liquidate them. 92. Supposing you extend it whenever necessary, when will accounts be in such a state that they will require no cover?—lt is quite impossible for me to state that. I think it is going on pretty satisfactorily now. The list is getting lessened every week or every fortnight. 93. Explain that.—The accounts are getting out of the "B " list. There are three ways by which they can get out. They can be removed to another bank, they can be taken over, or they may be liquidated. 94. Can you tell us what proportion is being got out of the "B " list ?—I could not say. 95. Roughly—between half and a quarter, or anything of that sort? —I could not say. I could not give you any approximate estimate. 96. Is it not rather short time within which to estimate the value of the Colonial Bank business to the Bank of New Zealand ?—Yes; it is. It would, no doubt, be very much better estimated next year. ' At the same time, I was very anxious myself to know how my own estimate would be borne out, and I called upon the accountant to let me know as nearly as he could. At the best it had to be a part estimate by him, because things have got mixed up ; it is difficult to separate the expenses. But the accountant did make an estimate, from which I speak. 97. Has the saving in administration been £15,000? —The accountant would be better able to tell you that than I. I have a general knowledge, but I have not gone into particulars. 98. Has there been any saving in the administration ?—There must be. The accountant would supply that. 99. Will you ask him to furnish that through you ?—I thought the Committee would rather have independent evidence, as my view is somewhat different to Mr. Booth's. 100. Do the facts within your knowledge warrant you in saying whether the colony is likely to incur ultimate loss through the bank ? —I answered that question yesterday, or a similar question. I think that, given expert and efficient management, ultimately there will be no loss to the colony through the bank. Of course, I cannot foretell what banking may come to in the future. I know now of a large industry in this colony which has not paid for years. 101. The Onehunga ironworks?—No; a much more important industry than the Onehunga ironworks. lam speaking of the milling trade; and I happen to know that millers who have put up expensive machinery and buildings have not had any return from their capital; and, from inquiries that I have made, they tell me —those who have made a little money—that they have not made it at milling but from dealing. Now, if the competition in banking is to be such as to leave no profit, I cannot be held responsible for that; but if we have ordinary banking the colony will lose nothing if we have expert and efficient management. 102. Are you interested in the milling industry ? —We are interested to a certain extent. 103. And such trading concerns as the bank holds in that industry have been unprofitable ? No; but I know that the industry has not been profitable on the whole with regard to the capital and skill given to it. 104. Mr. Hutchison.] How long were you with the Colonial Bank, Mr. Watson ?—About eight years. 105. Dating back from the 12th October, 1895?— Yes. 106. Before you joined the Colonial Bank, what were you engaged in ?—-Immediately before ? 107. Yes?—l was employed in the liquidation of the Oriental Bank. 108. And before that ?—I was managing the Oriental Bank at Shanghai, in China. 109. You were general inspector of the Colonial Bank in 1892 ?—Yes ; I was. 110. Do you remember the business of Mr. J. G. Ward at the Bluff and Invercargill being formed into a limited liability company ?—I regret that I cannot answer questions referring to individual accounts. 111. I ask you as a fact. —I decline to answer. 112. The question is, Do you remember that in the year 1892, while you were general inspector of the Colonial Bank, the business of Mr. J. G. Ward was formed into a limited liability company? —I decline to answer. 113. I ask why ? —Why I decline to answer is this : that the account was kept with the Colonial Bank. I have no other knowledge of it, and I decline to make any statements with regard to accounts either of the Bank of New Zealand or the Colonial Bank. 114. In the first place, I did not ask as to any account. I asked whether in 1892 you were aware that the business of Mr. J. G. Ward was formed into a limited liability company. I remember that.
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115. And you have just stated that the account of Mr. J. G. Ward was with the Colonial Bank. You have stated that—that is the fact; is it not ? —I decline to state any more. 116. Do you decline to repeat what you have said?—l do not know that I have stated that. 117. I ask you, was the account of Mr. J. G. Ward kept in the Colonial Bank in 1892 ?—I cannot answer that. 118. But if the account was being kept in the Colonial Bank you, as general inspector, would know of it ? —I cannot answer any questions regarding accounts. 119. I ask for a specific reply to each question ?—You asked a question regarding private accounts. 120. I asked whether you, as general inspector, would know of the account of Mr. J. G. Ward being kept in the Colonial Bank at Invercargill ? —I decline to answer that. Mr. Hutchison: I ask the Chairman to rule on this question. I would point out that it has nothing whatever to do with the Bank of New Zealand, of which Mr Watson is an officer now. It has to do with a bank in liquidation of which he was an officer, and consequently has to do with him as affecting his conduct and fitness to occupy the position of President of the Bank of New Zealand. Discussion ensued. The Chairman: I think that is a question that can be put. Witness : Yes ; but, then, I cannot answer any questions about private accounts. The Chairman : This is a very serious question, and I will put it to you again if you do not understand it. Witness : I decline to answer it. 121. Mr. Hutchison.] Do you remember the balance-sheet of the Colonial Bank made up to the 31st August, 1892 —you were inspector then ? —I have got a copy of it here. 122. You have it there before you?— Yes. 123. You were general inspector of the bank at that time?—l was inspector and afterwards chief inspector, but Ido not remember that I was chief inspector at that time. I think it very probable I was. 124. Can you remember who was manager or agent then of the branch at Invercargill ?—I think Mr. Burns was at this time. lam speaking from memory. 125. Do you know who was manager or agent at Timaru in 1892 ?—lt was either Mr. Wren or Mr. Mcintosh, but lam not sure. Mr. Mcintosh succeeded Mr. Wren. 126. Do you know if the account of Mr. J. G Ward was overdrawn at the date of that balance-sheet ? —I regret that I cannot answer that question for the reasons given before. Mr. Seddon objected that the question could not be put as it was outside the order of reference. Discussion ensued. The Chairman : I shall rule that the question can be put. 127. Mr. Hutchison.] Well, was the J. G. Ward account overdrawn at that date ? —I should like to say this : that if Mr. Hutchison is going to ask me about a certain £4,000 draft, regarding which The Chairman : You cannot anticipate the questions. Witness : In that case I have got the leave of the person to give evidence about it, because it is a matter about which a slander in reference to myself has occurred, and Mr. Ward has given me leave to talk about that particular matter. I hope Mr. Hutchison will help me a little further. 128. Mr. Hutchison.] I will go the whole distance. My question was whether the J. G. Ward account was overdrawn in August, 1892 ?—I believe it was. 129. Can you state the amount?—No ; I cannot state the amount. 130. Do you know of a transaction of £4,000 in connection with the account immediately before the 31st August ?—I do know about it. 131. What do you know ? —I should like to say here that I have Mr. Ward's specific authority to give this information to prevent the public from thinking that there was something wrong. I had heard that Mr. Maslin had been good enough to say to two or three persons that he knew of a certain transaction. First of all, my attention was led to an article in a certain paper called the Critic, published in Canterbury, where it was asked whether Mr. Watson would explain how it was that he instructed a certain manager in a Canterbury branch to do peculiar things about a £4,000 draft drawn by the Ward Association. Well, I heard that Mr. Maslin had been good enough to speak about this matter to two or three people here, so I looked up my private official letter-book which I then used in the Colonial Bank's service. The statement made was that the manager of a branch of the bank in Canterbury had pointed out to me that a draft for £4,000 had come along which he thought was of a bogus nature in order to make the Ward account appear to be right on the Monday, and that when he demurred and pointed out the irregularity to me I passed the draft and told him to mind his own business, or something of that sort. I looked back and found a letter addressed by me to Mr. Mackenzie. I was on an inspecting tour at the time. This is an extract from a letter 132. Are there any other matters in this letter referring to Mr. Ward ?—No, Sir. But the other part of the letter was referring to Timaru business, where I was at the time. I said, "Please ask Adam," who was the chief accountant in Dunedin 133. Please give us the date of the letter? —The 15th June, 1892. It is addressed to Mr. Mackenzie, General Manager of the bank. I said, " Please ask Adam to look into an entry of £4,000 debited to this branch by Invercargill on 30th May for draft Ward on C. W. Mullins, which draft did not come forward, but on the 31st (in the same letter with the debit) a warrant for the £4,000 to debit of Invercargill ' draft being since paid there.' So that probably Ward's account on Monday, the 30th May, showed £4,000 better than it should have done." I wrote to the General
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Manager and asked him to get his accountant to look into this matter. Since I heard Mr. Maslin's statement I got an assistant in the office to write down to Mr. Adam himself, as the subsequent correspondence was with him. I had passed to the North, but Mr. Adam took the matter up and corresponded with the Invercargill office, and here is the correspondence. This is a copy of a letter from Mr. Mackenzie to Invercargill, dated the 16th June, 1892 : " On the 30th May (Monday) you debit Timaru branch with £4,000 for remittance Ward on Mullins, and on the 31st May (Tuesday) you write to Timaru enclosing a warrant for £4,000 to debit of Invercargill, ' draft being since paid there.' Beyond seeing that this apparently improved the appearance of Mr. Ward's indebtedness at the close of Monday, the 30th May, the operation is not clear to us. What was the precise nature of it ? " This is the Invercargill manager's reply, dated the 18th June, 1892 : " Mr. Mullins purchased a cargo of oats from Mr. Ward, and I was pushing Mr. Fisher to have the draft in on Monday. After waiting until very late in the afternoon he paid in a demand order on Mr. Mullins, and promised to give me the bill of lading for the cargo early on Tuesday, instead of which he paid in Mullins's cheque on the Bank of New Zealand here, and we sent Timaru a warrant to lift the remittance." In the meantime Mr. Mullins sent a cheque down, which they took. "On the following week £1,000 was put through on Mr. Young's order." Oh ! this has nothing to do with that matter. Mr. Hutchison : Ido not think you ought to read part of a letter only. We must have the whole of it. Mr. Seddon : I rise to a point of order. We are now bringing in another man's account. 134. The Chairman.] Will you be prepared to obtain permission to read the other part of the letter ?—I should like to explain first in connection with this letter. Mr. Hutchison objected to an explanation till his question was first answered. The witness was in the middle of the answer. Discussion ensued. The Chairman : I think the witness should be permitted to give an explanation. Witness : As the technical terms used may not be familiar to some members of the Committee I should like to tell what the transaction was. There were some oats sold by Mr. Ward—the Association was not then in existence—to one, C. W. Mullins, of Timaru. They had told the manager that payments for these would be in before Monday night to reduce the account to the limit to which, probably, it was allowed to go. The cheque in payment of the oats did not arrive from Mr. Mullins, and consequently a demand draft for the cost of the oats, £4,000, was passed through by Mr. Ward on Mr. Mullins, of Timaru. In the Invercargill office, before the letter went away, a cheque was received, and the draft was taken out of the letter when it was ready to be posted. The draft was taken out because the cheque had been received. But the schedule which contained the draft was not taken out in the hurry, but was allowed to go on to Timaru, and the consequence was that the letter arrived at Timaru with the schedule saying that the draft was enclosed which the letter itself did not give, and hence it was brought to my notice by the Timaru office that such a thing had happened. Invercargill forwarded the warrant to debit the draft which was retired. That was the whole transaction. Now, in justice to myself, I am going a little further. An employe, who was then in the bank at Timaru, has since become clerk to Mr. Maslin. I have heard that he takes part in Mr. Maslin's business as a partner or something of that sort, and he was an employe who had left the bank. Mr. Maslin, I know, has given information to persons outside this Committee about that matter. One gentleman in the House confessed to me that he had, and doubtless if I asked some others they would say the same thing. I was told that Mr. Evans was stuck up by Mr. Maslin in Timaru and charged with being the man upon whom was drawn the draft for the bogus purposes of Mr. Ward. Mr. Evans denied that he ever paid drafts for Mr. Ward, and has sent word to him that he never had a draft drawn upon him as Mr. Maslin has stated; and Mr. Ward has told me that his office never did draw a draft on Mr. Evans at all. 135. The Chairman.] What you are stating now, Mr. Watson, is only hearsay ?—Mr. Ward's book-keeper can be called ? That is my explanation. W. Watson.
Wednesday, 19th August. Examination of William Watson, President of the Bank of New Zealand, continued. Witness : Before going on with my evidence to-day I should like to make a statement with regard to part of my evidence yesterday with reference to the question put to me by Mr. Hutchison as to when the amount referred to in clause 18 of the banking agreement was written off. I wish to say, in extension of my answer, that the Bank of New Zealand in complying with the first paragraph of that clause has not considered nor construed the expressions " write off" and "written off" in the list to be a "writing-off" in the ordinary sense, but merely that the amounts in the right-hand column of the " C " list were for the purposes of marginal cover to be credited to the accounts in the " C " list, the amounts so credited still remaining, so far as the Bank of New Zealand is concerned, to be dealt with by the liquidators of the Colonial Bank. Paragraph 6 o£ the agreement distinctly provides that these amounts are to be retained from the purchase-money, pending the taking over of the accounts by the Bank of New Zealand, " as marginal sums held by way of security." The Bank of New Zealand has debited no portion of these amounts to any bad debts account, but simply credited the gross amount of the " C " list with the sums in the right-hand column, and, pending its exercise of its election to reject these accounts, treated such credit as cover only. It having rejected these accounts, it has to account to the liquidators of the Colonial Bank for the sum so held back as marginal cover. I therefore say that there has not been any writing off these accounts by the Bank of New Zealand, and, in addition to my own opinion, this is the opinion of the legal advisers of the bank.
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1. The Chairman.] That now makes your statement agree entirely with the statement of this matter made by Mr. Booth?— Yes. I believe that he in the first instance used the words "writingoff" as I did myself, but he afterwards said they were written off in the same manner as I did. 2. Mr. Hutchison.] That explanation you have made and brought to the Committee this morning was prepared ?—I prepared it this morning. 3. Was it drawn up by the solicitor of the bank?— The solicitor assisted me, but I swear to i.t. 4. To resume at the point we broke off yesterday : Have you got the permission of Mr. Ward to refer to the names in connection with the transaction of £1,000 which occurred in the week following the 30th May, 1892 ?—No, Sir. I saw Mr. Ward last evening on the subject, and he told me that he must restrict his permission to matters in which my personal honour was impugned, that he could not allow his private matters to be discussed by me in any other manner. 5. In what respect is your private honour impugned in the transaction you referred to yesterday ? —My private honour was not impugned, but it was attempted to be impugned with regard to the £4,000 transaction. 6. It was only an attempt. ?—Yes. 7. I understand you found that this draft for £4,000 resulted in a credit of that amount to Mr. Ward on Monday, 30th May, 1892 ? —I found nothing more than in this letter. More than appeared in this letter I do not know. 8. Have you got the letter you were reading from?— Yes. [Document produced.] 9. This is a copy of part of the letter, the rest of which you cut off and put in your pocket yesterday ?—I gave the other part to Mr. Ward subsequently, and he said it had nothing to do with the matter. 10. Are you going to supply the very words you used yesterday to this Committee with regard to the advance of the £1,000, because I notice that the Committee reporter has started with the first words and given the concluding words? — No; it was a misapprehension. I did not intend it. 11. The Chairman.] But you gave it. It has been recorded here as a quotation in the usual- way to be filled in by the witness. —I cannot supply anything further than what I gave yesterday. 12. But what is required is only what you gave yesterday as a record which the reporter refrained from taking down, because it was being read by you. 13. Mr. Hutchison.] Do you refuse to say anything more about it ?—lt was done under misapprehension, and I should not have referred to it. 14. Very well; with regard to that £4,000, was the draft negotiated on the 30th May, 1892, and placed to the credit of Mr. Ward in Invercargill?—l cannot swear to anything beyond what is in the letter. 15. You have stated yourself that you got a reply from Invercargill ?—I do not think so. 16. You said it was brought under your notice and that you communicated with Invercargill ? —No ; I did not say that. 17. Well, you communicated through Mr. Mackenzie, the General Manager ?—Yes. 18. When was it that you were informed that the cheque had been received—what was the date ?— -I never again heard about the transaction until the other day. After I wrote from Timaru my duty with regard to the matter was at an end. 19. Before you left Timaru, or some time near then, you heard that a cheque had been received ? —I never heard anything more about it. I passed through Timaru on my way north, and it was not my duty to go into the matter further. 20. But you were informed that a cheque had been received ?—-I did not say so. I gave it in course of explanation. 21. The question is, Was the cheque received at the bank in Invercargill ?—The letter says that " Mr. Mullins purchased a cargo of oats from Mr. Ward, and I was pushing Mr. Fisher to have the draft in on Monday. After waiting until very late in the afternoon he paid in a demand order on Mr. Mullins, and promised to give me the bill of lading for the cargo early on Tuesday, instead of which he paid in Mullins's cheque on the Bank of New Zealand here, and we sent Timaru a warrant to lift the remittance." 22. Did you understand that that was done on the Tuesday ?—I understood that from this letter. 23. That is what I want to find out ? —Yes. 24. And not on a subsequent date?—l understand it was on the Tuesday from this letter. I have no other knowledge except what I glean from this letter. 25. Do you wish to add anything to what you have stated about that letter ? —I am not sure what is the exact evidence I gave. I should be very sorry if I said anything which was not correct with regard to Mr. Maslin's action with this matter. I should like to know what I did say, because I would then know what to correct. I mean to say this: that, of my own knowledge, Ido not know that the I alluded to is in Mr. Maslin's employment; I was told that he was. 26. You do not yourself vouch for your statement with regard to Mr. Maslin ? —I will not go so far as that; I was told about it. 27. The Chairman.] You will not vouch for it?— No. I did not see the person referred to sitting in the office ; I was told. 28. Mr. Hutchison.] I have now to remind you that all this you have been talking about has nothing to do with the question I put to you yesterday. I want you to bring your mind back to the question put yesterday, which had nothing to do with the transaction of £4,000 in May, 1892. The question I put to you was this: Do you know of a transaction of £4,000 in connection with the Ward account immediately before the 31st August, 1892 ? You have told us of one in May. My question was with relation to the transaction on or about the 31st August, 1892 ?—You said before the 31st August. Ido not know of any other except that.
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29. Was not your attention drawn to any transaction of £4,000 as having occurred on or about the 31st August, 1892, in connection with the Ward account?—By whom? 30. By any official of the Colonial Bank ?—No, Sir ; I do not recollect anything of the kind. 31. At Timaru, was not your attention drawn, subsequent to the 31st August, 1892, to a draft from the Invercargill branch for £4,000 on Evans and Co. ? —I have no recollection or record of anything of the kind. 32. And that that draft was retired next day by cheque ?—I have no recollection at all of anything of the sort. 33. Will you swear that your attention was not directed to a transaction of that kind ?—I will swear I have no recollection of that kind. 34. Will you swear that your attention was not directed to such a transaction ? —I will swear that I have no recollection. That is as far as lam prepared to go. 35. You will not go further than that ? —No. 36. Who was the representative ot the Colonial Bank at Timaru in August and September, 1892, do you know ?—No, Ido not know. [Witness here referred to a document.] Mr. Mackintosh was manager. 37. Did not Mr. Mackintosh, the manager or agent of the Colonial Bank at Timaru, bring to your notice a transaction with reference to a draft for £4,000, and credited at the Invercargill branch to the account of Mr. Ward, which draft was accompanied by a cheque, and retired the next day, with the result of putting to Mr. Ward's account a credit of £4,000, for the purpose of the Colonial Bank's balance-sheet of the 31st August, 1892 ?—Beyond the £4,000, which I have already given an explanation of, I have no recollection of anything of the kind ; and, to the best of my belief, he did not. 38. You remember the passing of the Bank-note Issue Act in 1893?— Yes, I remember. 39. Do you remember a meeting of representatives of the banks in Wellington here ?—No; I cannot say that I have a clear recollection of that. 40. Have you any recollection ?—No. 41. Do you remember the provisions of the Act enabling the Governor to make bank-notes legal tender ?—Yes. 42. On being satisfied of the position of the bank asking for such assistance ?—Yes. 43. You do not remember being at any interview with certain members of the Government on that subject ?—No; I have no recollection. 44. Coming to the following year, 1894, the Colonial Bank balance-sheet to the 31st August of that year was the last one that you were directly concerned in ?—I do not know that I was directly concerned in the balance-sheets. 45. But you were chief inspector at that time ? —I was concerned in the bank. 46. Do you remember the terms of that balance-sheet?—l have the balance-sheet here. 47. Will you look at it, and the remarks of the chairman? Were you present? —I cannot recollect whether I was present or not. I was present sometimes. I think it is unlikely that I could be there at that time. I may have been. 48. Can you remember whether you were at that meeting ?—I think that it is unlikely, because it was held in Dunedin, and I was very busy in Wellington at that time. 49. Can you say, looking at the balance-sheet, whether the deposits had fallen off by £227,214? —-They had fallen off by that amount from the previous year. 50. At the end of the last half-year, on the 31st August, they were put down at £222,277 ?—• Yes. 51. And the usual dividend was declared ?—Yes. 52. Were you a shareholder then ? —Yes. 53. Are you still?— Yes. 54. You might mention the amount ? —230 shares, I think. 55. What was their nominal value?—£2 paid up. They were £5 shares, with a reserve of £5 liability. 56. The amount of capital paid up by the shareholders was £400,000 ? —Yes. 57. And there was a liability of £1,000,000 ?—There was a liability of £1,600,000, because there was £3 uncalled. 58. That was the same year as the Act guaranteeing £2,000,000 by the colony to the Bank of New Zealand was passed ? —lt was the same year. 59. Do you notice in the remarks of the chairman at that meeting where he refers to the passing of that legislation as a "cruel blow" to the Colonial Bank?—l know he did so consider it. 60. Because, as he said, a rival bank was provided with money at 4 per cent., which was less than the Colonial Bank could get it at ? —Yes, at that time it was. 61. You were in Wellington during the negotiations that year for amalgamation ? —Yes. 62. And took part in those negotiations?— Yes. 63. Mr. Murray represented the Bank of New Zealand, did he not ?—Yes. 64. And you had frequent interviews ?—Yes. 65. And interviews with the members of the Government as well?—I may have met members of the Government towards the end of the negotiations. 66. Did you not meet them frequently ? —Yes, I did; but I have no special recollection. 67. Did you meet the Colonial Treasurer ?—Yes, socially and otherwise, frequently. 68. I mean directly in connection with the negotiations for amalgamation ?—Not officially. 69. Do you mean that you, as representing the Colonial Bank, along with Mr. Murray, as representing the Bank of New Zealand, did not have more than one interview with the Colonial Treasurer on the subject of amalgamation ?—I certainly remember meeting the Colonial Treasurer with Mr. Murray, but I had no official status at any such meeting, because I was acting under the instructions of Mr. McLean, chairman of the bank. *15 —I. 6.
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70. But you were representing the Colonial Bank in the negotiations under instructions from the chairman ?—So far as my negotiations with Mr. Murray were concerned, I was ; but I had no instructions from him to represent anything to the Government. 71. Were not the terms of the amalgamation discussed with the Colonial Treasurer?—l do not think it would be correct to say they were discussed with him. He may have been consulted on some points. 72. Was he not informed of the terms that had been come to before they were laid before the House ? —Yes, because they were laid by him before the House. 73. Was not the Colonial Treasurer informed of the terms of the proposed amalgamation before they were handed by him to be placed upon the table of the House ?—I do not think so. Ido not think I would be correct in saying that, because it would mean all the terms. I remember myself transcribing that document in a very great hurry, and bringing it up to Mr. McLean, after Mr. Murray and I had agreed upon it. Ido not think that I ever communicated the contents of it to the Colonial Treasurer. I have no recollection of doing so. 74. Did not the Colonial Treasurer, on behalf of the Government, accede to the terms of the proposed amalgamation ?—Do you mean after the agreement was handed to him ? 75. No, before?—l do not think he could have done that, because it was always varying. 76. I mean after it was arranged, of course? —I do not know. I handed it to Mr. McLean, as I told you. 77. You know that the assent of the Government was necessary to the amalgamation? You know that you could not have carried it out without the consent of the Government or Parliament ? —I know the first was necessary. 78. Was it not reasonable to suppose that you went to the Colonial Treasurer before the agreement was signed to ascertain whether he assented to it or not on behalf of the Government?— When you talk about the terms, I do not think I would be correct in saying that he consented to all these terms. He may have been consulted, as I said before, on points that Mr. Murray and myself thought we should not agree upon without the knowledge of the Government. 79. What terms would he be consulted upon?—l cannot tell you now. There may have been a great many conversations at the time, and I could not possibly say what it was. There is no writing on record of it. It was two years ago. 80. Do you mean to say that the Government did not assent to the terms of the proposed amalgamation before they were made public?— They may have, but I have no knowledge of it. 8.1. Would this be correct as a statement of fact—-I suggest that it was made by Mr. John Murray : " It has been asked why, when it appeared as if the Government really had no intention of allowing amalgamation to take place, the proposals in that direction had been published. Well, he was now in danger of saying things he ought not to say, but he believed, and still believed, that at first the Government were in favour of amalgamation ; and certainly he would never have signed any provisional agreement unless he had been perfectly satisfied of tliat. However, circumstances arose which led the Government to alter its views" ?—Mr. Murray had more knowledge than I had. 82. Have you any reason to suppose that this is not a correct statement ? —I do not know that the Government were in favour of it or not in favour of it. I have no knowledge of it. 83. You will swear that ?—I will swear that. In making that statement Mr. Murray had more knowledge than ever I had, because I did not know of it. 84. You have told us that from that time you always had in your mind the merging of the Colonial Bank into the Bank of New Zealand? —Yes. 85. And you, of course, brought that desire with you into the Bank of New Zealand when you were appointed President ? —Yes; but it would be rather incorrect to suppose I looked upon the purchase of the Colonial Bank as the only thing to save the Bank of New Zealand, because I had in my mind principally two things which would be necessary for the Bank of New Zealand. One was the severance of the Estates Company, and the other the purchase of the business of another bank; and, if the Colonial Bank directors had not been willing to allow their bank to be purchased, a strong bid would have been made by me to try and get the National Bank. I may say that Mr. Murray and I had several conversations after I was offered the appointment of President, and that we seemed to be of one mind as regards that. But Mr. Murray went further than I did, and said we ought to try to get both banks and make one large local institution. At that time—lB94—there was a period of very great depression, and it was a much more likely thing then to acquire the National Bank than it would be now when things are better in the colony. 86. That would apply to any transaction at the time ? —lt would. 87. You were appointed President of the bank in October, 1894, I believe ? —I was. 88. Were there any negotiations with any other bank than the Colonial Bank for amalgamation —of your own knowledge?— From my own knowledge, after going into the Bank of New Zealand I became aware that negotiations had been opened to take over the National Bank. 89. Of your own knowledge ?—I got this information I am now giving from the bank in the same way as I get my knowledge of balance-sheets from the bank. 90. From the time when, in October, 1894, you were appointed President of the Bank of New Zealand, were there any negotiations to purchase any other bank than the Colonial Bank?— Yes. I believe I myself spoke to persons connected with the National Bank on the matter. 91. Had you any authority from the directors of the Bank of New Zealand to do so? —There was certainly no minute or anything of that kind. 92. Had you any authority from the directors of the Bank of New Zealand to make any overtures of the kind ?—I would not be sure if it amounted to an authority. 93. I ask you, had you any authority from the board of directors of the Bank of New Zealand?—l should like to explain here.
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94. The Chairman.] Answer the question, Mr. Watson : Had you any authority from the directors ? —I cannot answer Yes or No about a matter like that, but I will tell you exactly what took place, which, I suppose, the Committee would rather hear than a wrong answer. 95. Please answer the question as nearly as you can : Had you any authority from the directors for what you did ?—I knew from conversation which took place amongst us that it would not be disagreeable to our directors to open up negotiations with regard to the purchase of the National Bank, and I spoke to persons high up in the National Bank, and sounded them on the matter, I think. 96. You did that because you thought it would be agreeable to your directors ?—Yes. 97. You had no authority from them ?—lt did not amount to anything official. 98. Mr. Hutchison.] I understand you gathered that from some one or more of the directors ?— Yes, I gathered that. 99. Will you name one director from whom you gathered that ?—I do not think I can do that. Perhaps it was more from what I had heard with regard to the negotiations before, and Mr. Murray's opinions, and that sort of thing. 100. I ask you to name one director from whom you gathered that ?—I cannot do that, because I have no definite recollection that would warrant me going so far as that. 101. It is not necessary for the President to be a shareholder in the Bank of New Zealand ? —No. 102. And you are not a shareholder ? —No. 103. You read some correspondence as to your appointment. Is that all the correspondence on the subject that you read ?—Yes. I may have sent a telegram before writing that letter from Dunedin to Mr. Ward, to tell him what my answer would be when I declined it, but I am not sure. 104. You have given us all the correspondence that is available ?—Yes. 105. Have your duties been defined at any time as President?— Yes. 106. How defined?—By the Governor's warrant, and by a letter of instructions from the Colonial Treasurer which accompanied it. 107. Have you those ? —No. 108. Can you produce them?—l will produce them if I get the leave of the Colonial Treasurer. 109. I ask to have them produced ? —I will take the advice of counsel and consider that later. 110. The Chairman.] Your answers, Mr. Watson, are not at all times what I should expect from you. I notice that several questions have been answered by you in a very peremptory way " that you would consider them " ?—-I am very sorry. I did not mean them to be in a peremptory manner. 111. Mr. Hutchison.] You are holding a position in the Estates Company?— Yes ; I am elected a director in London and an attorney in this colony. 112. You were elected a director and appointed an attorney ?—Yes, in this colony. 113. How many shares do you hold in the Estates Company?—l fancy the qualification has been effected. 114. You do not know of it?—l think it must have been done. At any rate, I hold them in trust for the bank if there are any shares. 115. I wanted to know how many shares you do hold?—I will ascertain that later. 116. Is Mr. Holmes a director of the Bank of New Zealand ?—He is a member of the advisory board in London, not a director of the Bank of New Zealand. 117. What does he get for that ? —£2so a year. 118. Who else is on the advisory board? —Mr. Glyn and Mr. Ewen. 119. Is that the same Mr. Holmes who was general manager for a considerable time ?—-Yes. 120. And within whose period of management very heavy losses took place ?—Some losses took place. 121. I said " heavy " losses. You know there have been heavy losses?— Yes; losses did take place, but not heavy, comparatively speaking, compared with the losses that have occurred. 122. Some hundreds of thousands of pounds ?—I should not like it to be understood here that Mr. Holmes was responsible for heavy losses in the bank. 123. He was general manager at the time these heavy losses occurred?—l was checked for speaking of hearsay, and I may say I have no knowledge that there were heavy losses during the time Mr. Holmes was an officer of the bank. I may say that I had heard that heavy losses had occurred, but I had no knowledge of them. 124. Do you know that he is the same individual ? —Yes. 125. Is this Mr. Glyn, who is also on the advisory board, the former chairman of directors?— Yes. 126. Now, coming to the following year, 1895, you remember the Joint Committee being set up ?—Yes. 127. And the Act afterwards passed removing the prohibition against the purchase of another bank?— Yes. 128. And you remember the negotiations which eventuated in the agreement of the 18th October, 1895 ?—Yes. 129. You took an active part in arriving at that agreement ?—Yes. 130. Did you see members of the Ministry on the subject while terms of that agreement were being arrived at? —Very likely I saw members of the Ministry, but not on the subject of the negotiations pending. 131. What did you see them about ?—As President of the bank, I have no doubt I saw them about bank affairs. 132. Did you see them more often at that time than previously ?—I do not think so. 133. Have you seen members of the Ministry at your own house?— Frequently.
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134. During these negotiations for purchase?—l have no recollection of it at this time. Ido not think so, because it was during the session. . 135. Had not Mr. Seddon frequently been in your house during the time these negotiations were going on ?—I do not think so. I have no recollection of Mr. Seddon being in my house during the session. 136. During the time these negotiations were going on, which resulted in the agreement of the 18th October ?—I have no recollection. 137. Can you say whether, after the Act was passed, or after the agreement was come to, there was a hitch in carrying out the terms of purchase? —I do not remember that. After the agreement was come to ? 138. Yes, the agreement was come to on the 18th October. In the course of the negotiations was there any hitch?—Oh, yes, several. 139. There were several hitches ?—Yes; I think the arrangements took fully six weeks, and during that time there were many things cropped up. 140. Do you mean any particular matter?— Probably they were relating to private accounts. 141. The making of four lists instead of three? —I do not think that was a hitch. 142. That was a change ?—lt was a change. 143. Can you say when it was, in the course of the negotiations, that took place ? —I could not say it was at that time. 144. Was it near the end ?—Yes, I should think that probable. 145. You have handed in a prepared explanation this morning as to clause 18 of the agreement. I would ask you to carry your mind again back to that clause. Do you remember it ? —Yes. 146. When did it take effect ? The agreement says the transfer of business shall be on the second Monday after the approval of the Colonial Bank shareholders ? —The " taking effect " of the agreement several times came up in the bank, and we have always held that it took effect on the 31st August. The date of the handing over of the bank's business was the second Monday after ratification of the agreement. •147. That was the time of the transfer of the business? —Yes. 148. What was the date ?—I think it was the 18th November, speaking from memory. 149. But it was binding from the 18th October?—lt was binding from the 31st August. 150. You mean it related back to the 31st August. Under clause 18, the Bank of New Zealand had the option within three months of taking over the accounts in the " C " list ?—Yes. 151. Do I understand that the bank exercised that option, or waited till the Colonial Bank called upon it to elect ?—I do not know whether the Colonial Bank called upon us or not, but I know that the Bank of New Zealand refused. 152. Do you know that the Bank of New Zealand declined, without being called on, to take over the accounts in the "C " list, or that it was called on and refused? You do not remember which happened ?—I do not remember that; but I remember giving notice a day or two before the three months. 153. That was to the effect that the Bank of New Zealand refused to take over the list? —Yes. 154. Did the refusal extend to all the accounts in the " C " list ? —Yes. 155. Then, did the Colonial Bank, or the liquidators of that bank, require you to liquidate or realise the accounts ?—ln the first instance, I believe they did; but there was a change afterwards with regard to some of the accounts. 156. Did you proceed to realise or liquidate the accounts?—lt never came to that, While we were asking for instructions the liquidators asked us to give more time. 157. Was that on account of the negotiations they were entering into for the sale of some of the accounts ?—Yes. 158. You mean the liquidators of the Colonial Bank ?—Yes. 159. Did the suspension of the operations continue long ?—Yes; I think the time was extended after the first time given, that being found too short. It was probably extended for six weeks. 160. When the negotiations fell through, did they ask you to go on with the operation of liquidation or realisation ? —No ; they asked for other arrangements. 161. What was the result of the new arrangements ? —The result was that the liquidators of the Colonial Bank took the matter into their own hands and relieved the Bank of New Zealand of their responsibility. 162. For the whole of the " C " list ?—They certainly relieved the Bank of New Zealand of all responsibility with regard to the " C " list. 163. You have put it, and so has Mr. Booth, that, under clause 18, you were merely acting as agents?— Yes. 164. Have you been relieved of the agency? —No. 165. You continue, then, to act as agents under the instructions of the liquidators of the Colonial Bank?— Yes. 166. Then, are the accounts in the " C" list still in your bank as agency accounts ?—All the remissions. 167. All that have not been liquidated or realised?— Yes. 168. Do you still retain the cover, £55,233 ?—The cover has not been paid over. 169. Then, it is still held by the Bank of New Zealand? —We have not paid over any of the £327,000. 170. Then, you did not pay over the £55,233 ?— We did not pay it over. 171. You are quite clear that the Bank of New Zealand is agent for that " C " list?— That is clear. 172. And has to do what the Colonial Bank desires it to do in relation to those accounts? — Entirely.
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173. Did the Bank of New Zealand, as agents for the Colonial Bank, debit the " C " list account or accounts with £30,000 on the 13th November ?—My counsel advises me that I cannot answer that question. 174. Do you decline to answer?—l decline to answer. 175. What is the ground of your declining?—lt is going into particulars of the " C " list. 176. You decline to answer because to answer the question would be going into particulars of the " C " list? —That is the ground, I am advised. 177. But that is a mere statement. There is no privilege in that?—l am advised to do that. 178. Is it because you have made a declaration of secrecy to the bank under the deed of settlement ?—I am advised to put it on two grounds : First, that it is outside the order of reference, and is irrelevant; and, secondly, that it is disclosing private business. 179. As to its being outside the order of reference, that is for the Committee to deal with. Your second ground is that your answer would disclose private accounts ?—Yes. 180. Do you take your stand on that—on the terms of the declaration you have made ? —Yes; and on every other ground that is open to me. The Chairman: I may state here that the Speaker of the House has, on my application to him on the matter, turned up authorities to show that a witness cannot shelter himself and refuse to answer questions before a parliamentary Committee because of any declaration of secrecy he may have made to his employers. Hon. Mr. Seddon: I rise to a point of order, which is that this question is outside the order of reference. Discussion ensued. The Chairman: Until we have some proof, which Ido not think we have had, in reference to writings-off, either from Mr. Watson or Mr. Booth, I shall rule that this question cannot be put. 183. Mr. Hutchison : That is subject, of course, to consideration by this Committee, which can review your ruling, and refer to the first ground of objection. The other ground of objection was as to the witness's duty to the bank. [To witness.] Is your obligation to the bank based on the provisions of clause 109 of the deed of settlement, which says, " Every director, auditor, officer, and clerk shall, previously to his entering upon the duties of his office or employment, sign a declaration in a book to be kept for that purpose that he will not reveal or make known any of the matters, affairs, or concerns which may come to his knowledge as a director, auditor, officer, or clerk to any person or persons whomsoever, except in the course and in the performance of his duties, or under compulsion or obligation of law, or when officially required to do so by the board, or by the auditors for the time being, or by any special meeting of the proprietors of the Company." Is that the provision you rely on ? —That is partly my reason. 184. What else? —I think it would be exceedingly detrimental to the bank itself, and against the interests of the colony and shareholders. 185. You know you have no more privilege here than a witness in the Supreme Court?— That is a legal point which I cannot answer. 186. I ask you whether you claim a greater privilege here than a witness in the Supreme Court ? —I claim all I can. I claim whatever lam entitled to. 187. I put the question, and you decline to answer, as to whether on the 18th November, 1895, the Bank of New Zealand, as agent of the Colonial Bank, debited the " C " list with £30,000 ?—I decline to answer that. 188. Do you know Mr. Vigers ?—Yes. 189. He was a former inspector of the Colonial Bank ?—He succeeded me as inspector of the Colonial Bank. 190. He is now one of the liquidators of the Colonial Bank ?—Yes. 191. Would he be mistaken if he swore that on the 13th November £30,000 was debited to this account?— For the same reason I gave before, I decline to answer. 192. You are aware that clause 25 of the agreement of the 18th October provides that bills in transitu shall be treated by the Bank of New Zealand as they develop. That is under subclause (d) ? —Yes. The selling bank guarantees that the items shown in the balance-sheet as being in transitu between the various branches of the selling bank are of the value which they are represented to be in such balance-sheet. 193. Can you say whether any drafts were treated as in transitu in accordance with the agreement ?—That is the same question as before. 194. Will you say that the Bank of New Zealand has not, also as agent for the Colonial Bank, debited an account in the " C " list with a sum of £16,000? —On the same ground, I refuse to answer. 195. You are aware also, are you not, as the reason for the suspension of the realising or liquidating by the Bank of New Zealand of the " C " list, that the liquidators of the Colonial Bank had made a provisional arrangement for the sale of certain accounts to Messrs. Lee-Smith and J. Reid? —I decline to answer that. 196. Have you seen a copy of an agreement dated the Ist June, 1895, between the liquidators of the Colonial Bank and Messrs. Lee-Smith and J. Reid ?—That is private business. 197. Are you aware that in that agreement the following recital occurs : "And whereas the Honourable J. G. Ward is also indebted to the Colonial Bank in the sum of £16,000, or thereabouts, in respect of a draft on London for that amount, which was in transitu on the date of the agreement of the 18th day of October, 1895, and is guaranteed to the Bank of New Zealand under clause 25 of the said agreement, and the Colonial Bank holds as against this draft as security for the same 16,000 shares in Nelson Brothers and Co. (Limited)"? —That is all relating to private business, I regret that I cannot answer it. 198. Are you aware that Mr. Ward himself has, in his affidavit, sworn this in paragraph 5 ;
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" I am indebted to the Colonial Bank of New Zealand in the sum of £16,000, or thereabouts, in respect of a draft on London for that amount, which was in transit at the time when the agreement for sale and purchase dated 18th October, 1895, between the Colonial Bank of New Zealand and the Bank of New Zealand was made and entered into. At the time when the Colonial Bank negotiated the said draft for me they had as security 16,000 shares of Nelson Brothers and Co., (Limited), which were then of the value of £10 each. The said shares are still held by the said bank, but have now fallen in value to £2 10s. per share, and, so far as I can see, without any prospect of rising again; and I am informed the said shares are now unsaleable"? —I may have read the affidavit casually in the newspapers, but I cannot say I am aware he has filed such an affidavit. 199. But are you aware of the facts mentioned in the affidavit ?—I decline to answer that. 200. Would it be correct for Mr. Ward to say on oath with reference to this draft of £16,000, that " it was a draft in course of transit, and when the amalgamation took place the bank became responsible for it " ?—That is having relation to private business, and I decline to answer. 201. Would it be equally correct for the three liquidators—that is, Mr. Vigers, Mr. Keith Ramsay, and Mr. Simpson— to swear that " the Honourable Joseph George Ward is indebted to the Colonial Bank of New Zealand in the sum of £16,000, or thereabouts, in respect of a draft on London for that amount which was in transitu on the day of the date of the said agreement of the 18th day of October, 1895 "; and that " the payment of this draft is guaranteed by the Colonial Bank of New Zealand under clause 25 of the said agreement, and the only security held as against the said draft is 16,000 shares in the Company called ' Nelson Brothers (Limited)' "?— That being all private business I regret that I cannot answer it. 202. With reference to another matter, was that account in the " C " list further debited with £5,052 on the 31st December, last year ? —That is also private business, and I must decline to answer. 203. It is as to the amount you were asked that you decline to give information ?—I decline to answer. 204. Then, I will ask whether this would be a correct statement of fact as contained in paragraph 13 of the agreement of the Ist June, 1896, between Messrs. Lee-Smith and J. Reid : " Nothing in this agreement is to prejudice the right of the liquidators to dispute, as between the Colonial Bank and the Bank of New Zealand, the liability of the last-mentioned bank to the liquidators in respect of a sum of £5,052 Is. 4d. debited by the Bank of New Zealand to the account of the association on December 31st, 1895, without the authority or consent of the liquidators " ?— That is also private business. I decline to answer questions having reference to private business. 205. As to terms of purchase of this Colonial Bank, do I understand that you took into consideration the stationery in arriving at the sum to be paid for good-will, or was that a matter entirely apart ?—Entirely apart. We bought the stationery at about two-thirds of its cost. 206. Then, that had nothing to do with the good-will ?—-It had nothing to do with the goodwill, but it was part of the whole arrangement. 207. Did it influence your mind in arriving at the sum to be paid for good-will?— Every point of the agreement influenced our mind. 208. The stationery in the Colonial Bank balance-sheet was set down at £9,717 ? —£9,717 9s. 2d. 209. And you got that for £6,050, or a reduction of £3,467 ?—Yes. 210. Had that any influence on what you paid for good-will ?—Everything had. 211. The landed property was put down in the credit balance-sheet at £125,399 ? —£125,399. 212. You took the properties over at that figure ? —Yes. 213. And you say you paid for good-will £75,000 ?—Yes. 214. These two together would make £200,399?—£200,399. 215. Did you add anything to that for profit on stationery in respect of the purchase ?—lt is not necessary to add it on. 216. I was trying to find out what the colony paid for this bank —for the landed property so much, for the good-will so much ? —What the colony paid ? 217. Well, we will call it the Bank of New Zealand, although, I suppose, the bank could not have done it without the assistance of the colony ?—I do not know, Sir. 218. Well, take it as the Bank of New Zealand. It paid book-value for landed and bank premises £200,399 ? —Yes, for good-will and bank premises. 218 a. And you state in the last balance-sheet that you paid £75,000 for the good-will ? —Yes. 219. Those two together make ?—lt adds up to £200,399. 220. Do these two items represent the good-will and the premises?— Certainly. I have just added them together. 221. And you say you got a bargain in respect of the stationery, but that did not influence you in buying the Colonial Bank ?—I believe the stationery was got at a very fair price. 222. Was it the price that influenced you? Supposing they had not taken the £200,399, would the stationery have influenced you in declining to purchase ? —I think we might have taken that without the stationery. 223. Would not that total of £200,399 have to be reduced by an amount that you expected the landed properties would not realise ? —I do not understand that question. If we do not realise the money we shall have to provide for it. 224. I understand you considered the landed property and bank premises together ?—We considered, besides what loss we might make out of the properties, that the purchase of the bank was worth £75,000. 225. And if you lost £30,000 on the properties it meant that the good-will of the bank was worth £105,000 ?—lt might be put that way. 226. You told us that another consideration was involved in the purchase—namely, the guarantee of two sums of £20,000 and £5,000, and that the obtaining of security for these influenced the
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directors in coming to the decision they did?—l think that was the case. Ido not remember saying so, but it was the case. 227. Were these matters, the £20,000 and £5,000, separate transactions, or did they occur at the same time ?—I regret that you are alluding to private accounts now. I cannot enter into that. 228. You have already stated that there was a minute of the directors on the subject of the £20,000?— Yes. 229. Can you produce the minute ?—No; that relates to private business about which there has been no writing-off. I cannot produce that minute; it involves a private account. 230. Were there representations made which induced the authority for this advance of £20,000 ? There were, but I cannot give any particulars. 231. Were these representations borne out by the facts afterwards ascertained?-—These are details relating to private business. I regret I cannot enter into them. 232. You remember saying also that the advance was authorised, subject to the approval of the solicitor of the bank ? —I think I said that. 233. Was that approval obtained ?—Yes. 234. Were the conditions fulfilled ?—The conditions imposed by the solicitor were fulfilled. Mr. Cooper has satisfied me as to that. 235. Were the conditions imposed by the directors fulfilled ?—I cannot go into details about it, but I believe the conditions imposed by the directors were fulfilled. 236. Where was the payment made—at what place?— That is private business. I cannot answer. 237. Do you decline ?—I must decline. 238. Was not this £20,000 authorised to be paid in Invercargill ?—I do not think so. 239. Will you ascertain and answer?—No; it being private business, I regret that I cannot. 240. I will ask you whether the £20,000 was not paid by the bank to the Ward Association in Invercargill ? —That is distinctly relating to private business, and I must distinctly decline to answer it. 241. I understand you to say that the other transaction of £5,000 was later?—l think there is no harm in saying it was later. That does not disclose anything. 242. I understood you to say that you had the authority of Mr. Ward to explain about this £5,000 ? —I would like to know from what you understand it, because Ido not know that I said anything of that sort. 243. As to what transaction of £5,000 have you the authority of Mr. Ward to speak?—l do not know that I had the authority of any one for that. 244. Have you the authority of the person involved in this £5,000 to explain the transaction? —No, Sir, I have not. 245. You went some distance in explaining how this £5,000 advance was made, and I remind you that you said that the advance of £20,000 was made upon a promise that you would get onethird of certain first-class bills of exchange in London. Is that true ?—Yes. 246. And that afterwards your attention was directed to the fact- that you were not getting the business ? —My attention was directed by the Auditor. 247. And that you then represented the matter to your manager in Invercargill ?—No ; I told the Auditor. At that time the acting general manager was absent in England. A junior officer of the bank was acting in his stead, but all important things went through my hands and through Mr. Butt's before they were done; and Mr. Butt came to me one day and complained that we had not got the bills of exchange stipulated for. I said, " Well, Mr. Calendar had better write down to the manager of this particular branch to get some exchanges." I understand that the manager at that branch asked for £10,000; he got £5,000. They were drawn on the credit of one of the best London houses doing business with this colony. 248. Was that house Brooks and Co. ? —I decline to say that. The names attached to bills are distinctly private business. 249. Do you decline to answer whether the advance was on a bill of exchange drawn upon Brooks and Co., of London? —I decline to answer that. 250. The draft was not paid at its destination ?—The draft was paid by the drawee in due course. 251. Was not that the sum, £5,052 Is. 4d., which the liquidators of the Colonial Bank dispute as having been improperly charged to them by the Bank of New Zealand?—l do not know what you allude to. 252. You surely do not say you know nothing about it ? —I should probably, with a little thought, get it out of my memory; but, talking of the £5,000 at the time, it has no reference to that. 253. Going back to the £5,000, you say the draft was paid by the drawee ?—Yes. 254. In due course ?—Yes. 255. Was it paid to credit when the agreement to purchase was come to ? —lt was not taken then. 256. It was after that ? —Yes. 257. How, then, did you get a guarantee for it if it was not taken at that time ? —I have made a mistake between the two years as to whether it was 1894 or 1895. It was paid before the 18th October, I think. 258. Why, then, did you take the guarantee for it on the 18th October?— The guarantee was not taken for it; but a difficulty had arisen after payment of the draft. 259. Was it debited to any one at all after payment ?—No. 260. What would be the position after payment?—l could not tell you without entering into details of private business.
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261. Will you ask the person or company concerned whether you may explain it?— Yes. 262. You can tell us later about that?— Yes. 263. I think it would probably be desirable to all parties if the mystery were cleared up. Now as to the cost of administration, have you any expectation that the cost will be reduced ?—Are you taking the Estates Company into account ? 264. What I refer to is your estimate given last year before the Joint Committee as to the cost of administration of the Bank of New Zealand, when you reckoned £15,000 as part of the additional earning-power of the bank under the amended proposals submitted by the directors ? —Yes ; I think that is the amount as regards the two banks. If the two banks were put together I thought there would be £15,000 saved in the business. 265. It is put on the same footing as the £14,000 for the inscription of stock?— You asked me whether this is likely to be borne out. 266. Whether the estimate is likely to be borne out ?—Yes; I think so, when the vast acquisition of business is taken into account. I think, comparatively, the business can be worked at a saving of this amount. 267. You take off the first item of the inscription business as not available ?—Yes. 268. Do you anticipate that the increased earning-power, estimated by you at £138,750 per annum, will be realised as a result of the amended proposals being given effect to by the colony ?— In time. 269. How long do you suppose ?—This provides for investments of money in business and other things; but I would like to say, in connection with this, that every day we get information which shows that this inquiry is damaging our business very seriously, and it may have the effect of preventing this being carried out. Just this morning, before I left the office, I saw a complaint about that. 270. Have not the officers of the bank submitted to a reduction of their salaries which is only temporary ?—From the Ist June, 1895, to the Ist June, 1896, all the officers of the bank submitted to a reduction of 10 per cent, in salaries over £200. On the Ist June this year that reduction was remitted in so far as regards officers drawing a less sum than £400, but those drawing £400 and over are subject to a reduction, but so that none drawing less than £400 will be affected. 271. Is that arrangement in force now? —That is in force now. 272. As a temporary arrangement ?—As a temporary arrangement. 273. Can you say what would be added to the cost of administration if that arrangement were superseded, and salaried officers of £400 and over were paid their salaries without reduction ?—I have not got the amount. 274. Would it be a considerable amount ?—Several thousands. 275. You, I understand, have submitted yourself to that reduction ? —The Auditor and I did for one year. 276. Are you now subject to the reduction ?—No. 277. Is the General Manager subject to it ?—There are some officers who have been appointed since the reduction took place, and they were appointed at a net salary. It was taken into account in their appointment. 27.8. What is the salary of the General Manager?—£l,7so. 279. That is not subject to any deduction?— No. 280. How long was Mr. Mackenzie in the Colonial Bank with you ?—He was in the Colonial Bank before I joined. I was eight years there, and I left him there. 281. Was it on your suggestion that you and the other directors went to Mr. Seddon to ask him to remove the difficulty about Mr. Mackenzie's appointment?—lt might have been, but I have no recollection of asking them to go. 282. It did not originate with you ? You went to Mr. Seddon, and he suggested that you might give Mr. Mackenzie a trial? —Yes. I should not like it to be understood that I said Mr. Seddon took any active part in the matter.
Thursday, 20th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. Mr. Hutchison.] Have you obtained the permission of the person interested in the several accounts, to which I was referring yesterday, to give an explanation of them ? —Not yet. 2. Then, you have not had an opportunity ?—No. I have instructed that a telegram should be sent about the matter. 3. And you are not in a position yet to say ? —No. 4. Can you say now how many shares you hold in the Estates Company ? —I have not got that information yet. I can get it to-morrow morning. 5. Now, about your appointment ?—I produce copy of my letter of appointment, and a copy of the Governor's warrant. 6. Defining the duties of the President, I presume ?—Yes. 7. Were there more than one original agreement of the 18th October, 1895, signed? —Yes; I think there were two. 8. One for each bank?—l think so. 9. Were the lists " A," " B," " C," and " D " attached to the originals of the agreements?— No. 10. They were kept separate? —Yes. 11. For what reason was that ?—I suppose it would be because the lists disclosed private business, and the agreement did not.
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12. Do you say that was the reason, or that you suppose it was ?—They were separate documents. Ido not know of any reason why the one should be attached to the other. 13. Are the bank inspectors given permanent appointments —that is to say, without any limitation as to the period of employment ? —Not as a rule. 14. But your bank inspectors? —Not all of them. 15. Have any of them ?—Yes. 16. Who ?—Mr. Buller and Mr. Litchfield have got not a permanent, but a longer term of appointment than the others. 17. Is any period mentioned?— Yes; three years from October last. 18. Was that by resolution of the directors ?—Yes. 19. Was the Government asked to approve ? —I myself asked the Colonial Treasurer whether there was any objection, and he said he did not see his way to interfere, or something like that. 20. He did not indicate any disapproval; but, on the contrary, you understood him to assent ?— Ido not know that I could say that; but, at all events, he did not interfere. 21. Mr. Henry Mackenzie's appointment is not on the same footing?—No; it is the same as that of the rest of the staff. 22. That is, subject to three months' notice?— Three months' notice. 23. Can you tell the Committee what is the amount that the Bank of New Zealand, on behalf of the Colonial Bank, claimed in Riley's estate ? —That is private business; I cannot give any information about that. 24. You know that he is a bankrupt—that his affairs are now being wound up by the Official Assignee?— Yes, I know that. 25. Do you not feel at liberty to say what the claim of the bank is in that estate for the Colonial Bank ? Would it be upwards of £74,000 ?—I cannot give any information about that. 26. Is it in the " B " list ?—lt is private business, and I cannot speak about it. 27. Has the Bank of New Zealand, apart from the Colonial Bank, a claim in the estate of John Riley?—l cannot give any information about private accounts. -28.- You mean you will not ? Your answer does not indicate any inability—you refuse ?— I must decline. 29. Can you tell us who holds the 80,000 shares in the Auckland Agricultural Company upon which £5 17s. per share is uncalled?— The Bank of New Zealand Estates Company holds all the shares of the Auckland Agricultural Company, and therefore must hold those too. 30. Can you explain, what Mr. Booth could not, as to the Court in Dunedin in the Colonial Bank liquidation being asked to give its sanction to the acceptance of a compromise in connection with an account in the "A" list?—l regret that I cannot give any information about private business in the bank. 31. You can, but you decline? —Yes, I decline. 32. Mr. Maslin.] I think you stated that you were formerly connected with the Oriental Bank, which went into liquidation?—l was. 33. Was Mr. Henry Mackenzie connected with that bank ?—Yes. 34. Then, what was his position ?—He was an assistant inspector of that bank. 35. Was he attached to the staff of the Colonial Bank before you? —Yes. 36. Do you know how long before, approximately ? —I think between two and three years before I was. 37. When you joined the Colonial Bank, was Mr. Henry Mackenzie general manager?— Yes. 38. I believe you joined as chief inspector ?—I joined as branch inspector. 39. And subsequently took office as chief inspector?— Yes. 40. What were your duties as chief inspector?—To inspect the branches and report. 41. Report to whom ?—The general manager. 42. You have had, I believe, several sub-inspectors under you?— Yes. 43. Can you tell us what their duties were ? —Their duties were the same. 44. To report to you or the general manager ? —To the general manager. They might sometimes report to me if I happened to be in the vicinity. 45. I suppose all their reports would come to your knowledge from time to time ?—Not always. It might be that I would be away from the head office for three or four months at a time, and reports that they might send in during my absence might never come to my notice, because I would be busy with other matters. 46. What were the duties of the general manager ? —He was chief executive officer. 47. It would be his duty to report any matters of importance to the directors?— Certainly. 48. So that the general manager would have a full and intimate acquaintance with the whole business of the bank ? —Yes, according to the reports of the officers sent to him, he would. 49. Of course, if the officers sent unreliable reports, he would not be responsible for them ?— No, unless he knew to the contrary. 50. You stated, I think, that you were a shareholder in the Colonial Bank?— Yes. 51. Did that bank for a number of years pay a dividend of 7 per cent. ?—Yes. 52. Was proper provision made, in your opinion, by the directors, before declaring a dividend, for bad and doubtful debts ?—As things have turned out, I do not think the provision was quite full enough. 53. How do you provide for a debt you know to be bad?— Write it off. 54. Do you write the whole of these accounts off in the year, or spread them over a number of years ? —When we ascertained than an account was bad, the whole account was always written off. 55. You would object to answer with respect to any accounts that have been popularly known to be bad and lost to the bank? —-I cannot give any information regarding private accounts. * 16—1. 6.
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56. Then, it would be no use to put the question to you. Did you yourself, as one of the directors of the Bank of New Zealand, take part in investigating the accounts of the Colonial Bank before the purchase ?—Yes. 57. Did you discover that, if they had made full provision for bad and doubtful debts, the whole of the capital, the reserves, and undivided profits would have been absorbed, excepting the sum of £58,906 ? —No ; but after retaining sufficient funds to provide for ample cover for any possible deficiency, we found that to be the case. 58. When you were connected with the Colonial Bank, when did you consider that an account had become bad? —Do you mean utterly bad? 59. Well, something more than doubtful ?—Well, when I got knowledge of the fact, I considered it to be so. 60. What class of accounts would you consider those that were in the " D " list, that you would not recognise at all ?—They were not operative accounts. They were accounts, many of them, having valuable securities attached to them, but they were not ordinary operative banking business. 61. They had ceased to be interest-paying accounts ?—Oh, no. There were several of them bearing interest and were secured, but they were not ordinary banking business, and, in fact, they were retained by the Colonial Bank of New Zealand for liquidation. 62. A sort of globo asset ?—No; but they were not accounts any bank would desire to take up in the first instance, because they were not operative. 63. I suppose a considerable proportion of the accounts were more than doubtful?—l should say some of them would be probably more than doubtful. 64. That is, they would be bad ?—I do not know that any of them would be utterly and totally bad. 65. You have intimated that a proportion of the accounts were mere than doubtful. Do you know if provision was made by the Colonial Bank for those accounts in the "D" list before declaring a dividend?—l do not know that. 66.- Then, you do not know for a certainty whether the Colonial Bank did make provision for ascertained bad debts, or debts that had become more than doubtful ? —Yes ; I believe they always did make provision for debts that had become thoroughly bad. That was their practice. If a customer passed through the Bankruptcy Court, his indebtedness, after payment of all dividends, was always written off. But lam not prepared to say that, in the light of what we know now, I consider that they made ample provision. 67. You do not consider that they did make ample provision? —According to their lights at the time, they probably did. They might have had expectations of things reviving which were not realised. 68. That is the result, that the whole of the capital, the reserves, and accumulated profits, excepting £58,906, was gone, if provision had been made for bad and doubtful debts ?—No, I do not say so. I say ample cover had been made to meet losses. We had retained £272,000, and they expected to get a considerable return from that sum. 69. There were £272,000 set aside for the "B" list?— Yes. Besides the £58,906, they got £102,000 in the "D" list. 70. Still, it showed that, if proper cover had been taken for the doubtful accounts—if proper provision had been made—the bank would not have been able to pay those dividends for years past of 7 per cent. ? —No; but I am convinced, of what I know of the business, that they could not possibly have known all that at the time. 71. You know the usual form that they attached to the balance-sheets—" The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts " ? —Yes. 72. You know that that was attached to the balance-sheet of the Colonial Bank?— Yes. 73. And such provision was not made in the light of recent events ?—lt altogether depends upon the opinion the directors held at the time as to values, and what would be ample provision. In the light of after events, I think the provision was short; but lam not prepared to say that the directors were not justified at the time. 74. Who suggested to the directors of the Bank of New Zealand that Mr. Mackenzie should be appointed General Manager ?—ln connection with that, Sir, I should like to say that, when the former agreement was made between Mr. McLean and Mr. Murray, a private arrangement was come to as to who should be the principal officer of the amalgamated bank, and Mr. Mackenzie was then agreed upon as one of the principal officers. 75. Who was the private arrangement between ? —lt was between Mr. McLean and Mr. Murray; and I think it is alluded to in the document put before the House at the time—in the amalgamated agreement. 76. The contents of that private agreement were not disclosed ?—No. 77. Can you produce that private agreement; it may be a matter of considerable importance to yourself?—l am not sure that I have got that agreement now. Masses of papers accumulate, and I destroy them from time to time ; but I will see whether I can produce it or not. 78. It is rather an important matter, as referring to the appointment of Mr. Mackenzie ; and, especially in the light of Mr. Booth's evidence, it is important?—l will see to that. 79. The Chairman.] But such a document is not one that you would be likely to destroy, is it ?—I destroy a great many documents from time to time. 80. Mr. Maslin.] Can you say whether any of those documents you destroyed were in connection with the Colonial Bank amalgamation?— Yes. 81. Documents that subsequently bore fruit ? —Probably notes which were taken at the time. -
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82. I understand that this private arrangement was between Mr. McLean, Mr. Murray, and yourself?— No. I was a party to the arranging of it, but it was between Mr. McLean and Mr. Murray. I would not like to be misunderstood. It was arranged that there should be joint general managers. That was what was arranged at that time. 83. Here is the provisional agreement laid before the House (1894, 8.-26). It says : "IV. With the exception of the chief executive officers—namely, the joint general managers, chief inspector, and London manager (regarding which a separate agreement has been entered into) —the officers of the bank shall be selected by the new board of directors from the present staff of both banks, and appointed to their various posts." You will try and find that separate agreement? —Yes. 84. Mr. Maslin.] What other officers were provided for besides Mr. Mackenzie in the private agreement ? —Mr. Butt. 85. What position was he to take ? —He was to be joint General Manager with Mr. Mackenzie. 86. Mr. Mackenzie was to take the premier position, I suppose ? —-I do not recollect that. 87. Were there any other besides Mr. Butt and Mr. Mackenzie?—l do not recollect whether there were any others or not. 88. You were not President then ? —No. 89. Was there any reference to yourself in that private agreement ?—Not that I remember. 90. Hon. Mr. Seddon.] " Therefore, if the Governor shall appoint as President of the bank a person heretofore connected with either bank, such President shall stand for one of the directors to be nominated by that bank." So that they did make provision for one of the officers to the President? —I did not know anything about my appointment when that agreement was made. 91. Mr. Maslin.] Was any one else referred to besides the two gentlemen named?— There may have been, but I do not think any one else in this colony was mentioned. 92. Did the President or the directors of the Bank of New Zealand desire to appoint some person to the position of General Manager other than Mr. Mackenzie ?—No, not as a body. ' 93. Were any representations made to you by individul directors that it was desirable that some other person should be appointed?— One director mentioned some one else. 94. Was the name mentioned by that director supported by other directors ? —No, I do not think so. 95. Were they opposed to it? —l could not quite say that. Some of them were, I think. One of them was, anyhow. 96. Did you have to take a firm stand in order to secure Mr. Mackenzie's appointment ? —I could not have secured Mr. Mackenzie's appointment by taking a firm stand. I believed then, and do now, that Mr. Mackenzie is quite the best man that could be got for the appointment in the colony, and I was very anxious. Furthermore, he had been led to believe he was going to get the appointment. I heard Mr. Booth tell Mr. Mackenzie in the Club that he was very favourable to his getting the appointment, before the legislation took place, when it was talked of that Mr. Mackenzie might be appointed. As I told you, I never let the matter go out of my mind, and Mr. Mackenzie was led to believe that he was to get the appointment. 97. And you felt under some moral obligation to secure that appointment?—l did, Sir. 98. The Chairman.] You have not answered the last question, as to whether you took a firm stand at the meeting of directors in reference to Mr. Mackenzie being appointed General Manager ? —I expressed my views that he was the best man that could be got for the appointment. 99. Mr. Maslin.] You have the power of veto ? —Yes. 100. And had the directors proposed any other person, you could have vetoed such proposition ?—Of course, I could veto any such thing, but I should not have done it if I thought the person suitable for the appointment; and m any case I have never exercised my power of veto, and before exercising it on a general matter such as that I should refer to the Colonial Treasurer. In a matter of private account I should veto it without referring to the Colonial Treasurer ; in fact, I am instructed by the Government to be very careful in using my power of veto. 101. Did you refer the appointment of Mr. Mackenzie as General Manager to the Colonial Treasurer ? —I mentioned it. 102. And what was his advice? —He declined to interfere officially in the matter. 103. I think you stated the other day that he advised you that the appointment should be made ? Hon. Mr. Seddon : I rise to a point of order. He did nothing of the sort. Discussion ensued. 104. Mr. Maslin.] What was the result of your interview with the Premier in respect to the appointment of General Manager ?—As I have stated, the Premier declined to interfere officially in the matter. When asked his opinion as regards Mr. Mackenzie, he said he thought he was the most suitable man available, and when further asked his opinion he said something like " Well, you might try him for three months," but I cannot recollect the exact words. 105. And under whose control is the staff of the Bank of New Zealand ?—The board of directors. 106. Do you know if the board of directors make all the appointments ?—They make all the appointments of any important nature. They might not make the appointment of a teller, for instance, at a branch; but I think they see all the appointments of accountants—at least, of the important branches—and certainly all managers. Any appointment of importance passes through the board of directors. 107. I think you stated that no considerable changes have taken place in the several branches of the bank since the early part of 1895 ?—There have been changes from one point to another, but no dismissals have taken place since that time of any importance. No officer who was formerly in
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the Bank of New Zealand has lost status or emolument through the purchase of the Colonial Bank that I know of. 108. Is it not a fact that the present managers at Napier, Wanganui, Oamaru, Timaru, Nelson, Palmerston South, Masterton, and Reef ton, and the assistant-managers in Auckland, Christchurch, and Dunedin are all ex-officers of the Colonial Bank ?—Yes, with the exception of the assistantmanager at Dunedin, who was an officer of the Bank of New Zealand when I entered the Bank of New Zealand. Some seven years before then he was an officer of the Colonial Bank. 109. What had become of the gentlemen who occupied positions in these branches prior to these late appointments ?—I think they have got promotion. The manager at Timaru has been promoted to Invercargill, and the manager at Napier was appointed to Wellington. 110. The former manager at Napier has been appointed to Wellington ?—Yes, on an increase of salary. 111. What became of the manager in the Wellington branch?—He was appointed inspector in Australia. 112. And the manager at Wanganui ?—He is now in Lyttelton. 113. What became of the Lyttelton manager ?—He was appointed to Tauranga on promotion. 114. What became of the manager at Tauranga?—He was a Bank of New Zealand man, and went to Dunedin. 115. Could generally such an absorption of prominent officers of the Colonial Bank take place without displacing officers holding similar positions in the Bank of New Zealand ?—Practically it did. 116. Have you opened many more branches ? —No, we have not; but, on the other hand, you will see that the business has become so large in many points that assistant-managers have had to be appointed, and it was deemed advisable at the time to retain the officers of the Colonial Bank— or, at least, about two-thirds of their number —in order to conserve the business, in which I think we were justified, because we have lost very little of the business of the Colonial Bank. Afterwards, as vacancies took place in the ordinary way, more and more of the Colonial Bank clerks were taken-into our employment—some of them at reduced salaries. But I think they nearly all have been absorbed now —those that are likely to be. 117. In the proposal you laid before the parliamentary Committee of last year you stated that a very considerable saving would take place in the cost of administration of the bank, amounting to about £15,000 ?—That is so. 118. Will the absorption of nearly the whole of the staff of officers of the Colonial Bank lead to such a saving ?—Yes, because in a large staff, consisting of about six hundred persons, there is always a yearly exodus. In the last twelve months a great many clerks left the bank, owing partly to the boom in Auckland, and partly also to the very low pay bank-clerks got last year. 119. How many old managers have left the service of the Bank of New Zealand since 1895 ?—I can only think of three, and in each case they left to accept higher positions. I think that they were perfectly satisfied with their positions —excepting one —in the Bank of New Zealand, and that they only left because they got very much higher salaries than they did last year. 120. Do you consider that the managers and officers of the Colonial Bank were better qualified —that is, men of larger experience and ability—than the officers of the Bank of New Zealand ? — No, Ido not consider them so as a staff. Some were and some were not so well qualified. 121. I want you to look at the share-transfer list. Could any registration of shares take place without your sanction ? —No. 122. You have to sanction all transfers of shares ?—Yes. 123. You know that on the 21st January, 1896, Mr. B. Hallenstein transferred 100 shares? —Yes. 124. Mr. Hallenstein is a man of financial substance ?—Yes. 125. Do you think it a wise thing to transfer shares from a man of standing like Mr. Hallenstein to any other man, whoever he may be ? Who is Mr. Forbes ?—He was the bank's manager at Waimate. 126. He was a second-rate manager of the Bank of New Zealand ? —He was a manager of a second-rate branch. 127. Where is he now?—He has left the service now; he has retired now, I think, either from sickness or he was pensioned. 128. Has he paid the calls ?—I cannot say whether he has paid the last call made in June. He had paid the calls when the transfer took place, because there is a rule that shares cannot be transferred until the calls are paid. 129. What is the liability on those shares ?—About £6. 130. When this transfer took place there was £6 13s. 4d. on each share?— Yes. 131. And do you consider it was in the interests of the bank to transfer shares from Mr. Hallenstein to the manager of a second-rate branch in the Bank of New Zealand whose whereabouts you do not know ? —We knew then. Speaking from memory, I think Mr. Hallenstein had got the promise of the bank that these shares would be transferred. 132. Why should the bank promise Mr. Hallenstein that he should transfer shares ?—They considered Mr. Forbes was perfectly good, and, on Mr. Hallenstein writing to know if the shares could be transferred, the bank replied that they could. 133. The deed of transfer was dated the 18th October, 1894, and it was registered on the 21st January, 1896 ? —Yes ; Mr. Hallenstein, I think, was promised that, on the calls being paid, the shares could be transferred to Mr. Forbes. That was some time after October, 1894. 134. That is, he was promised that if he paid the first call on the £500,000 you would transfer the shares, and relieve him of any further liability ? —No, I have not said so. He was promised that when the call was paid—we could not transfer shares while the call was in abeyance. He was
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told that; I think Mr. Forbes was ill at the time. I think Mr. Forbes paid the call, to the best of my recollection, and when he did so the promise of the bank was given. The bank had written a letter to Mr. Hallenstein from Dunedin, saying that on the calls being paid the shares would be transferred, and the bank considered itself honourably bound by the promise made. 135. Will you produce certified copies of the letters to the Committee, so that they can judge whether it is a bond fide transfer ? —I will endeavour to get that letter. 136. You know the amount appearing to have been paid to Mr. Hallenstein—£B 15s. for the 100 shares?— Yes, probably. I do not know that it is correct. I see it here. Probably it is correct. 137. Do you consider it was a proper transaction for you to sanction as President of the bank, and supposed to safeguard as far as possible the interests of the colony ?—Under the circumstances, we all thought so. There was no dissent recorded at the board. 138. Do you not think it was a proper thing on which to exercise your veto and bring it under the notice of the Colonial Treasurer ? —No, I do not. 139. Not seeing that the colony is interested in the uncalled capital of the bank?—No ; because I have not ascertained that Mr. Forbes is not good for the amount. 140. Is he equal to Mr. Hallenstein in standing?—No, he is not. 141. He is a pensioner of the Bank of New Zealand at the present time?-—Yes; but he has some private means. 142. Do you know that he has private means?—l did at the time. His circumstances were brought before us. 143. Can you give us the proof ?—I am not going to produce it. 144. Here is a liability of half a million on the State, and we want to see whether these shares are not transferred to men of straw ?—Proof was given to me at the time that Mr. Forbes was able to pay the calls. A letter had been sent to Mr. Hallenstein promising that the transfer would be made on the calls being met, and all the directors felt with myself that we were honourably bound to carry out the agreement. - 145. By whose instructions was that letter sent to Mr. Hallenstein?—That I cannot tell you just now. I think it was sent from a branch manager to him. 146. The Chairman.] Do you know if there was any instruction from a higher officer?—l do not know that. 147. Mr. Maslin.] A branch manager would not send a letter of such importance without instruction. If he did it would not be binding?— This was before the Act of 1895 was passed. The Act says, " Notwithstanding anything contained in any Act dealing with any bank or any deed of settlement of another bank, the directors of any bank may decline to register any transfer of shares upon which there is any liability to be met to any shareholder or to any person of whose responsibility they may not be satisfied." It was not a question of whether Mr. Hallenstein was as rich a man as Mr. Forbes, but whether the board of directors was satisfied as to Mr. Forbes's responsibility. They were satisfied. 148. You were perfectly satisfied to take Mr. Forbes in lieu of Mr. Hallenstein ?—I was perfectly satisfied to take Mr. Forbes's responsibility, as the others were. 149. Can you tell us whether any transfer of shares had been entered into by any director of the Bank of New Zealand ?—Most of those shares at that time had been handed in for transfer before the Act was passed. 150. Not the Act of 1894 ?—Yes, before the Act of 1894. 151. You are wrong.—l am not wrong. I know what lam talking about. If you look a little further down you will see a lot of transfers dated 1893, and we were advised by our solicitor that if they had been handed in before the Act passed they had to be transferred. We could not refuse. 152. Starting on page Bof the printed list, can you show me any date of a deed in 1893? Are they not all 1894 ? —Every one, as far as I can see, was before the date of the Act. 153. Take page 10. You find a number there, some on the very day when the Act passed, and some subsequent to it ?—Very few subsequent. I do not see more than three or four out of what were passed. 154. Take page 11. Most of them are subsequent to the passing of the Act, because they are July, August, and September, and some are on the day the Act was passed ? —Yes, I see that. I think there were two Acts dealing with the subject. 155. Look on page 12. There are over thirty subsequent to the passing of the Guarantee Act ?—They are all good marks, and in some cases very much better than those persons selling them. 156. On the 28th December, 1894, there is a deed for the transfer a hundred shares from John Murray to William Scott Wilson for 10s. ?—Yes. 157. These were registered on the 16th January, 1895. Which John Murray was it?— Assuming it was John Murray, formerly manager of the Bank of New Zealand, I think the transferee is five or six times wealthier than Mr. Murray is. This William Scott Wilson is one of the wealthiest men in Auckland. 158. You can see without going through this list that there is a very considerable number of shares that were taken over subsequent to the passing of the Act, and that the registration has taken place in 1895 and 1896. Who is Sir James Clark Lawrence, on pages 15 and 16? —Mr. Cooper informs me that he believes him to be an English Judge. 159. Have you any knowledge of who he is ? —I had knowledge when I passed this transfer. 160. And you satisfied yourself that he was a man of sufficient substance to meet the calls on, I think, three or four hundred shares ?—We would have satisfied ourselves before the transfer. 161. Did you satisfy yourself in the same manner as in the case of Mr. Forbes?—There may
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be instances where the shares are transferred from persons who are practically very poor and unable to pay the calls. In such cases we should be satisfied if we passed them on to people who were considered better able to pay the calls. 162. I notice, if you look on page 16, there is a list to T. M. Cheeseman, who transfers four shares to Sir James Clark Lawrence for practically nothing ?—I notice that. 163. Do you notice a little further down that the same person buys thirty-three shares at Is. each ?—Yes; but the date of that transfer is prior to the other. 164. The date of registration is the same ? —Yes. 165. And they are bought subsequent to the Act ? —Yes ; but the date of the transfer accounts for the difference in the price—the date of the contract between the two parties. 166. Does it not strike you as strange ?—Not seeing that the buying of the shares was three months previously. 167. Do you consider the share-list now is as strong in every respect as it was when the legislation was passed, or before any transfers took place ? —Yes; with the exception of those cases only where shareholders have been depleted of their funds by having calls to pay. 168. The Chairman.] With reference to this transfer of shares, I will ask you to be good enough to produce a statement showing,—(l) The names of all persons who have become shareholders since the legislation of 1894 was passed, and who have failed to pay their calls; (2) showing separately the amount of the unpaid calls ; (3) the total amount unpaid; (4) the date of the contract for sale of shares and the date of transfer. Will it take long to prepare?—No ; I will let you have it to-morrow morning. I would like to say, with regard to this list, that if given as called for it might be misleading to the Committee, for this reason : that we were advised by our solicitor that in cases where a contract between the parties took place prior to the passing of the Act we had no right to refuse the transfers, and this would be a misleading return in that case. 169. Mr. Tanner.] If you turn to page 13 of the list, about the eighth or tenth line down, you will see the names of Mr. Studholme and Mrs. Moorhouse transferring shares for about 2Jd. each. The whole of the shares, 120 in number, were transferred for 255. ?—Yes. 170. Do. you consider that the Mr. Studholme and Mrs. Moorhouse are in the class of people whom you think too poor and unable to pay the calls ? —I should not like to say that they are too poor and unable to pay, but the transferee is better able to pay. 171. You are satisfied that you have a better holder of the shares in Mrs. Rhodes ?—Yes. 172. Do you think these shares were transferred to avoid, any further liability? —I cannot say for what reasons they were transferred ; but of course we were satisfied to accept the transferee. 173. Are you aware that Mrs. Rhodes has again transferred those shares?—l may say that Mr. Daniel Haynes, to whom she has transferred shares, is one of the richest men in Dunedin, and is well known to be a very wealthy man. 174. You are satisfied that the status of the holder of those shares has been improved ?— Quite. 175. Down further you find that James Bremner has transferred thirty-five shares to Thomas Morris for £109 7s. 6d. ?—I have no knowledge at the moment of those persons, but lam confident that we were satisfied of Mr. Morris's standing. 176. At the time the shares were transferred to him?— Yes. You will observe the contract for these was dated before the passing of the Act. 177. Five days before, was it not?— Yes. 178. Is it not singular that a large number of contracts for the transfer of shares are dated immediately before the passing of that Act ? —Well, we could not help that; if the parties chose to be dishonest we could not help it. 179. Hon. Mr. Seddon.] If they presented the document a few days before the passing of the Act you were bound to transfer ?—Yes; so we were advised. 180. Mr. Tanner.] Are you prepared to tell the Committee that all these applications for the transfer of shares came into the bank immediately they were concluded ?—Not for a long time afterwards, some of them. 181. Will you say that took place with regard to a large number of applications that were put in shortly after the passing of this Act ?—I would not like to say that. 182. It is apparent from the return that a large number were put in shortly afterwards?— Not nearly so many as used to be passed through the bank. 183. From the middle of page 10 and down the whole of page 11 the whole of the deeds of registration are dated within a couple of months—the bulk of them in the month of July —and we passed the Act on the 30th June ?—I think that the changing of the head office may have had something to do with this ; but it did not strike us that an unusual number of transfers were being put in. These were all registered before I was President —those on pages 10 and 11. 184. I am not asking you with regard to your own conduct, but as regards the directorate as a whole. The transfer of these shares was sanctioned immediately after we passed the Act. Including the period from the middle of July, in the middle of page 10, and the whole of page 11, and you will find that, subsequently to the passing of the Act, I shall not be wrong in saying a thousand shares were transferred, and many of them for no consideration ? —-I notice the fact, but I would like to say that the transactions in the share register of the Bank of New Zealand were always numerous. 185. Particularly numerous at that particular time?—l do not think so. If you look into times past —January, February, and April, 1894, you will find they were the same. 186. Then to page 11, and I call attention to particular names. Look half-way down and you will find the name of W. P. Reeves; follow the date and you will find that on the 12th July, after the passing of the Act, an arrangement was made to transfer fifty shares to Francis Hull for £72 10s. Would you not consider that a genuine sale, differing altogether from the cases just
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cited ?—I think it would be a very easy thing to be misled by these simple entries, for"this reason : Very often a man says to a broker, "I should like to sell so-and-so shares"; and it may be months afterwards that the broker says, " I have sold those shares." I have had shares for months and months in the hands of a broker, and I think that may have taken place here. 187. Would you not consider the case of Mr. Reeves an actual and bona fide sale? —I am satisfied that that is a bond fide sale. 188. Are you satisfied with the position of Mr. Hull?—I think he is as wealthy as Mr. Reeves. 189. Go on a line or two and you will find twelve shares transferred by L. Harper and E. C. Latter to E. C. Latter and R. H. Rhodes for 10s. ? —Yes. 190. What explains the disparity in price between those I have indicated and this case ?—I should think the transfer is to the Rhodes Trustees. It is a customary thing, when shares are not transferred for a valuable consideration between the parties, to put down 10s. in order to define the stamp duty on the transfer. 191. You have no other explanation than that for the large number of transfers that were sold at these small figures ? —No ; I have no other. I might point to one on page 11: Mrs. Mary Kennedy transfers her shares to Mr. Martin Kennedy for Is. This is the same sort of thing. 192. You are satisfied you have made a good exchange in those transfers ?—I was not President then, but I am satisfied that in any shares we transferred we were very careful to see that we did our duty. 193. Have you ever refused to transfer any? —Yes. 194. Any large number?—l think we have refused a good many. 195. Can you state the proportion of the number you refused to transfer and the number you have sanctioned ?—I do not think we have declined so many as we have sanctioned, but we have certainly declined a good many. 196. Does it not suggest itself to you as somewhat extraordinary that you are not able to produce in writing any of the proposals which passed between the Colonial Bank directors and the New Zealand Bank directors before the purchase took place ? —Those memos, were all destroyed. We do not keep those things. 197. You do not generally trouble yourselves about matters that involve two millions of money ? —What is the good of keeping such papers as those ? 198. Would they not have an historical value ?—We have the agreement. We do not keep notes or such papers. 199. You are able to giye a complete list of the furniture taken from the Colonial Bank, even down to the coal-scuttles and brushes ? —All the particulars were carefully kept by the departmental officers. 200. Why were these not kept by the departmental officers ?—Because they did not concern the departmental officers. They were thrown into the fire. 201. But would you not preserve them, as you have taken a leading part in the amalgamation? —No, I did not preserve them; I should have been preserving papers all my life if I always preserved things like those. 202. You have alluded, in parliamentary paper 8.-26, to a paper dated 11th September, 1894 ? —I have. 203. May I ask whether you made the directors of the Bank of New Zealand acquainted with the contents of this private agreement ?—I was not in the Bank of New Zealand at that time. I think there were no directors in the colony then; but I remember talking to Mr. Murray's nominees, who were going to stand for election, about the matter. 204. Will you again recall the date of your appointment as President of the Bank of New Zealand ?—The 12th October, 1894. 205. And this private arrangement was in existence then, was it not ? —No ; it had been refused by the House prior to that time. 206. On the 11th September it is mentioned as being in existence ?—But only as a part of that other arrangement which is mentioned in the parliamentary paper. 207. When did you first become acquainted with the details of that private arrangement ? You joined the bank a few days afterwards? —-I helped to make that arrangement with Mr. Murray. 208. Did you make the other directors of the Bank of New Zealand cognisant of the fact ?—• There were no directors of the Bank of New Zealand at that time in the colony. 209. Did you at any early opportunity make the Government cognisant of the promise which had been held out to Mr. Mackenzie of that appointment ?— 1 might have, but I do not remember specially doing that. 210. Did anything occur last session to recall it to your mind ? —I think it is probable the Government knew of the private arrangement, but I could not say that they did. 211. If they knew of the private arrangement, would they be likely to deny in the House last session that they had any intention whatever of appointing Mr. Mackenzie Manager of the Bank of New Zealand?—No ; they would not be likely. 212. Is it fair to put the Government in that position?—l do not know. I did not approach the Government with regard to that. Mr. McLean told me to enter into negotiations with Mr. Murray, which were supervised by himself. Mr. McLean then took the principal part, and anything that was done officially was done by Mr. McLean and Mr. Murray. They wrote several letters to the Government, which, I believe, were printed, and it may be seen by those whether this was done or not. 213. Did you enter into any private arrangements between Mr. Murray and yourself with regard to Mr. Mackenzie ?—No. 214. Is it fair, then, on your part, or on Mr. Murray's part, that this should be kept back from
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the knowledge of the Government, and that the Government should be allowed to deny last session in the House that they had any intention of appointing Mr. Mackenzie, and afterwards force their hands in the matter of the appointment ? —I have never considered that question, and I should like to consider it very carefully before making an answer. So far as I was concerned, I had absolutely no duty to the Government whatever. My duties were to the chairman of the bank in which I was employed, who employed me in those negotiations. What Mr. McLean's and Mr. Murray's views were by which they were actuated I really could not tell you. 215. Is it the ordinary way among bank directors to conclude arrangements which may likely affect other parties and put those parties in a position which is essentially false before effecting it ? —It is not unusual for directors to enter into arrangements affecting other parties and never to tell the other parties about them. 216. You will give an answer on this subject later on ?—My answer is that I was under no obligation to tell the Government anything about what I was employed to do by the Colonial Bank. 217. Will you tell the Committee why those who entered into these negotiations did not inform the Government with regard to this agreement made between three or four of you ?—I had no official instructions about this matter. I was instructed by Mr. McLean, and I had nothing to do with informing the Government. If any one had to do that it was Mr. McLean. He wrote a letter to the Government, placing the agreement in their hands. 218. Do you mean to say that the agreement was in the Government's hands last year ? Has it ever been communicated to them? —I do not know ; I had nothing to do with the Government. Mr. McLean conducted that matter. 219. Was Mr. McLean ever appointed in any official capacity to negotiate with the Government in this respect ?—Mr. McLean was chairman of the Colonial Bank. I presume he was acting according to the wishes of his board; but Ido not know of any other special appointment, or that any was necessary. 220. Have you any knowledge of a copy of this private agreement ever reaching the board of directors of the Bank of New Zealand ?—I have no recollection of anything definite, but I should say that I am convinced it must have reached them, because the interests of the shareholders of the Colonial Bank were to be put into the amalgamated concern—that is, they were to have shares of a certain nature issued to them in return for their own shares in the Colonial Bank. That being the case, it would only be likely that the directors of the Colonial Bank should know under whose hands the management of the amalgamated concern should be placed. 221. That answer is entirely wide of the question I put. The question I put was this : Have you any knowledge that a copy of this private agreement reached the board of directors of the Bank of New Zealand ? —I thought you said the Colonial Bank. Yes, I have knowledge of this. I remember that Mr. Booth, who was then staying at the Wellington Club, and was nominated by Mr. Murray as a director of the Bank of New Zealand, told me that Mr. Murray had told him of this arrangement. He was not a director then, because there were no directors at that time in New Zealand, as I have told you. 222. You are satisfied that the directors, or any one of them, have not ever communicated the nature of this private agreement to the Government ?—I do not know that. 223. You have no knowledge ?—No. 224. You were personally aware of it ? —I knew of it. 225. And were aware of it during the whole time the legislation was going on during the session of 1895 ? —Yes. But that agreement itself was not then in force, because it alluded to a former amalgamation which had not come off. 226. But you appear to have considered yourself bound by the arrangements made in the agreement, as you have carried them out in the case of Mr. Mackenzie ?—I explained that merely to show that from that time it was intended to carry them out, and that Mr. Mackenzie expected to get an equal appointment to what he held before. 227. You say that was the first occasion when the agreement became invalid? —Yes. 228. But nevertheless the opportunity came round to place that arrangement in force, as contained in the agreement ?—No ; the arrangements were different from those which were afterwards in force. 229. Was a second agreement drawn up ? —No. 230. Is the first agreement in existence, or did it perish in the burn-up of all this rubbish?—l have been asked to get it, and shall endeavour to do so. 231. Can you say who it was that asked Mr. Mackenzie when it was necessary to make that appointment ?■—We had it in mind all the time. 232. Mr. Booth was acquainted with it ?—Yes ; I heard him afterwards refer to it in the Club. 233. That was previously?—l suppose it was about July, or some time about then. 234. Hon. Major Steward.] Do you think the amalgamation of the two banks increased the earning-power of the Bank of New Zealand ?•—Yes, decidedly the purchase did. I have been asked the same question by the Upper House Committee, and I have just got from the accountant of the bank a letter here on the subject. I asked the accountant to make out in his own way a statement for the Upper House Committee, and he states here that he has taken everything that he can think of into account, and on the safe side he makes it out to be £26,000. I can give you a copy of this. 235. How many years have you been connected with banking institutions? —Thirty-two years. 236. What capacities have you filled ?-—I have filled them all, from junior clerk to President. 237. In connection with this business, what do you consider should be the proportion of expense of management to the earning-power of the institution ; what percentage should it be?— I should not like to answer that question right off. I would like time to consider it.
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238. But, speaking as a professional who thoroughly understands it, or is supposed to understand it, you ought to know what the amount per cent, of the cost of management is as compared with the gross earnings? -It varies very much. I could not exactly say that. 239. You could not say exactly what it ought to be ?—lt would be very much more in New Zealand than it would be, probably, in Scotland. 240. But, supposing that the area of the business was fixed, and that you had an opportunity of adding another area of business to it, the proportion of expenses would be less? —Yes. 241. And that is the reason you recommended the purchase of the Colonial Bank, is it ?—Yes, mostly. 242. Did you ever assist in negotiations with the National Bank?— Not officially; but I have spoken to persons :n connection with the National Bank on the. subject. 243. You know that it took place?—l may say that I know that negotiations were pending previous to my becoming President of the Bank of New Zealand. 244. When you became President of the Bank of New Zealand, you did your best to get the Colonial Bank connected with the present bank?— Yes, I did. 245. Was the earning-power of the Bank of New Zealand increased by the amalgamation?— By the purchase, I think it was. 246. You say so as an expert ?—Yes. 247. Is the expense of management in proportion to the volume of business ?—Yes, I think so. 248. Therefore you thought you ought to get an increased volume to reduce relatively the cost of management ?—Yes. 249. What was the percentage of the cost of management of the Bank of New Zealand before the amalgamation took place—the percentage of gross earnings ?—I think, during the transition period in which the Bank of New Zealand has been since I joined, it has been somewhat irregular. I could get the information easily enough for each half-year.
Friday, 21st August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] Have you the information that Mr. Hutchison asked for yesterday?— Mr. Hutchison asked for the number of shares I held in the Estates Company. I hand this paper in showing that each of the three New Zealand directors of the Estates Company hold fifty preferential shares. 2. There is something else you undertook to provide with reference to a private agreement ? —I could not find that, and I am under the impression that I must have handed that along with the other agreement to Mr. McLean at the time. 3. You have looked for it, I suppose ?—Yes. 4. Do you think you will not be able to find that?—No, I could not find it. But I think it is not likely that I should have retained it in my possession, because it was a document belonging to tho Colonial Bank, and I think I should have handed it to Mr. McLean. 5. Will you make inquiry and ascertain if that can be found ?—I will ask Mr. McLean. I was asked for the accountant's estimate of the profits made by the Bank of New Zealand from the acquisition of the Colonial Bank's business. I now hand that in. That is a copy of what is being laid before the Legislative Committee. Then, there are two statements with regard to the transfer of shares. One is a list of persons who have become shareholders in the Bank of New Zealand since the 30th June, 1894, and who have not paid calls. The other is a list of the transfers of shares of the Bank of New Zealand, of which calls due were unpaid, showing the amount of such overdue calls at that date. 6. Does this cover completely the request made to you yesterday ?—The dates of the instruments of transfer can be supplied. It covers everything else. There was a letter wanted referring to the transfers of Mr. Hallenstein. I have not been able to find that, but am looking for it. 7. Major Steward.] What was the percentage of cost of management of the Bank of New Zealand prior to the amalgamation, in order that we may see whether from that point of view the amalgamation was successful or desirable. Have you any memorandum to that effect ? —I have got a memorandum made up by the accountant; but before putting it in I should like to say that, owing to the transition state in which the bank has been for the last two or three years, it might be misleading to take this as correct as a test for an ordinary period. The percentage for the halfyear ending 30th September, 1895, was 73-54 per cent., and on 31st March, 1896, for the half-year it was 58-2; that is, the percentage of the cost of management to the gross earnings had fallen, but I am not prepared to say that the fall will be sustained. 8. That was the consequence of the amalgamation ?—I think to a certain extent it was. 9. When you recommended the purchase of the Colonial Bank, presumably you wished to increase the earning-power of the Bank of New Zealand by having a larger area with a less average cost of administration ?—Yes. 10. You cannot say that it has actually resulted ?—lt has to a certain extent. 11. You had pretty intimate relations with Mr. Mackenzie at the time you were in the Colonial Bank ?—Yes. 12. Did you recommend his appointment as General Manager to the Bank of New Zealand ?— Yes. 13. Why did you do so—was it because you thought he was the most capable man ?—lt was. 14. Was there any question of private friendship or any other consideration involved ?—I knew the gentleman very well, and I knew there would be no difficulty in working with him, and that he could fill the position very well. 15. Then, you thought him a thoroughly competent man ?— Yes. 17—1.6.
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16. Have you had any reason to doubt that since he has filled the position ?—Not any. I should like to say that no complaint has ever been made about Mr. Mackenzie by any one of the directors in the bank. 17. Did any officers of the Bank of New Zealand leave its service in consequence of that appointment?— Not to my knowledge. 18. Was there any friction at Invercargill in connection with some officers with regard to it ?—- Ido not know that there was any friction in connection with that. I believe that Mr. Graves, who was then at Invercargill, expected to get the management there, but an officer was sent there who, I fancy, had seen nearly double the service in the bank that Mr. Graves had—Mr. Chisolm, from Timaru. They were both Bank of New Zealand officers. 19. Was Mr. Graves's resignation the consequence of his disapproval of any account or transaction going on with the bank ? —I have not heard so. 20. In relation to somebody's account in the bank ? —Not that I know of. He gave no such reason for his resignation. 21. Before the legislation took place in this House in connection with the bank, had you any interviews with the gentlemen who were directors of the Colonial Bank ? —I have no recollection of any interviews. I might have talked so far as I could, without imparting any knowledge of the bank, in a general way with Mr. McLean. 22. Were you induced by any representations made to take the action you did?— No. 23. If you would just look at the Bank of New Zealand balance-sheet of the 31st March last, I would like to ask one or two questions about it. You will find on the liability side of the account, " Reserve fund, £23,418," notes in circulation, bills payable in circulation, and deposits. Then, you come to " Other liabilities, £608,912." Do you not think that is rather a loose way of putting down such large liabilities in the balance-sheet ? —No, sir. In the year previous the deposits and liabilities were all put in one amount, but some people had made observations about it, and we thought there was no harm in separating them; but we should not like to go into particulars, because it would disclose our business to other banks. 24. Then that is the reason why they are not disclosed ? —Yes. I mentioned that that includes interest on fixed deposits, but not paid. That is to say, if nine months' interest had run it was included in the amount. Also the rebate on bills discounted which did not run off, and money consequently not yet earned. 25. Would the details be available to the shareholders? —No. 26. Would it not be possible, under a general head of that sort, to include liabilities that ought not to have occurred ?—lt would not be possible. It would have to pass a great many officers of the bank and the Auditor. 27. You gave some evidence with regard to the lump sum on the other side—£37B,ooo —for " other securities " ?—Yes. 28. You could not give us details of that ?—No ; but I can assure you that all those securities could have been realised on higher prices than they appear here. 29. Hon. Mr. McKenzie.] There is a statement supplied to the Committee, called Exhibit No. 2, showing " Amount paid for legal expenses, bill drafting, &c, in connection with the banking legislation prior to and since 1894, showing names of firms or companies who received same." Have you got that return ?—Yes. 30. I would like to get some information with regard to what the amounts are made up of. Here is the firm of Buddie, Button, and Co., and I find they are down here for £105 and £242 ss. in connection with the Bank of New Zealand and Banking Act and the banking legislation, Colonial Bank contract. What are these large sums paid for ?—The first sum was for perusing and giving an opinion on an Act drawn by Mr. Hosking, which became law in 1895, with some alterations. 31. Do you pay these men by the lump sum, by the day, or for their opinion, or how ?—Sometimes they put in a lump sum for a piece of work like that—a hundred guineas. The second is for assisting and drawing up the agreement between the Bank of New Zealand and the Colonial Bank. 32. That is that £242 ss. ?—Yes. 33. Then, I see you have paid Messrs. Kenyon and Hosking £632 for the same sort of work ?— Yes. Mr. Hosking had spent about five or six weeks up here to, the neglect of his own business, and worked day and night. 34. You paid Mr. Hosking more than £600, and then Buddie, Button, and Co. £105 to look over his work?— That is so. 35. Have you any way of checking these amounts, or do you give them whatever they want ? -—We do not give them whatever they want. Mr. Hosking's was much the larger bill of the two, and we did not consider it too much. 36. If you were employing these men for your own business, would you pay the same amount of money ?—I hope I shall never be called upon to pay such an amount of law-costs. 37. You do not think you would pay that money if the Bank of New Zealand was your own?— I do not think I could get the work done cheaper. 38. Was all this money for work in connection with the Bank of New Zealand at the time ?— It was in connection with the legislation only. 39. Do you not pay any sums for expenses at law ?—There were other legal expenses at that time. 40. Have you any objection to supply them to the Committee ?—Well, they related to private business. Messrs. Buckley, Stafford, and Treadwell were lawyers for the Bank of New Zealand in Wellington, and they were carrying on cases relating to the suing of debtors and matters of that kind. I think they might trench on private business.
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41. Were any members of the House employed by the bank or Estates Company in defending actions ?—Yes, I think by the Estates Company. 42. Have you any objection to name any member of the House receiving fees for that ?—I should like to get the gentleman's consent, but I do not think there should be any objection. 43. Will you name him ?—I think that Mr. Bell, of Bell, Gully, and Izard, was employed by the Estates Company, but he was employed many years before. 44. When I was in Gisborne as a Minister of the Crown a number of Natives met me there and waited upon me as a deputation, and the burden of their complaint was that the Estates Company had employed two Wellington lawyers, and sent them up to defend some lawsuit at Gisborne, at very heavy expense to the Natives, which you charge to their account in an adjustment of accounts with the Natives. They looked upon it as a robbery, and said that those two legal gentlemen simply walked up and down the beach for a few days, and attended the Court for about two hours, and that you have charged them about £2,000 for that ?—That has not happened since I had anything to do with the Estates Company. lam aware that large fees have been paid on account of what we called the East Coast Lands Settlement Account; but I know that some very heavy legal work had to be done about it, and it would be unreasonable that the Estates Company should have to pay those fees, and it was just and proper that the land should bear the cost. 45. Did you not think that it would be advisable that you, acting in the capacity that you did, should see that the Natives were not robbed ?—I was not there at the time. Anything that Mr. Bell has done in connection with the East Coast Lands Settlement was earned. 46. Was there any other person except Mr. Bell employed as solicitor ?—No ; not in my time. 47. Have you any objection to get a return showing the legal expenses charged to the Natives to whom the money was paid, names of the lawyers engaged, and the amounts of money received by each, so far as the bank and the Estates Company are concerned ? —I am advised that there will be no objection to that. 48. And the time they were employed ?—I shall get it if possible, but I think it is a very difficult thing. 49. The Chairman.] Will you get that by the next meeting, Mr. Watson ?—I shall try to do so. 50.' Hon. Mr. McKenzie.] When you became President of the bank did you consider it was your duty to inquire into the past policy of the bank which brought so much trouble upon it?—No; I did not devote much time to that. 51. Did you not think it was your duty to do so?—I had not much time, but I was picking it up as I went along. 52. When appointed President you knew what you were appointed for?— Yes. 53. You knew that the bank got into trouble, and that you were sent there to look after the interests of the colony?— Yes. 54. And do you not think it was your duty to look into the causes which led up to the trouble ? —Yes ; I saw enough to show me the causes which led up to the disaster. 55. Was not the principal cause of the bank getting into trouble the advancing of money on landed estates ? —I believe that was the principal cause. 56. Did you not learn out of experience in connection with the bank that, if they had sold those properties which fell into their hands at the market value, it would have been very much better for the bank ?—As a rule, I am of opinion that it would be far better for banks to sell properties when they fall into their hands ; but, not being aware of the particular circumstances of each case, I would not like to say definitely that it would have been better to sell such properties as, say, the Waikato estates, because, possibly, they could not have found purchasers at all. 57. Did they try ?—Yes, they were always for sale. 58. In your experience of banking now, could you not see that if they had sold these properties some years ago they were worth more money than when the banking legislation took place ?— Yes; I believe if they sold them gradually —they could not have sold them all at onee —it would have been better, but they were not then aware of the fact that properties fell in value since. 59. Should they not have sold them instead of putting them into the globo assets? They fell into their hands, not in six months but during a long period, and, if the policy of the bank had been to accumulate properties so that they had to be put into the globo assets of the bank, do you not think that was a bad policy ? —To begin with, I do not think it can be said that all these properties fell into the hands of the bank. Owing to the way the accounts of certain persons were carried on certain properties did fall into the hands of the bank and heavy loss resulted ; and when Judge Gillies, I think, moved for a committee to inquire into the affairs of the bank the position had become strained. But they could not have proceeded to realise on those properties then, as there were not sufficient purchasers in New Zealand to buy them. 60. I want to prevent any such properties from falling into such a position again. The estates in 1888 were taken over by the globo assets—at any rate, by the bank—and after that investigation by the shareholders' committee. Now, if the bank had been doing a legitimate business before, they would not have had all these estates on their hands?—lt is a very difficult thing to say that the bank were not doing legitimate business, because the question is, What is legitimate banking business? In the Australian Colonies banking business is very different from what it is in England, and all the banks lend money on large landed estates. What are called the Australian banks in this colony do that kind of business more than the ordinary trading business, and in Australia it is well known that the banks lend largely on squatters' properties. 61. Do you not think it is very dangerous business?—l think it is. 62. For instance, take even 1892, the value of station sheep at that time was 10s. to 12s. Was that not a good time to sell ?—I think about that time the bank did sell some large properties. 63. Where ?—There was Riverslea, down near Timaru ; that was parted with at that time. 64. The following year, 1893, the value of sheep was only ss. ? —I know they went down.
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65. Does that not point out to you the dangerous character of business of that sort ?—Yes; I do not think that it is good banking business. 66. You have a large number of estates outside what the Realisation Board got. When did you get those estates ?—There are very few. We got them out of some of the past business of the bank. They were none of our making. They belonged to accounts for which provision was made in that £576,000. 67. Have you tried to sell any of these estates ? —We have tried. 68. Have you managed to sell any?— Yes; I think some. 69. Where? —I think in the Gisborne district. 70. And you are carrying on some of them yet? —Yes; we are. 71. Are you prepared to take market value for those estates? —We are prepared to take a value which will afford a fair return to the purchaser. 72. What do you consider a fair value for land in Gisborne?—The flat land in Gisborne, I understand, is valued for growing ryegrass-seed as high as £22 an acre, some of it. 73. Would you sell any estates at that price ?—-I think we are in treaty for some at about that figure. 74. Are you prepared 4o take that ?■—Yes ; I think so. 75. Were you not offered £18 an acre for agricultural land at Gisborne, and refused it?—l think so. 76. Do you not think that it is a fair value for agricultural land in the Gisborne district ?—I think we can get more than that. 77. You admit that you refused £18 an acre for agricultural land in the Gisborne district?—l have not got the figures before me, but I have no doubt that is correct. 78. You think you will do better?— Yes; I think we have been offered more since. 79. This offer you got was cash ?—lt was either cash or as good as cash. 80. And the other offer you got, was that cash, or partly cash and partly mortgage? —I cannot be quite certain about that, but we looked upon it as quite good for the money. 81. You have not offered the same land openly to the public ?—Yes, through our agent there. 82. Have you advertised it?—l am not certain about that. 83. Is it not a fact that you have not sold that property? —I am not sure about that. I know there were some negotiations pending not more than ten days ago about it. 84. Do you not consider it to be the proper policy of the bank to get rid of those properties? —Certainly. 85. And are you prepared to take market value for them ?—We are prepared to take a fair value for them. Ido not say that we are prepared to put them up to auction and take what they will fetch. 86. Is it not a fact that your co-directors have a very high opinion of land in the North Island ? —I should not like to say that, but I should think they know more about the values of land in the Hawke's Bay, Wairarapa, and Manawatu districts than they know about land in the other parts of the colony. 87. Have not certain of your co-directors refused offers for land in the Wellington District, and sneered at them because they were not high enough, in their opinion ? —Well, I do not know about sneering at them, but I know that we have refused offers for land in the district near Palmerston North and up that way. 88. You refused to take cash for them?— Yes. 89. If this sort of thing is to go on, what do you, as an expert in banking, think the end of it will be ?—Well, the freehold properties have been turned over to the Assets Realisation Board, and they are no longer in our hands to deal with. We did what was thought to be the best thing at the time, and exercised our judgment to the best of our discretion. 90. But you told me that you had estates in the bank independent of those ? —Very few. 91. But if you and your co-directors are going to carry on the same policy in the future, what is to be the end of it ?—We are prepared to sell at once if we can get suitable prices ; but we are not advancing now on large estates. 92. But you do hold estates against advances. I know that, not from information got from the directors, but from the people who have got the advances themselves ?—There may be some, but not to a very large extent. That business is not done now to a very large extent by the Bank of New Zealand. 93. Your policy in the future would be to avoid that sort of thing ?—Yes, or do it within very safe limits. 94. What power do you give to your local managers now? —I should very much prefer that you would not press that question. 95. I think it is a very important matter for the people of this colony to know. I want to know, and ask you straight, whether the banking management is carried on in Wellington, or whether you take the advice of your branch managers ?—We do take the advice of the managers, and, if anything ofimportance occurs, we take the advice of the inspectors on that. Then, we get knowledge from the records. 96. What knowledge have you got of South Island clients ?—I think Mr. Martin Kennedy and Mr. Macarthy know the West Coast very well. 97. But the West Coast is not the whole of the Island ? —I do not know that the directors know much about the South Island themselves. 98. It seems to me that they take upon themselves to be judges as to the chief business that comes before them ?—They also take the opinions of the district inspectors and the managers. 99. Is it not a fact that you have confined some of your managers within such limits that they cannot advance a ten-pound note without referring to Wellington ?—No. Certain accounts are limited to certain amounts, but no manager's discretion is confined to such an amount.
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100. What is the amount ?—I would rather you did not press that. Customers of a branch would say to the manager, " You are confined to that amount, and I will not keep my account with you." 101. The people themselves, your own clients, go about saying so?— That may be so, but they are often wrong; and if I said it the emphasis would be very much stronger than anything they can say. 102. When a branch manager sends up a proposal to do business with you, do you take his recommendation ? —Generally so. I may say this: that I myself have been all over New Zealand about ten times, and we have got gentlemen in the office here who also know about the districts and the people, and we get the district inspector's ideas with regard to important advances. We have also got, where securities are offered for advances, the tax-value and insurances upon buildings, and there are various other methods of finding out, in order to satisfy ourselves regarding the goodness of each advance. 103. Is it not a fact that, at the present moment, Wellington is the favoured district for the bank to advance its money in ?—I should not like to say that. 104. Do you deny it?—l think the directors probably know more about this district than any other. 105. The directors, being all local men, they, of course, know the business-people and the properties, and consequently that is to the advantage of the people in the Wellington District as against people in the other parts of the colony ?—I should not like to go so far as that. 106. Would it not be detrimental to the Bank of New Zealand if that impression got amongst the people ?—I think it would be. 107. Are you aware that that impression is now prevailing amongst your clients ?—No, I am not aware of that. I have heard " the man in the street" say certain things, but as a rule I pay very little attention to " the man in the street." 108. Have any representations been made to you by clients to that effect ?—There may have been. 109. And do you not think that representations made by clients are very different to a statement made'by " the man in the street " ? —Well, discontented clients sometimes make representations that I should be unwilling to accept as altogether correct. 110. Is it not- a fact that you have lost some very profitable business in the South Island lately through the bank's actions ? —Yes, we have lost some business. 111. Profitable business, too? —Yes. 112. What was the cause of your losing that business?—l am afraid there was one important account lost through want of knowledge on the part of the directors as to the standing of the party. 113. As President of the bank, representing the Government and the colony, do you not think it was your duty to put your foot down on that occasion ?—I could not. It would have been a very difficult matter for me to have done that. 114. Do you not think it was your duty to report the matter to the Colonial Treasurer ? —No; I could not. I cannot report anything of a private nature. 115. What is the good of your being there as President if you are going to allow the interests of the-colony to be sacrificed without informing the Government?—l do not think it amounts to that. I think it is my duty to restrain the directors from making advances Ido not approve. 116. Do you not think that was a matter in which to exercise your veto, where they were losing profitable business to the bank?— No. I must allow the directors to have a voice in such matters. Ido not think it amounted to the calling-up of an advance. It was more in the way of making drastic inquiries which offended the customer. 117. But there was more than one?— Yes; there was more than one. It may be considered in this way : that the directors wished to do a safe business, and in taking every possible precaution to do that they offended the customers, but they had no intention of so offending them. 118. Were those accounts taken over from the Colonial Bank ?—Mostly, I think. 119. Were they in the "B " list or in the "A " list?—l am advised that I should not answer questions in connection with the lists. 120. You have admitted that these accounts were taken over from the Colonial Bank. Do you think the directors of the Bank of New Zealand should pay a large sum as good-will to get that business and then chuck it over in that way ?—I do not think it amounted to chucking over. 121. The fact of the matter is that you do not want to make a statement here that these directors are not fit for their business ?—I do not want to make a statement of that kind. 122. You want to shield them? —I do not want to blame them. 123. What is the class of business that is in good repute with your directors? Is it a fact that they think the brewing business is the principal business to advance on and protect ?—I do not think so at all. 124. Do they make any advances on churches?—l do not know of any advance on a church. 125. Is it the intention of the directors, since they saw the losses by losing accounts of that sort, to alter their policy ? —I do not know. I have never heard them express anything of that kind. 126. Did the local managers in the districts where these accounts were lost to the bank recommend that they should be retained ? —ln some cases. 127. And, notwithstanding the local managers' recommendations, the directors acted differently?— Yes ; but I cannot blame the directors for that, because it is frequently the case that local managers recommend business that the board does not pass. 128. Do you know that these accounts were taken up by another bank readily?—l know that some were. 129. And you yourself admit that they were good accounts, and that the managers also recommended them ? —I would not say that the managers recommended them in all cases.
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130. Were the inspectors asked to report on them? —Yes. 131. What was their recommendation?—ln some cases wealthy men were offended by having their business probed into too closely. The inspectors have, I think, been very strict in everything connected with the Colonial Bank business. 132. I suppose the inspectors you have now were the same gentlemen who were inspectors of the Bank of New Zealand previously ?—Some of them. The head inspectors, three in New Zealand and one in Australia, were all Bank of New Zealand officers. 133. And they had got a new-born zeal in looking after the interests of the bank?—l do not know that I could say they act any differently now to what they used to do. 134. Do you not think from the large amount of writings-off that you and Mr. Booth have admitted before this Committee to have taken place it shows that they had been a little lax in the past ? —I have all along stated that I attach no blame to any of the men now in the service. 135. You think that the service is now complete and perfect?—l am afraid there is nothing perfect in this world, but I think on the whole we have got a very good service. 135. Will you give to the Committee the amount of salary that is paid to each of the present directors ?—I can get it for you. 137. Will you get the exact amounts that have been paid since these directors came into office —what they received from the Assets Board and from the bank, and also the total amount of their travelling-expenses. Mr. Johnston and Mr. Booth are also directors of the Estates Board, and I suppose when they come to Wellington they come on business for one concern as well as the other, and I want to know what they are paid for expenses?— Yes, I will get a return of that, 137 a. Since you became President of the bank, have the salaries of the officers of the Bank of New Zealand been reduced? —Some have been reduced and some increased. 138. Did you not make an all-round reduction of 10 per cent. ?—Yes. 139. And sent a circular to that effect to every officer you had in the colony ?—No, sir. All the officers drawing £200 or over were reduced 10 per cent, for one year, from the Ist June, 1895, to Ist June, 1896. Then, those receiving between £200 and £400 have been reinstated since June, 1896, and the reduction applies now only to the other officers who were reduced; but there are several officers in the bank whose salaries are net. 140. Did that reduction apply to the inspectors, managers, and every one else?— Yes. 141. Did it apply to you?— Well, they could not have applied it to me, but Mr. Butt and I voluntarily gave up 10 per cent, on one year's salary. 142. Did it apply to the director's themselves?— Yes, I think so; but I shall be able to show you that in the statement. 143. Did the directors give up 10 per cent, on the amounts they were receiving from all their offices? —I am not very certain about that. 144. Will you put that in the statement?—l shall get a correct statement. 145. Are any of your directors, to your knowledge, occupying the position of director in any other company in Wellington?— Yes. 146. Which of them ?—Mr. Macarthy is chairman of the Wellington-Manawatu Railway Company, and he may be connected with other companies. Ido not know: 147- Is Mr. Johnston chairman of any company in Wellington?—l do not know. 148. And Mr. Booth ? —He is chairman of the Wellington Meat Export Company. 149. Does the Wellington Meat Export Company do business with the Bank of New Zealand ? —Yes. 150. You carry on their account ?—Yes. 151. Do you do any other business with the Wellington Meat Export Company ?—I am sorry I cannot answer about the business of private accounts. 152. You decline to answer?—l am very sorry that I must decline. 153. When being examined by Mr. Montgomery, I think the day before yesterday, he asked you a question as to how you fixed the values of the Estates Company in making up your yearly balance. I do not think you made it very clear as to how you did that. Have you thought the subject over since, and can you add anything to what you have told Mr. Montgomery. He asked you whether the stock was written down every year ? —I think I should now explain that better. The Act of 1894 provided that the shares of the Bank of New Zealand Estates Campany in the books of the Bank of New Zealand should be valued at par. As the Bank of New Zealand Estates Company belonged altogether to the Bank of New Zealand 154. That was for the purpose of appearing in your banking balance-sheets ?—Yes. As it belonged altogether to the Bank of New Zealand, we did not think it necessary to write down the values of the stock, more especially as by the time that we had digested the balance-sheet of the Bank of New Zealand Estates Company of the 31st March, 1895, it became apparent to us that we should have to approach the Government. We did not write up the value of the sheep. What happened was this: At the board meeting of the Bank of New Zealand Estates Company a minute was put before us for our decision as to writing down the value of the sheep. We did not write them down for the reasons I have stated. Afterwards — months afterwards; in fact, this year—we found that the book-keeper in the Estates Company had already written down these values, and thought, by our not confirming the minute, that they ought to be written up again, and wrote them up again ; but we did not know that that was done at all until quite recently. 155. How were you to arrive at the true valuation of the station unless you had the proper values ? —We thought the Act of 1894 allowed us to let things remain as they were. 156. Had you legal advice on that subject?—No; we did not think of taking legal advice then. I may say that we had no fund to write them off from. 157. Then, the value would, at March, 1895, show a bogus value?—l do not know that. It was the book-value we gave to the Committee last year.
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158. Was not the same value held in the books for these estates, stock, and everything from 1891 to 1895 ? —Practically, I think that was so : not stock ; I think that had been changed from time to time. I have heard since that it was a yearly custom to write down stock. In fact, the reports of these two auditors say so, but I did not go into the past book-keeping. 159. Have you any idea what the revenue from the estates in 1891 was ?—Not the slightest idea. 160. If I tell you it was £120,000 will you believe that ?—lf you tell me, I will believe it. 161. Have you any idea of what it was in 1894?— Yes, I have an idea. 162. Was it about £78,000? —I think it must be about that, because it was not sufficient to pay the interest on the debentures, which, I think, amounted to £80,000. 163. 'Then, in four years the revenue derived from the estates was £42,000 less than it was four years previously. Do you think it was a proper thing to keep up the value ? You say until 1894 you were not called upon to keep the actual book value according to Act ? —I was not connected with it then, and I really do not know what the directors had before them. I am aware that the values of things had fallen very much, and that is what makes me so very diffident in attaching blame to persons who had to deal with these things in those years. 164. The officers who were responsible are still in the bank?— No. The Bank of New Zealand Estates were worked quite independently of the Bank of New Zealand. I do not think that the inspectors or managers knew anything about that. 165. Was not Mr. Butt, the present Auditor of the Bank of New Zealand, in a position to know what the losses were in connection with the Estates Company?—l do not think so. He was the chief inspector of the Bank of New Zealand, and he was acting-general manager at one time. 166. Then, if the revenue from these estates in 1891 was £120,000, and only £78,000 in 1894, he surely would know that ? —Yes ; but he would no doubt consider, as many other bankers have considered, that the low values were only temporary ; in fact, they have proved temporary. The 1894 values have been considerably improved upon since. 167. Yes, that may be ; but that is not the question. The question is whether those officers did their duty in not reporting this to the directors, in order to prevent this thing going on year after year ? —I cannot say, as Ido not know what they reported to the directors. I should not think that Mr. Butt failed in making proper reports to his directors. 168. I notice in the statement put before us here in connection with the Estates Company that there is one estate especially where they lost £16. The estate was composed of 8,000 or 9,000 acres, fully stocked and well equipped with implements, &c, and at the end of the year there was a loss—without providing anything for interest or depreciation—in the working-expenses of that estate of about £16. Do you not think it was the duty of the officers who had charge of that account to look into the matter?—l should like to say here that these things were entirely due to the Estates Company. Now, Mr. Hanna is a very able and efficient officer for a bank, but he had no practical knowledge of estates or of their working at all. He was a man who would doubtless get on very well as a bank-manager and inspector. 169. But had you not station-managers to whom you were paying high salaries?— But Mr. Hanna was not capable of judging whether those managers were doing their duty. 170. But if I tell you that on the estates I have referred to your head managing-man lived himself, and it was under his immediate eye and control ?—That may be probable; I have no knowledge of it myself. We did not approve of the way in which the Estates Company was managed, and we made several alterations ; but I should like clearly and distinctly to absolve Mr. Hanna from any blame, so far as I am personally concerned, beyond the fact that I believe him to be a very efficient bank officer, but with not sufficient knowledge of estates. 171. But even an efficient bank officer, such as you say Mr. Hanna is, in a glaring case such as I have referred to, would it not immediately strike him that there was something wrong in connection with the management ? —I think I know the case you refer to, and I believe Mr. Hanna did recommend that a change should be effected there. 172. And who declined to carry out that recommendation?—He recommended us to effect a change, which we did. 173. What position did Mr. Murray hold in connection with the estates ?—He was at one time an attorney. 174. Was he not receiving a salary as one of the board from 1891 to 1894 ?—He was receiving a salary. 175. Would it not be Mr. Hanna's duty to tell him?—No doubt it would. 176. And did Mr. Hanna do that ? —-I do not know ; I was not there then. I should think it highly probable that Mr. Hanna gave Mr. Murray his ideas on the subject. 177. Did they have anything to do with the auditing of accounts of the Estates Company?—Yes ; I believe that two competent officials of the bank—accountants—audited the Estates Company accounts locally ; but there would be another auditor in London, where the head office was. 178. Had Mr. Butt anything to do with the auditing ? —I do not think so. 179. Was it necessary for the accounts of the estates to go before Mr. Butt at all?—I should not think so beyond this: that, from his high position in the bank, complete accounts or the balance-sheet for the year would no doubt engage his attention. 180. You know that there is a dispute at the present time between the Estates Company and the Assets Realisation Board as to the amount of debentures to be given by the Government for the Estates Company?—l am aware there is a difference. 181. And you are aware that Mr. Butt recommended the Government to pay something like £200,000 more than the officers who have been sent by the Government to inquire into the matter say they are entitled to ? —I am aware that the officers sent by the Government recommended that £200,000 less should be paid than Mr. Butt thought they were entitled to. Ido not think it
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amounted quite to that, because it was a question whether £80,000 should not be given in cash instead of debentures. 182. There is a difference of £120,000 independent of that ?—The difference would be about £120,000, I think. 183. In selling the estates to the colony and to the Realisation Board you calculated that amount of money would go to the Bank of New Zealand—that the debentures would be handed over to the Bank of New Zealand'as their property ? —Yes ; it would come to that on the liquidation of the Estates Company. 184. And, if the debentures are £120,000 short in the amount you calculated, how do you propose to make up that gap ?—I hope it will not be so, but in the event of it being ultimately decided to give us what I consider £120,000 less than the legislation provided for, then we should have no option but to make it up out of future profits instead of paying those profits to the Assets Board, because they cannot get it until it is actually made. 185. One account in dispute is £40,000, in connection with Matamata. How was it that the Estates Board gave £80,000 when it was only valued at £40,000? —I have got the correspondence about that matter. I should like to have time to go through it and see if it can be produced. It was not a clear bargain of giving more than what it was worth. It was done by the Bank of New Zealand directors before I took office—not the board here, but the previous board in London—and it was thought up to that time to be a good transaction for the bank. 186. Did you disclose that to the Committee last year in the investigation ? —lt was disclosed to the Committee of last year that this particular estate, of which particulars were given, was down in the books at a certain amount. 187. The transaction was not disclosed ?—No. I do not think it was asked about, as far as I remember at present. 188. And the directors of the bank might have been asked about other things—that they were giving far more for the property than its real value ?—But there was the settlement of other accounts involved. As a matter of fact, I think I may plainly state—l have been consulting with counsel to see whether it is private business, and he says it is not —that the purchase was made from a company, which company was indebted to the bank for a very large sum of money. The other creditors of that company, in payment of indebtedness to them, took for a portion of their indebtedness deferred shares in the reconstructed company. The bank did not take any deferred shares ;it got securities which were worth 20s. in the pound. In respect of the bargain which was made regarding Matamata and other properties, on the whole the bank directors thought they had made a very good bargain. 189. Was not the position this: that this debt was piled up on the Estates Company for the purpose of putting money in the coffers of the bank ?—lt was not so. 190. How was it that more money was paid for it than its real value ? The account you refer to was between the bank and another company, and you were adjusting the account by which the bank got 20s. in the pound by purchasing this estate at more than its value ? —-Yes. 191. Is it not a fact that the Estates Company was made on that occasion the milch-cow of the bank ?—That had been passed before my time by the board, but the fact was before the Committee last year—that is, the cost of the estate. 192. Yes; but this fact was not explained to the Committee?—-I am not aware as to that matter. 193. Of course, as President of the bank you had to investigate, as a necessity, many things connected with the Estates Company and the bank, and you must know a great deal about them. Is it not a fact that the Estates Company has been the milch-cow all along?—As things have turned out there is no doubt that the cost to the Estates Company of the properties has been too much. 194. And, to wind up, you do not think it will be in any way wrong to take another £120,000 out of the estates for the bank?— Well, I do not consider it in that light. 195. Ido not blame you personally, Mr. Watson. I have no doubt you came to the conclusion from the statements put before you that these balance-sheets were correct; but do you think that Mr. Butt was serving the interests of the colony on that occasion, or do you think he was serving the interests of the bank?—He is not auditor of the Estates Company. 196. No, but he was adjusting the dispute about this account, and it appears that he wanted to palm off £120,000 on the Estates Company ?—I do not think he has done anything of that kind intentionally. There may be two opinions on this point; but I think Mr. Butt acted according to his lights and to the legal advice he got. 197. Do you think, from the fact of Mr. Butt having this agreement in his pocket from the directors securing to him his position in the bank if he ever fell out with the Government, that he was quite willing to do this?— No. 198. You think he acted independently of that?— Yes. 199. Do you think it the right thing for Mr. Butt to have an agreement that, if the Colonial Treasurer thinks it necessary to dispense with his services, he can go into the bank ?—I do not think it is quite, and Mr. Butt thinks with me also; but it did not strike me as irregular at the time. I would like to say that one witness has given evidence to the effect that I put that agreement before the board. I have to say, and I think others will bear me out in my statement, that Mr. Butt got the agreement drawn up by his own solicitor. Now, when I sit at the board I have to read each item in the draft minute-book, and everything is read out. That was given to me among other things by the clerk of the board, and I did not specially put the agreement before the board as the Committee was lead here to suppose. 200. We were told by one of your directors that that agreement was brought before the board, and that they were asked to agree to it ?—The agreement was brought to me just as all the other business of the day was. I did not initiate it, or urge the directors to do anything about it. I agreed with it, and I did not see any harm in it. I mentioned the matter afterwards to the Colonial Treasurer.
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201. Was that after the thing was done?— Yes. 202. You did not tell the Colonial Treasurer before ?—I do not think I knew before. I knew that Mr. Butt had approached his solicitor on the point. All I knew was that Mr. Butt and I had made up our minds to ask the board to give us agreements with regard to our salaries under seal instead of under a minute, because they could revoke a minute and not the seal. But I can say this in justice to Mr. Butt: that his agreement only embodies what the board had said to him when he hesitated to accept the position of Auditor, because by his doing so he thought he should lose his position in the bank, and might not be able to regain it. 203. Was not that the proper time to make the agreement ? —He said, " I am loth to lose my position in the bank and my interest in the Provident Fund," and it was arranged that he could remain a member of the Provident Fund. It was also mentioned that if there was nothing against him in connection with his position as Government Auditor he undoubtedly would be taken back into the service of the bank. 204. Mr. Butt was appointed by the Government ?—By the Government. 205. Do you not think it was his duty as an honourable man to tell the Government that he was making an arrangement like that with the directors, over whose actions in connection with the bank he was sent there to watch ? —I think he overlooked the gravity of the point. 206. Then, as to the other inspectors, Mr. Buller and Mr. Litchfield. They also have short agreements of three years ?—Yes. 207. So that if you dispense with their services you would have to pay them their salaries for three years?— No- if they were dispensed with for misconduct. Unless we could sheet home a serious charge there would be no valid reason for dismissing them. 208. There might be some fault in connection with an account or an error of judgment; would that not be a reason for dispensing with their services?— Yes ; but I can hardly imagine their doing that. 209. Suppose that you, as President of the bank, and the directors of the bank lost confidence in Mr. Buller or Mr. Litchfield with regard to any advice they gave you as to an account', would that not be a reason for dispensing with their services ?—We should certainly remove them from their present positions. 210. Would you not then have to pay them their salaries ?—We might utilise their services in less onerous positions. 211. But does not the agreement give them a permanent engagement for three years?— Yes; except as regards misconduct. 212. They can do as they like ?—-They cannot misconduct themselves. They must consider their duties very onerous. 213. But suppose one went to a club and fleeced some one at cards, would you consider that misconduct ?■ —Yes. 214. I have been dealing all this morning with the Bank of New Zealand and the Estates Company. I want now to put a few questions about the Colonial Bank. The Bank of New Zealand bought the Colonial Bank on the " A," " B," and " C " lists?— And other assets also. 215. Were the other accounts that the Bank of New Zealand took over appearing in one of these lists —" A," " B," and "C " ?—All the local advance accounts appeared in those lists. 216. What do you call the local accounts ?—The bills discounted and overdrafts in the colony. 217. That does not refer to London?—lt would not refer to London; and such things as cheques on one branch cashed at another and in transit, and bills of exchange between here and London and between London and here. 218. Were there any overdrafts in the London branch ?—Yes, a few. 219. Were there people in the colony who had overdrafts in London ?—lt might be so. 220. Was there one of the directors of the Colonial Bank who had an overdraft in London?— That is private business ; I cannot answer that. 221. I want to know that particularly?— And I wish particularly not to tell you. 222. There is a rumour afloat to the effect that one of the directors of the Colonial Bank had an overdraft in London so as to be able to hide it from his co-directors in New Zealand, that he was allowed to draw on that account, and that his cheques were cashed in the colony without the exchange being paid ?—I think I can go so far as to explain that that is entirely incorrect. To begin with, a cheque on demand of an account in London has very little exchange to pay here ; and, secondly, I do not think it would be cashed free for a director. 223. Are you prepared to say that there was no exchange charged upon these cheques?—l think it is very unlikely that it was done ; and I am prepared to say that while I was in the Colonial Bank no director had an account in London which was unknown to his co-directors; but I cannot make any admission as to anything of that kind. 224. You will not deny the fact that one of the directors did have an account in London?—l must decline to answer that.
Monday, 24th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] Mr. Watson, do you now produce the private agreement you referred to between Mr. Murray and the Hon. Mr. McLean?—No, Sir. Mr. George McLean has gone to Dunedin, and I am waiting until he is back to ask him about it. 2. Do you think he is likely to have it ?—I think it is most likely, if it has not been destroyed. 3. Is there any copy of it in the bank ?—No. Mr. Murray left none of his papers there. 4. Did I understand you to say that Mr. Murray and Mr. McLean would have a copy each ?—I do not know that they have them now, though I think they each had a copy at the time. I was also *18—I. 6.
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asked for this return of payments to directors during the year ending 31st March, 1896, which I now put in. Also, for this memorandum of solicitors' fees paid to Messrs. Bell, Gully, and Izard in connection with the Validation Court at Gisborne. 5. Hon. Mr. J. McKenzie.] Is there not some more information to get in connection with the London account of one of the directors of the Colonial Bank? —No. I said that was private business, and that I could not say anything about it. 6. You said you were quite sure that no director could have an account in London without the knowledge of the other directors?— Yes. 7. I asked whether you could find out if one did have an account, and you said you could?— I think I said I could not disclose anything with regard to private accounts. 8. The Chairman.] Is the fact of stating whether or not a director had an account in London disclosing the private business of the bank ? —I think so. I may say this : that no director of the Colonial Bank had an account in London that was not fully secured, and known to the other directors. 9. I think you have a knowledge, "Yes" or "No," as to that question that you should answer ? —I cannot answer that. 10. Hon. Mr. J. McKenzie.] I asked you the question whether the " A," " B," and "C " lists and the premises of the Colonial Bank were the only things you purchased, and I asked Mr. Booth that also ; I then asked whether you got any other accounts transferred to the Bank of New Zealand in any way, and then you said the London accounts were. Were they or were they not included in the "A," "B," and "C " lists? —I regret that I cannot quite answer that. There might have been some of the London accounts included in those lists. 11. There might have been some included in the "A" and "B" lists?—lt is possible there might have been. 12. I understood from you the other day that you deny the fact that any director had an account in London without the knowledge of the other directors ?—Yes ; it is impossible. 13. I will accept your statement; but that there was an account there with the knowledge of the directors you will not deny ?—I cannot say No. ' 14. Does the return produced with regard to the remuneration paid to your directors show that the reduction of 10 per cent, has been deducted?—l think that shows whether it has been deducted. I have another statement here, but I thought the statement you have the clearer of the two for the purpose of the Committee. [Statement handed in.] 15. I think the statement should be given back for amendment?— Yes; I will make a note of it. 16. I have here your memorandum showing the legal expenses of the Validation Court at Gisborne. I find here that Mr. Gully received £78 15s. (forty-four days at £12 125.) ; travelling, hotel, and other expenses, £49 16s. lOd.: total, £682 19s. There are no dates except the month of May put down. Ido not see how they can charge forty-four days for the month of May. Mr. Hutchison apparently values his services (£847 16s. lOd.) at a greater amount than Mr. Gully ?— I really do not know anything about these accounts. I just brought what I could get from the books, and all that business in connection with the Validation Court was before my time. 17. Then, I notice that in February-September Messrs. Hutchison and Hogg charged £49 2s. 4d.; and there are general costs of Messrs. Bell, Gully, and Izard, £201 17s. 5d.; C. A. de Lautour, £448 ; Whitaker and Russell, £13 16s. 3d.; Hutchison and Hogg, £145: total, £2,389 ss. 1 find that Mr. George Hutchison receives £1,042 10s. lOd. Can you give the Committee any information with regard to the expenditure of so large a sum of money ? —Only what is in the statement of costs. It was all before my time. 18. How long did the Validation Court business take ? —I heard it took about seven weeks, but I do not know myself. 19. Was this money charged to the Natives ?—I think, by the agreement of the Validation Court, it was afterwards charged to the land. 20. And the Natives had to pay all this money, or give land in value for it which was equal to cash? —I think the value would be in the land. 21. Is that all the information you can give? There are large sums of money given for this work, and I want to know whether the Estates Company was justified in saddling the Natives with all this?—lt was done before I joined the board, and I have no knowledge of it myself, but Mr. Cooper says it took about seven weeks. 22. This was in May, 1894. When did you join ?—lt was October, 1894, when I joined. 23. Now, with regard to the Auckland Agricultural Company : What is its connection with the Bank of New Zealand and the Estates Company ?—The Bank of New Zealand Estates Company own all the shares of the Auckland Agricultural Company. 24. The whole ? —Yes, as far as I know. 25. Has not the Auckland Agricultural Company a board of directors in London?— Yes ; but the shares are all held by the Estates Company. 26. Then, why do you require a board of directors in London ? —I suppose they want that to comply with the Companies Act. 27. Then, the position is this : that the Bank of New Zealand owns the Estates Company— they are the only shareholders?— Yes. 28. And the Estates Company own the Auckland Agricultural Company—they are the only shareholders ?—Yes. 29. And what about this large mortgage ? Was not the Estates Company mortgaged to some people at Home ?—Yes, to the debenture-holders. 30. There were no shareholders. Those that held mortgages over the Auckland Agricultural Company have other debentures ? —Yes.
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31. And'these debentures were issued by the Estates Company ?—They were issued by the Auckland Agricultural Company. 32. Have you two different boards for the two companies ? —Yes ; and two different sets of attorneys here, but consisting of the same men. 33. And were the expenses kept separate ?—Yes. 34. What has been done with regard to the debentures ? —They have been paid. 35. They have paid them off?— Paid them off. 36. Is the board of the Auckland Agricultural Company in existence now ?—The company is now being wound up. 37. Have the whole of the estates belonging to the Estates Company been handed to the Realisation Board? —They were all handed over to the Realisation Board. 38. Have you gone into the valuations of the Estates Company's properties since you took office as President for the last four or five years ?—Not beyond what was done for the Committee of last year. We took the land-tax valuation with 10 per cent, added as a basis for the valuations of last year. 39. Did you ever look into the matter and see how the valuation of the estates were going down in 1891 ?—No, I did not. 40. You could not of your own knowledge say that they went up from £120,000 in 1891 to £129,387 in 1892, and went down to £84,887 in 1893, and to £87,352 in 1894 ?—No ; I have not had time. My time has been fully occupied since I joined the bank. 41. Can you supply the Committee from the books with a statement of what the values were since 1891 to 1894 or 1895 ? Take, for instance, the income for each half-year from those estates, and thus capitalise that at 5 per cent., and show how the values have come down?—l should not like to give that as the values for the estates for one short period. 42. But is it not a fact that there was a steady fall each year ?—I think so. I will get you the profits from 1891 downwards. I went over to the Estates Company to get Mr. Hanna's reports ; but they did not seem to have any. 43. The Chairman.] Has he none? Did he make no reports? —I do not know. He was manager before my time. 44. Hon. Mr. J. McKenzie.] I have a statement here, but not an authorised one, made partly by myself and partly by some one else, and I want to arrive at whether it is a proper statement or not. I have it that the revenue in 1891 from the estates was £120,000; in 1892 it was £129,387. There was a rise in that year of over £9,387. In the year following there was a falling-off of £44,500, and in the next year a further falling-off of £6,555. That was when the bank officials came to the Government for assistance. I think it is very important that this should be made clear ?—I will ascertain the correctness of that. 45. There is no doubt the values were going down. The other day you said that you would not take these valuations owing to the very low price of produce in those years, and that it would not be fair to take them at that price. It might show from my view that the fall was so rapid and large as to make the directors responsible in some way ?—Although I cannot vouch at present for the correctness of that statement, it bears out what I know to be a fact: that at one time, three or four years ago, dividends from its shares was paid on £1,850,000; but latterly the income of the Estates Company was not sufficient to pay the debenture-interest, so that the bank could not get anything from this £1,850,000. 46. Can you get a statement showing the income of the Estates Company from the date of its formation to the present time ?—Yes. 47. Mr. Booth, in giving evidence before the Committee here, in reply to a question put by myself in connection with the agreements made with Mr. Buller and Mr. Litchfield, said you had informed the directors that you had the Government authority for this. Have you made such a statement as that to the directors ?—No; I did not say I had the Government's authority. I mentioned the matter to the Colonial Treasurer of the day, but he did nothing officially with regard to it. He left the matter in my own hands. 48. Was Mr. Ward Colonial Treasurer at that time ?—I do not think so. 49. When was this agreement made ? —I really cannot tell you when it was made. Ido not think it was Mr. Ward I spoke to about the matter. I may say I consider it my duty in any general policy of the bank, apart from private accounts, to mention the matter to the Government, so that they should not be in ignorance of it. 50. Do you remember which member of the Government you mentioned it to?—I think it was Mr. Seddon. 51. Can you produce copies of these agreements? —Yes. 52. Did you supply copies of these agreements to the Government ? —No. 53. Will you produce copies of the agreements with Mr. Butt and the other two gentlemen, and correspondence leading up to the agreements, if any?— Yes; but Ido not think there is any correspondence. 54. The Chairman.] I just want to ask a question or two with reference to the transfer of shares, especially since the date of the legislation. The transfer of shares since that date is a matter of very large importance to the colony, is it not ?—lt is. 55. The Government, through the Assets Realisation Board, were called upon to give debentures to the amount of £850,000 more than the actual value of the assets they took over from the Estates Company ?—Yes. 56. And the security that the Government had for that £850,000 of additional debentures was the security of the balance of uncalled capital of the shareholders —the remaining £1,000,000? —Yes. 57. Hence the necessity for being very careful to ascertain that the persons to whom shares may be transferred are at least as good as the persons who transferred them ?—I would not say that,
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As a matter of comparison, it is impossible to find out the wealth of the two parties; but if the directors are satisfied that the transferee is able to pay the calls they allow the transfer. Of course, in a large quantity of shares they take into consideration the probability of the transferee not being so strong as the transferor. 58. For the purpose of bringing the transfer of shares directly under the notice of the directors, it was provided by the Act of 1894 that no share should be transferred without the written authority of the directors to show that they were satisfied that the transferees were as good for the calls as the transferors ?—Yes. 59. I think you said you have always taken care that before the shares were transferred the arrears of calls were paid up?— Yes; no shares can be transferred if the calls are in arrear. 60. You were asked the other day to give a return on this matter, showing,—(l) The names of all persons who have become shareholders since the legislation of 1894 who have failed to pay their calls; (2) the amount of unpaid calls; (3) the total amount unpaid ; (4) the dates of contracts for sale of shares, and the dates of transfer. You have now supplied a return, but it does not include the dates of the contracts for the sale of the shares. Now, in all these cases, did you take care that all the arrears of calls were paid before the shares were transferred ? —Yes. 61. In this list the name of Mrs. M. Howatt appears as the transferee from Henry O'Neill of a hundred shares, the consideration being £412 10s., and the arrears of calls are put down at £196 13s. 4d,, and they still remain unpaid. The date is the 6th July? —It was passed before I joined the bank. 62. But it shows that the arrears of calls remain unpaid. This is a list of persons who have become shareholders in the bank since the banking legislation, and who have not paid the calls upon their shares ? —The calls were made since these persons were made shareholders. 63. When was the first call made?—lt was made after October. 64. The first half-million call on the reserve capital was made in three instalments. What were the dates of payment of these three instalments? —I think the first call was called up in one. - 65. Yes; but it was paid in three instalments. There were two instalments of £1 2s. and one of £1 2s. Bd., the total amount of the call being £3 6s. Bd. per share?— Yes. Ido not remember the dates now. This is a list of persons who became shareholders of the Bank of New Zealand since the 30th June, 1894. They could not have paid the calls before they were shareholders; but the date of this particular person becoming a shareholder was the 6th July, 1894, and these calls accrued afrerwards. 65a. In this case there are a hundred shares, and if you multiply the hundred by three and a third it gives you the total amount of the call. The £113 6s. Bd. arrears in the first column, therefore, must represent the third instalment as unpaid still ? —Whether it represents that or one of the other instalments I cannot say. 66. You do not remember the dates when these instalments were due?— Not beyond this: I think the first call was made about November, 1894, and I think the first instalment was payable in February, the next in July, and the next in October of the following year ; so that when these shares were registered there was no call due on them. 67. These shares were bought from one Henry O'Neill ? —I cannot say. I was not on the board at that time. 68. At any rate, Mrs. Howatt has not paid anything at all since the shares were transferred to her ? —Well, it was not done by me. 69. We have another a little lower down the list —Henry Smith, a hundred shares, and arrears, £196 13s. 4d. Do you know who he bought them from ? There are three people mentioned as transferors—Mrs. Mandelson and two Cohens ? —lt was before my time. I cannot say anything about it. 70. Then, there is William Frater, who is put down as having nine shares. I can trace all the others in Exhibit No. 12, but I cannot find any trace of these ?—Mr. Frater must be the sharebroker in Auckland, and he has had a great many dealings in shares. 70a. He appears in this list to own nine shares and owe £7 10s. on them; but since the date of the legislation he has had no fewer than thirty-two transactions with the bank as a seller, and fourteen as a buyer, of shares ?—Brokers very often have an order for certain shares; perhaps they have half a dozen orders at one time, and consequently when they see a big parcel of shares for sale they buy them up, and after completing their orders they may have a few remaining over in their hands, and these they sell when they can. They are jobbers in this colony as well as brokers. Mr. Frater probably bought and sold in the way I have mentioned. 71. He appears to have bought 1,007 shares for £798, and sold in the same time 933 shares for £2,771, and thus coming out on the right side nearly £2,000 to the good ? —You cannot rely upon the consideration-money being the exact thing. 72. Can you explain this : On the Bth September, 1893, Mr. Frater sold eighty-five shares to the New Zealand Insurance Company for 10s., and just a day or two before that he bought 134 shares from the same company for 10s. ?—That might occur in half a dozen ways. We can never tell what the contracts are between parties. It is evident that the New Zealand Insurance Company held the shares, and probably handed them over to the broker to sell them all. Well, Mr. Frater probably sold so many and transferred back the remainder to the company. Perhaps he sold all but eighty-five, and transferred back that number. That may be so, but I cannot say of my own knowledge. 73. It does not strike you as at all curious ?—No, not at all. 74. A little further down you have a man named James Reid as a buyer, Is he a good man ?—Yes ; he is another broker, and is supposed to be a good mark. 75. Still, he owes £188 6s. Bd. of calls unpaid?— Yes; that is the second call,
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76. Do you suppose that may come in yet ? —There are three instalments. That would be the first instalment. 77. How many shares is he down there for ? —226. 78. He bought them from a lot of people —eleven in all. Would you consider that James Reid would be as good in himself as these eleven people altogether ?—The board thought he was quite good, or it would not pass them on to his name. 79. There is another case—James Logan, the owner of seventy-five shares ? —lt is 175 shares on my list. 80. Yes, that is right; you will find them in six different places in the printed list. He buys four separate parcels from S. G. Bensusan all on the same day, and parcels from two other people?— They are brokers in Dunedin, and there is some dispute with them just now. 81. They hold all these shares?— Yes, in their name ; but there is some lawsuit about them. 82. Do you think they are as good shareholders as all the people together from whom they bought the shares ?—These things took place before my time. 83. But do you consider it was a good bargain for the bank ?—I should not like to say. 84. Especially under the circumstances that there is not even the first instalment of the first call paid on any of these shares ? : —I do not know the persons from whom they were transferred. It was half a year before I came into the bank at all. 85. I ask you whether, in your opinion, that is looking after the business of the colony with reference to keeping good marks on the share-list ?—I do not know the people from whom they were transferred. 86. You do not know these sharebrokers ?—Yes ; but I do not the people from whom they were transferred. 87. Are these brokers well known?— Yes. 88. Do you know them by repute ? —I know them personally. 89. Can you not give an opinion of these people ? Do you think they are good for the total amount of their arrears —£723 3s. 4d. ? You say you personally know them :Do you think they are good for-that amount ?—I would rather not express an opinion. I think we have something like a lawsuit. If I said they were not able to pay these calls I do not think they would ever be paid. 90. Have they been pressed to pay the calls?— Yes, undoubtedly. 91. In what way?— Through the solicitors. It would be detrimental to the bank if I gave information about this firm. 92. This looks very much like another speculation of brokers, and they have been landed this time. They are not quite so lucky as Mr. Frater? —In some cases the brokers bought shares having purchasers for them; but when they came to put in the names of their purchasers to the bank as transferees the bank would not take them, and the brokers were landed sometimes. 93. And they are now trying to land the bank?— They have to get the consent of the bank, or they cannot get a transfer. That was before my time. 94. Are sharebrokers allowed to become transferees by the bank at the present time?—We do not shut out any class of the community, so long as we consider them good marks. 95. You might tell us what steps the directors take to see that they get sufficiently good marks to conserve the interests of the colony with reference to the transfer of shares ?—The transfers generally come from the branches. They are handed in by the purchasers to be forwarded to the head office to be passed. The branch manager has to send up to the head office an account of the circumstances of the transferee, and he has to be approved before the directors will pass any shares. 96. And you also make inquiries into the position of transferors to see if the transfer is for the best interests of the colony ?—Yes. We know the tranferee's position by the reports in the bank. In fact, we know, more or less, the position of every man of means in the colony, whether he banks with the Bank of New Zealand or not, and we form our judgment in consequence ; and if the transfer is only for a few shares we should not be so particular as we should be if it were for two or three hundred shares. These transfers were taken before my time. 97. Are you more particular now than you think the directors were then?—l think so. Ido not think the board had power to refuse transfers at all until the legislation of 1894. 98. And do not allow yourselves to be influenced by any particular individual because he might happen to belong to the right " colour " ?—No, we have no " colour." 99. You do not know whether you are likely to get the calls in from these sharebrokers or not ? That is a problem you are now endeavouring to solve ? —We shall try. 100. I am quite right in stating that in this case none of the instalments have been paid on the first call of £3 6s. Bd. per share—that is, a total of £583 6s. 8d ?—Yes. 101. Also the first instalment of the second call is still owing?— Yes, nearly the whole are outstanding. 102. You agree with me that that is rather a bad case?— Yes ; but there is a lawsuit pending. 103. There is another case--that of Mr. F. M. Ollivier, who appears to have a large number of shares transferred to him from five different transferors, on which £406 13s. 4d. of the first, and £122 10s. of the second, is still owing. Is he a good shareholder?—He is a barrister who retired from this colony some years ago with a fortune, and when these shares were transferred into his name there was no knowledge on the part of the directors that he had lost any of his money, or would have any difficulty in paying the calls. I believe Mr. Ollivier has returned to the colony and joined Mr. Travers, and will soon be in a position to pay the calls. 104. Do you think him a better mark than all of those people who had their shares transferred to him—Sandison, Gibson, Bethune, Corley, and W. H. Clark?—Yes; we went into them all at the time, and thought that Mr. Ollivier was better off than the transferors.
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105. Were all these in your time ?—All those in November were in my time. 106. And you thought Mr. Ollivier was better off at that time than all these other people ?— Yes, from all the information we could get. 107. It is only under special circumstances that you could say that one man is better than a lot of holders ?—Well, he was supposed to be a wealthy man. 108. But he is in arrear in his calls £529 7s. 4d. Do you charge interest on these arrears of calls ? —Yes. 109. Of course, you have not shown any accrued interest here. You have only put down the net amount of the call?— Yes. 110. But you do charge interest ?—Yes, if we can get it. 111. There is another case—Charles Thumwood. Is he a sharebroker too ?—I do not know who he is. 112. That, I think, is after the date of your appointment ?—Yes ; I do not remember him. 113. He buys, you say, ninety-five shares; I can only see seventy-five in this list. He buys them from five different people—Ferguson, Pegge, Taylor, Barron and Laws. Do you know any of these ? —No, I have no record, of them ; but I have no doubt the board considered he was in as good a position as any of these. 114. He is in considerable arrears in the first call, and has not paid any of the second. Do you know anything about him?—No; sometimes a man loses his fortune very suddenly. 115. Are these matters brought before the board of directors in any way ? —Yes ; very frequently the matter of unpaid calls comes up, and reports are made about the ability of the party to pay, and the steps to be taken are considered ; but when the vast number of shareholders are taken into account, I think this is a very small list of outstanding calls. There are only ten persons here who have not paid the first call—the people who have had shares transferred to them. Of the £500,000 there are about £450,000 paid, and I think that is very good. 116. Still, that does not make these particular cases better. What I want to know is whether the directors are making special endeavours to keep the share-register good, or better than it was before, in the interests of the colony ?—Yes. 117. Because that is the only security, practically, that was held out for the Government gurantee. Of course, the cases in this list do not represent anything like the number of registrations of shares transferred since the date of the banking legislation ?—No. 118. You only represent here about forty-three, but these are only the people who have arrears of unpaid calls ? —Yes. 119. There have been 286 registered transfers altogether since the banking legislation, but I suppose you consider them good, as there are no calls on them ?—Yes; we have a book showing particulars of transfers since we took office, and there has never been any dissent recorded, and no division taken. If there were anything like a dissenting voice, or a division taken at the board, we should not have passed them; but we have never had any dissent recorded. 120. If there was any dissenting voice, you would have inquired more particularly into the transfers ? —Yes; but there has never been any dissent recorded. 121. They have not, I suppose, been passed in a routine way like some of the other business appears to have been done ?—I do not think any of our business is passed in that way. 122. From- looking at this list one is apt to think that many of the shares have been transferred to men of straw ?—I do not think so, if you knew the cases at the time; and from the proofs we had before us we were perfectly satisfied about them. 123. Mr. McGowan.] Do you care to express an opinion upon the management of the Bank of New Zealand before you had any connection with it ? —No, Sir, I would rather not. Ido not know sufficient about it to express an opinion. 124. Would you express an opinion upon the management of the Colonial Bank while you were connected with it ?—Yes; that if times had been anything like steady, instead of prices continually going down as they did, the management of the Colonial Bank would have been found to have been very good. 125. Would you just answer the question as I put it in this way : Do you consider the management of the Colonial Bank, taking the condition of things into account, was prudent, and carried out with a view to the welfare of both the shareholders and the bank's interest ?—Yes, I do. I think the men who had the management in their hands were able men, and that they acted for the best interests of the bank to the full extent of their ability. 126. And you think that the cause for the results not being so satisfactory as you could have desired has been the continuance of the fall in prices of produce ? —Undoubtedly. 127. I presume from that you would say that the same thing has had effect upon the Bank of New Zealand ?—Yes. 128. You attach no blame either to the directorate or to the management of the Colonial Bank of New Zealand, as far as you know ? —No management can be free from blame in isolated cases; but in a general way I attach no blame to the management of the Colonial Bank. 129. Do you consider that the management of the Bank of New Zealand, and when the same officers are in charge that were in charge of a part of the business of both banks previously—do you think that they have made such a radical change in the management as to make it probable that the bank will do a secure and profitable business in the future ? —-I think so. 130. Can you intimate the changes made in the conduct of the bank's affairs previous to and since the legislation ?—I could give a statement showing what the management was previous to the legislation and what it is now. 131. Will you make that statement now, or do you wish time to make it?—l want a little time for that,
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132. Hon. Mr. Seddon.] I have before me Exhibit 36, the Bank of New Zealand Estates Company, memorandum of counsels' fees paid to Messrs. Bell, Gully and Izard, and Messrs. Hutchison and Hogg, &c. When was that money (£2,389) paid ?—I can get that. These fees were incurred prior to my having anything to do with the Estates Company. 133. Can you say whether they were taxed ?—I am told they have not been taxed. 134. I am speaking as Native Minister, and want to know whether you do not think it is a very wrong thing that these unfortunate Natives should have been charged thirty-seven guineas a day. Fifteen guineas a day went to Mr. G. Hutchison, and the balance to Mr. Gully and to Mr. De Lautour?—lt was paid before my time. 135. It has been stated here, I think, by the Minister of Lands, that there was only a week spent at Gisborne in the Validation Court ?—I do not think that is right. I always understood that they were about seven weeks there. 136. You have had some experience since being a banker in paying lawyers' costs ?—Unfortunately I have. 137. Is it a usual thing to keep them in board and lodging as well as to pay them fifteen guineas a day ? —They get expenses in addition to fees very often if they have to go from home. They get travelling-expenses added on. 138. Who was leading counsel in this case —Mr. Gully or Mr. Hutchison ? —Mr. Hutchison was. 139. Do the fees indicate who is leading counsel ?—I think so. 140. I notice there is a fee on the brief of a hundred guineas. You seemed to have been very lavish with your fees. What I want to know is this, as lam Native Minister. Have you charged it against the unfortunate Natives ?—By the consent of the Validation Court it was charged against the land mortgaged to the Estates Company. 141. And that was done without having the bill of costs taxed?—l regret that lam not able to say as to that. 142. Have you any knowledge of the fees on the brief on the other side?—l expect they got value for that, Sir. I believe the costs on the other side were taxed. 143. Have you any other estates upon which you have been heaping up the legal expenses, and then taking a mortgage ?—I should not like to say. We have got to incur legal expenses to get our readjustments sometimes. 144. Do you think it was necessary there to have three legal lights at thirty-seven guineas a day?—lt was before my time. Ido not know the amount of work done then, but I know there was some very vexatious work done afterwards, for which we had to pay. 145. I want to know if you have anything else like this now going on ? —I do not think that matter is quite settled yet. There are probably some small legal expenses going on there now. 146. Will it surprise you to know that ten guineas a day is the highest the Crown ever pays, and that that was all we paid in the Midland Railway case, in which £1,800,000 was involved? What was involved in this case at Gisborne ? —About £80,000. 147. On this one.estate? —I believe the large fees were on account of one case—the Paramata. 148. What is the amount involved in respect of that ?—Probably about £70,000. 149. You have had considerable experience as a banker?— Yes. 150. How many years ?—More than thirty-two years. 151. Have you, during that course of time, anticipated it as being your business to overhaul the balance-sheets of public companies in the banks and corporations with which you have been connected ?—Yes. 152. Will you take these balance-sheets? What are the balance-sheets of those companies you now hold in your hand?— Walter Guthrie and Co. (Limited), Canterbury Farmers' Cooperative Association (Limited), National Mortgage and Agency Company of Dunedin (Limited), Wellington Woollen-manufacturing Company (Limited), Gear Meat-preserving Company of New Zealand (Limited), Wellington Meat Export Company (Limited), Wellington-Manawatu Railway Company (Limited), Westport Coal Company (Limited), Farmers' Co-operative of Canterbury (Limited). 153. Will you look at those balance-sheets and ascertain whether or not bills under discount are set down as liabilities or charged as contingent liabilities ?—I notice that in the Walter Guthrie Company v Limited) there are no liabilities on bills discounted. In the Canterbury Farmers' Cooperative Association there is no liability for bills discounted. I notice that in the first three balance-sheets put into my hand of the Canterbury Farmers' Co-operative Association there is no liability set down for bills discounted, but in the fourth —for 1894 —it appears for the first time in " Bank overdrafts and bills discounted." In the following year, 31st July, 1895, bills discounted do not appear among the liabilities. In the balance-sheet of the National Mortgage and Agency Company bills discounted do not appear among the liabilities. The balance-sheets of the Wellington Woollen Company do not show bills discounted among the liabilities. The Gear Meat-preserving Company's balance-sheets do not show bills discounted among the liabilities. The Wellington Meat Export Company does not show bills discounted as one of the items forming the liabilities, but there is a note at the foot showing it as a contingent liability in the balance-sheet of 30th June, 1896. 154. Look at the one prior to that ? —Bills discounted as a liability is not shown at ail. 155. Is Mr. Booth one of the directors of that company ? —Yes. 156. The Chairman.] In 1895 that company did not show in its balance-sheet bills under discount as liabilities ?—No. 157. But in the balance-sheet of 1896 they put them in as contingent liabilities ?—Yes. 158. What is the date in July of the balance-sheet put in — was it before or after Judge Williams's decision in Dunedin ?—lt was after the decision —14th July. 159. The decision of Mr. Justice Williams was given on the 16th June ? —Yes. In the year 1893 they do not show it. The next is the Wellington-Manawatu Railway Company. They do not show
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the bills discounted ; but in the case of that company I do not think it is likely they have bills to discount. The next is the Westport Coal Company. This is the balance-sheet of the 30th September, 1889. There are no bills discounted in the liabilities. Next, the New Zealand Farmers' Co-operative Association of Canterbury. I have got four balance-sheets of theirs here, and none of them show bills discounted as liabilities. 160. Are those some of the leading companies in the colony ?—Yes, I think they are. 161. A number of them are trading concerns, just the same as the J. G. Ward Company is a trading concern : is that so ?—Yes. 162. Would you give the names now of the chairman and directors who have signed those balancesheets ?—Sir Robert Stout and Walter Guthrie signed the balance-sheet of the Walter Guthrie Company; J. Page, chairman of the Canterbury Farmers' Co-operative Association ; subsequent balance-sheet, John Talbot; chairman of the National Mortgage Agency Company, H. R. Greenfell. This balance-sheet, I may point out, is audited by one of the best audit houses in London— Turquand, Young, Bishop, and Clarke. The Wellington Woollen Manufacturing Company, T. K. Macdonald, chairman; Gear Meat-preserving and Freezing Company of New Zealand (Limited), Nicholas Reid, chairman ; Wellington Meat Export Company, W. C. Buchanan, chairman, and William Booth, chairman, at different dates—in 1893, Mr. Buchanan, and 1895 and 1896, Mr. Booth ; Wellington-Manawatu Railway Company, J. E. Nathan, chairman, 1887 ; Westport Coal Company, H. J. Miller, February, 1890; New Zealand Farmers' Co-operative Association, Canterbury, C. Ensor, chairman. 163. I will read to you an extract upon which I will ask you a question—taken from a decision given by Mr. Justice Williams on the 16th June last. In that decision the following appears : " Any person with an elementary knowledge of accounts must see that this process is an illegitimate one. If they do not appear in the balance-sheet as an item of liability, the effect is to suppress the fact that contingent liabilities exist, and the amount of such liabilities. That is in itself a falsification of the balance-sheet." Now, I ask you this question : With your experience as a banker, with these balance-sheets before you, will you say that because in the balance-sheets bills under discount are not shown as liabilities that that has been a falsification of the balance-sheet ?—No, it is not, in my opinion. As regards these balance-sheets I have been looking over, Ido not think it was intended as a falsification. 164. Then, if the bills under discount were not shown in the Ward Association's balance-sheet, as they were not shown in these balance-sheets, there was no falsification in that respect ? —I should not consider so. I should consider of it the same as of these. It was usual enough. 165. It has been the usual practice of companies in the colony not to show bills under discount as liabilities?— Some companies do, and some do not. 166. You have read out the names of men of honour and good repute and integrity : Would you say that any of those gentlemen have been guilty of falsification in balance-sheets on' account of those companies ? —No, certainly not. 167. Do you know what banks these companies are dealing with?— Yes; some are dealing with the Bank of New Zealand. 168. And some were dealing with the Colonial Bank ?—Yes ; and some in the National Bank. 168 a. I presume some with other banks trading in the colony?—I do not think there are any other banks here with which these companies are trading. 169. At all events, you would say that no banker would say that a company was deceiving the bank or falsifying the balance-sheet if they did not show bills under discount as liabilities?—No, I should not think so. I should not consider they were misleading the bank or their shareholders by not doing that. 170. Would you consider it improper?—lt is nothing unusual. I may say I know several bank balance-sheets where the banks concerned do not show their bills rediscounted in London. When bills of exchange are purchased by banks doing business in foreign or colonial places on London, these bills are sent home, and if they want money at any time they discount these bills with the leading houses, but they do not always show this rediscounting. They look upon them as perfectly good when the bills are passed out of their hands. Some banks do and some banks do not show it. 171. In respect of this practice, Mr. Justice Williams says here, " The practice is obviously a dishonest one." That is the opinion he expressed in this decision? —Yes. 172. Now, from the practice obtained from your experience of thirty-three years, is the fact that bills under discount are not shown as liabilities a dishonest practice ?—No. I must say that I have never understood several things in that judgment. One thing Mr. Justice Williams said—if not then, at some other time—was that the "D " list was worthless. Whoever told him so informed him wrongly, because the " D " list is worth a lot of money, and I know that one amount of £8,000 has been got out of the "D " list, so he has evidently been misinformed; and in this matter of the balance-sheets I think he was also misinformed. 173. Well, at all events, if the strictures of Mr. Justice Williams were warranted in this case, the Ward Company is in the same position as some of the best companies in the colony ?—Undoubtedly. I should put the Wellington Gear Meat and Westport Coal Companies amongst some of the best companies in the colony. 174. And you have told us that in the balance-sheet there the President of the Legislative Council, who is the chairman of the Westport Coal Company, has also signed balance-sheets without bills under discount being shown as amongst the liabilities ?—ln that case I am not quite sure that they had bills discounted. 175. But it is a large trading concern ?—Yes, and I think it is highly probable they had. 176. If they had, according to Mr. Justice Williams, he has been guilty of dishonesty and of an illegitimate transaction ? —I do not consider that he has been guilty of any dishonest transaction.
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177. Are you aware whether any evidence was tendered in the case before Mr. Justice Williams as to the practice of companies in respect of placing bills under discount in their balance-sheets, or otherwise ?—I do not remember whether any evidence was tendered or called for on that point. 178. At all events, in respect of the J. G. Ward Company, you were inspector of the Colonial Bank at the time the company was doing business with the bank?—l was. 179. You yourself, as inspector of the Colonial Bank, would not take exception to a balancesheet because it did not show bills under discount as liabilities?—-No, I would not take exception to these other companies' balance-sheets which are now before me keeping their accounts in the same manner, and making up their balance-sheets in the same manner. 180. Have you, as President of the Bank of New Zealand, or have your board of directors, taken exception to companies doing business with the Bank of New Zealand not showing bills under discount in their liabilities?—No; but, of course, the Bank of New Zealand would know in such cases what bills were under discount; they would know every Bill and every name, and would be able to form their own conclusions. 181. Banks would not take exception because they have a general knowledge of what bills are under discount ?—Of course, they know every bill, and name, and date, and everything, and returns are made of all bills discounted to the head office of the bank. 182. Have shareholders been in any way prejudiced by this not being disclosed?—l do not think so, because sometimes shareholders are prejudiced by disclosures. The disclosure of bills might prejudice the shareholders, and do more harm than stating the amount of the discount. 183. As an expert, in your opinion, has Mr. Justice Williams erred in putting this very harsh construction upon balance-sheets that do not show bills under discount as liabilities ? —I think he erred in classing it as dishonest. 184. And stating it was a falsification? —Yes, I think he went too far in that. 185. In your opinion, it is not likely that one of the highest legal authorities in the colony would be likely to err in affixing his signature to a balance-sheet knowing it to be false and dishonest ?— No, I do not. think he would. 186. Well, the name of Sir Robert Stout appears on one of those balance-sheets, does it not?— Yes. 187. Was that company doing business with the Bank of New Zealand, and is it doing business with the Bank of New Zealand?—l am advised that that would be disclosing private business. 188. Well, generally, there are companies dealing with the Bank of New Zealand whose balance-sheets do not disclose bills under discount as liabilities ?—Yes. I do not think Sir Robert Stout would put his name to any balance-sheet knowing it to be false. 189. But, if Mr. Justice Williams's strictures are well founded, he has done so ? —Yes ; but I do not think they were well founded. I should like to say this, if I may : that I think it would be a very good thing for companies to show their liabilities under bills discounted. But I was asked whether I thought these companies' whose balance-sheets were placed before me were dishonest in not stating their bills discounted. According to Mr. Justice Williams, they would be dishonest; according to mine, they were not. 190. And you are speaking after thirty-three years' experience as a banker ?—Yes, I am, and in various countries. 191. Have you ever passed any large advance in connection with a client of the bank without first having the approval of the board of directors ? —No, no large advance. 192. What would you consider a large advance?—l should consider £10,000 a large advance. 193. Would you consider £5,000 a large advance?— Yes; but I should think it possible that I should advance up to £5,000 during a week, but the directors would know of it next meeting-day. I do not think I have ever passed £10,000. 194. Did you pass the discounting of the draft which has been mentioned for £5,000 ?—-No ; it was done at a branch. 195. Without your knowledge?—lt was not done without my knowledge, because we had written down about the bills under credit. 196. I mean the transaction itself was not referred to you?—No, it was not. 197. Was Mr. Ward in the colony at the time the transaction took place—-the £5,000 discount of this draft ?—No, Sir; Ido not think he was in the colony at the time. 198. Did you or any other member of the board of directors communicate with Mr. Ward on the subject at that time when the Colonial Bank agreed to guarantee the £5,000 and the £20,000 ?— No. I speak for myself, but Ido not know of any of the other directors communicating. I believe they did not. 199. Did you or any member of the board of directors intimate to Mr. Ward separately, in respect of the £5,000 or £20,000, that you were making special arrangements for that being guaranteed by the Colonial Bank ?—I have no recollection of anything of the kind. 200. Did you mention to Mr. Ward anything in respect to the guarantees of any accounts in the "C " list?—l have no recollection of doing so. 201. Can you say for yourself positively that you did not?—To the best of my belief I did not. 202. You were here when Mr. Booth was giving his evidence? —Yes. 203. You heard Mr. Booth state positively that the purchase of the Colonial Bank was a firstclass investment for the Bank of New Zealand, and a good thing for the colony ? —-Yes. 204. Was the purchase of the Colonial Bank by the Bank of New Zealand unanimously agreed to by yourself and the other directors ?—No, not entirely. 205. It was not unanimous ?—No •19—1. 6.
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200. Who were the directors who disagreed with that purchase ? —I would rather you did not press that. Well, Mr. Johnston, Mr. Kennedy, and myself were in favour of it. Mr. Macarthy was in favour of the purchase, but he wanted to get as good a bargain as he could, and probably thought he could get a better one than what was made ; and Mr. Booth, I think, was against the purchase altogether. 207. Now, did not Mr. Booth, along with you and the rest of the directors, send a letter to the Government asking it to agree to the purchase of the Colonial Bank at the commencement of the session of 1895?— I do not remember that. I remember sending a letter saying that it was imperative that another bank should be got; but Ido not remember the letter specially about the Colonial Bank. It may have been, because I always had the thing in my mind, but I do not remember the letter you refer to. 208. Well, do you remember the report of the Committee being sent to yourself and your codirectors ?—Yes. 209. Do you remember sending a letter to the Government saying you acquiesced in that report and the resolution proposed ?—I think I remember that. 210. Did not Mr. Booth sign that and agree to it ?—I do not remember that, Sir, but I can easily ascertain. I think it is probable. If any director signed it, he would have signed it. 211. At all events, of the whole of the directors the main objection to the purchase of the Colonial Bank you say came from Mr. Booth ?—Yes. 212. Since that time has he, in the working of the accounts and business transacted under the purchase, expressed any dissent, or has he expressed his satisfaction with the purchase ?—He has expressed his satisfaction with the purchase. 213. Practically in the same terms he expressed when giving evidence before the Committee— that a good bargain had been made, and that it was in the interests of the colony ? —Yes. 214. And you now state that the profits now derived, according to a computation made by Mr. Gibb, the accountant, equal £26,000 a year ?—Mr. Gibb estimated it at that. I think it is worth more. I think there are some indirect benefits not taken into account by Mr. Gibb. .215. Now, in working this account for the Colonial Bank, do you think that, under the existing circumstances, working under the agreement with the Colonial Bank, that if you had had the accounts clear, and taken them over from the Colonial Bank, would it have been more profitable? Would it have been more profitable or more satisfactory to work them as you are now doing under your agreement, or if you had the accounts definitely settled, and taken over, and worked on their own responsibility ?—I think it would be better if they had been taken over; but it is just in the taking over where the difficulty comes in. lam not sure whether I explained the position to this Committee, but I did to the other Committee. There are certainly some of the "B" accounts where, if the Bank of New Zealand had had them itself, they would be carefully nursed, and other advantages given to the customers. That is not the case now. The Bank of New Zealand hesitates to take them over, owing to what it believes to be their insufficient capital. The Colonial Bank liquidators cannot present them with that capital to have them taken over, and the consequence is that some of these very deserving and worthy persons are in difficulties, and their accounts may be thrust into liquidation, which would certainly not happen if their accounts were in the Bank of New Zealand, or in any other bank. That is the position ; and lam very sorry for these people. 216. Have you had time, do you think, now, in the working of these accounts, to come to a conclusion as to what cover you consider would be necessary to liberate and take them over? —Yes, it is just that point of cover where the difficulty comes in. We want as much as possible to liberate these accounts, but we cannot, and it is therefore unfortunate for the customers. 217. But is it not injurious to the Bank of New Zealand, and have not these accounts had to leave the Bank of New Zealand through this cause ?—Some have. 218. That is, the dispute between the Colonial Bank and the Bank of New Zealand as to the cover has led to the customers leaving the Bank of New Zealand and getting accommodation elsewhere ?—Yes, I think there have been cases of that kind. 219. Would not that show that you are rather severe, if some of those customers have had to go to a strange bank altogether and get their accounts taken over ? Would not that show that there has been an undue straining, when they had to go to a bank which had had no experience in working the accounts at all ? And would not that go to show that these accounts did not require the cover that you. were demanding? —I believe, if we have erred, we have erred on the safe side. 220. If you have paid £75,000 for good-will and you lose good customers, that takes from the value of the purchase, does it not ?—Yes, that is so. 221. Have complaints reached you that, in respect of some of the Colonial Bank customers, the Bank of New Zealand as agents were treating them harshly? —Yes; but in the case of the"B" accounts there is a clause to say that they should be worked under the supervision of the selling bank, and I am not sure that the liquidators are not to blame for some of the apparent harshness shown, because the Bank of New Zealand would be perfectly ready to give them more credit if the liquidators guaranteed it. 222. But if by that means you lose the business of these persons or corporations, it is a loss to the Bank of New Zealand, is it not ?—That is so, Sir; but we must make safety our first consideration. That is where the difficulty comes in ; we want to be perfectly safe. We want to act as if we were taking new business ; whereas if they had their accounts in any other bank they would be allowed more latitude, and their accounts would be nursed. lam very sorry for them, and I think sometimes that if I had the option of doing the thing over again some one else would have to do it, as I feel very much for these people. 223. Through what you wanted on the one side and the liquidators would not agree to on the other these persons unfortunately suffer ?—Undoubtedly they do. 224. Have you not power at any time to take over any of these accounts ?—Yes, the board has power to take them over.
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225. Do you think, if the liquidators had a free hand, and were not compelled to go before the Court, that it would be an advantage to the customers and to the Colonial Bank ?—Yes, Sir, a great advantage, I think, because it would be done in a more commercial way. 225 a. And it would be an advantage, consequently, to the shareholders of the Colonial Bank ?— Certainly. 226. Would it be to the disadvantage of the Bank of New Zealand ?—Not at all. 227. Have you approached the liquidators of the Colonial Bank with a view of going through the accounts in the " B " list, and coming to the definite cover, in order to take them over into the Bank of New Zealand ? —The officers have come together several times for that purpose, but the difficulty I have told you of has always stood in the way of anything important being done. 228. The difficulty has been, I suppose, as to the amount of cover in each case ?—Yes. 229. Is there no way of coming to some arrangement without keeping these unfortunate customers like a shuttlecock between the two parties, and, as you say, injuring them, as also injuring the Bank of New Zealand?—l have not been able to see any way owing to this purchase agreement. I have said all along that I have considered it would have been much better if what Mr. Murray and I arranged for in 1894 had been carried out, because then the liability of the Colonial Bank shareholders could have remained until, with careful working out in after years, these accounts could have been all absorbed ; but owing to this agreement there is not the same chance for these customers getting their accounts worked out to advantage.
Tuesday, 25th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] Did you take note, Mr. Watson, of the documents that you were to hand in to-day ? Dates were required when the payments were made of the legal bills of costs in connection with the Validation Court proceedings at Gisborne ?—I have that prepared, with the dates of payment shown at the side. I have also an amended statement of the directors' fees, which was asked for. I was requested to get a statement also of the profits of the Bank of New Zealand Estates Company for each half-year from 1891. This morning the accountant sent me a statement, but he had so mixed up the writings-off of late years that it was barely intelligible, so I sent it back, and it will probably come to hand to-day while we are here. Also, I expect some further particulars in connection with the shares transferred, which were asked for by yourself yesterday. I expect those will come to hand this morning. 2. Hon. Mr. Seddon.] I see by the dates given here in this return of legal expenses that nearly £600 of the £2,000 has been paid since you have been President ?—Paid since, but incurred before. 3. Is it not your duty to see that large bills of costs like these are taxed in the ordinary way ? —We do not get all our bills of costs taxed. 4. Do you not think it advisable ? —lt has not been the habit of the bank. 5. Do you think you have made so much money that you do not think it worth while?— No. Mr. Hosking's bill last year was very heavy, but it was well earned, and it was not taxed. 6. The Government have a lot of litigation, and take care that the costs are taxed. You know that it has been stated that Sir Walter Buller said lawyers always put on one-third extra to provide for the cutting-down of costs by taxation ? —I will make a note of what you say, and lay it before the directors. 7. You stated that, owing to the position in which matters are placed by the bank agreement, the shareholders and clients of the Colonial Bank had been prejudiced. Is that so ?—Yes, I think so, to a certain extent. 8. Are you aware that at a particular juncture in the history of the colony the Colonial Bank came to the rescue of the colony by making a large advance ?—Yes, I know that. 9. Was the Colonial Bank of New Zealand weakened or prejudiced by the banking legislation of 1894 ? —lts business was affected, and no doubt it was prejudicially affected.. 10. Will you explain the details to the Committee of how the Colonial Bank was prejudicially affected by that legislation ? —lts business was altogether in competition with the Bank of New Zealand, and the Bank of New Zealand, being strengthened by two millions of money, was placed in a better position to compete. The Colonial Bank had to call in advances, because its own deposits were reduced at the time of the Australian crisis, and the Bank of New Zealand, getting two millions of money, was able to enter the market and compete on better terms against the Colonial Bank. 11. Do you think there had been a weakening of both banks by the competition that had taken place ? —The general competition between all the banks had no doubt caused a weakening. 12. What was the nature of the weakness ?—The bank profits had been run down very low by competition. 13. Anything else ? Do you think there had been liberal advances made which, under other circumstances, would probably not have been granted ?—I think that is probable ; competition leads to that as well. 14. Then, there was an advantage to the other banks by the amalgamation or purchase, as that removed the competition which had been injurious to both ?—Undoubtedly there was such an advantage. 15. You said the Colonial Bank had helped the colony, and you now say that in return the colony injured the bank by the legislation ?—Yes; the legislation did undoubtedly injure the bank. 16. Now, was there any compensation offered, or given, or asked for by the Colonial Bank in respect of this ?—I do not know whether there was in respect to that; but I know that the Colonial Bank was never done asking for a share of the Government business.
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17. Do you know whether any promise was given, or got, of assistance by the Government in any way ?—Yes ; they got one-third of the colony's exchanges in Mr. Ballance's time. I have heard of lots of promises, but cannot vouch for this myself. 18. Do you know whether they had any assistance?—l do not know what you would term assistance. I know that before my time they had certain deposits from the Government, and the Government had certain loans from them quite recently. 19. Well, that is the assistance? —Yes, I know that. 20. You say that, in your opinion, the Colonial Bank had a claim on the colony ? —Yes, I think so. 21. And that claim being recognised by financial assistance rendered by the colony on safe lines, was it, in your opinion, a proper thing to do ? —Yes. I do not think any assistance was rendered by the Government to the Colonial Bank by the effect the legislation of 1894 had upon them. 22. Have you heard or read anything in respect of assistance being granted by way of help to the Colonial Bank to the extent of £150,000? —Yes, I have read and heard about that. 23. Was there anything, in your opinion, taking all the circumstances into consideration, improper in respect to that, or would you consider it a just and businesslike transaction?—l know of nothing improper in connection with it. 24. Would it be unreasonable, or would it not be a proper thing to do for an institution which you say yourself was injured by the legislation, and so weakened, that the State should help it. In other words, had not the Colonial Bank a legitimate claim for that assistance?—l think so. 25. On the one hand, the colony had guaranteed one bank two millions of money, and, on the other hand, the only assistance given was the lending of £150,000 ?—Yes, that is, so far as I know, the only assistance given to it. 26. Was there any insecurity in reference to that £150,000 ? —No, there could not have been any insecurity. 27. In your opinion, it was a safe investment ?—Yes, an undoubted investment, so far as safety was concerned. 28. Would the Bank of New Zealand, with you as President, and the present board of directors have been prepared to make the same investment ?—I think it would have been prepared to make a deposit with the Colonial Bank ; but I do not think the Colonial Bank would take that. 29. At all events, so far as safety is concerned, and as a business transaction, the Bank of New Zealand would have been prepared to make the investment?—Oh, yes. 30. Was it an advantage or disadvantage to the Bank of New Zealand to have the whole of the banks in the colony kept strong ?—I think it was an advantage to prevent any crisis among the banks. 31. Am I to understand that you mean this : That, having put the Bank of New Zealand in a safe position, to have allowed any of the other banks to get into trouble would have prejudicially affected the colony in respect of the Bank of New Zealand ?—Yes, sir. It must be remembered that at that time the Bank of New Zealand was not really safe. The lending of the two millions of money did not do away with the deficiency in the Bank of New Zealand in any way. The Bank of New Zealand's position was quite unsafe until the legislation of 1895 ; consequently, before that legislation took place, the Bank of New Zealand was more likely to be affected by a banking crisis than any other institution in the colony. 32. Then, if the Government had allowed any of the banks to go down, it meant that the two millions of money which had been advanced to the Bank of New Zealand was in " Queer Street" ?— I think so. 33. On that ground alone —setting aside the claims of the Colonial Bank on the colony—your opinion is that any assistance rendered by the colony to the Colonial Bank was proper ?—I think it was a proper and wise thing to do. 34. Now, the Bank of New Zealand after it received the two millions had a large sum of money to invest ? —Yes. 35. Was anything done by the Government, with respect to the investment of the reserved million, that prejudiced the position of the colony or the bank itself, to your knowledge?—No, I do not know of anything that prejudiced the position of the colony or the bank—any action of the Government. I cannot recall anything of that kind. 36. Then, in the investment of that million, do you think prudence and care was taken with each and every investment ?—Yes, and I may say that assistance to invest was given by the Government ; after the Government was applied to. 37. What was the position as regards the earning-power of the million that was therefor investment in liquid assets ?—I think, taking the profits made upon the sales of securities, as well as interest received, that on the whole there was a profit made over and above the 4 per cent, paid for the money. 38. You think it about covered itself ?—I think it did. 39. Have you made any loss as yet on this particular investment ?—No. 40. You have not ? —None that I know of. 41. Yesterday you said that the shareholders and customers of the Colonial Bank of New Zealand were prejudiced by the action of Parliament. Will you explain to the Committee in detail how they were prejudiced ? First of all, were the shareholders of the Colonial Bank prejudiced, and, secondly, how were they prejudiced by the action taken by Parliament ?—Looking at it from the Colonial Bank shareholders' and customers' point of view, I think it would have been more beneficial for them if the purchase had not been agreed to on a liquidation basis, for if the accounts could be nursed at the risk and expense of the Colonial Bank it would bring out more in the long run, I believe. Of course, the Bank of New Zealand cannot do that. The Bank of New Zealand only purchased the good business of the Colonial Bank. They did not bind themselves to give time for
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the nursing of the accounts in such a way as they undoubtedly would do if the accounts were their own ; and the consequence is that the prompt liquidation of several accounts promises to bring in less money to the shareholders of the Colonial Bank, while it is very disastrous to the persons whose accounts are likely to be liquidated. 42. Can you inform the Committee who it was who was responsible for the condition being placed in the Act which has put the Colonial Bank into such a fix?—lt was advised by the solicitor who drew the Act which was passed on the 4th September. 43. But was it the solicitor of the Bank of New Zealand, or the solicitor of the Colonial Bank? —The solicitor employed by the Bank of New Zealand. 44. Then, according to your own showing now, you are all parties to what was injurious to both banks, and prejudicial to the interests of the shareholders and customers of the Colonial Bank ?—Yes; but I do not think any director of the Bank of New Zealand, or the solicitor employed, foresaw that it would be prejudicial to the Colonial Bank shareholders and customers. Section 41 is the clause referred to. 45. Was there any discussion in respect of that clause 41, or did the directors of the Colonial Bank object to it when you were fixing the conference in respect of the agreements ?—I remember questioning the solicitor about it myself, and he told me that if it were not done it would be necessary to hold a confirmatory meeting of shareholders six months after the first meeting to sell the business ; that no bank could stand during that six months, as the business would run out of it; and that there would not be much to sell when the date of the confirmatory meeting came round. He therefore thought that, in selling the bank, prompt measures should take place. Ido not remember any of the Bank of New Zealand directors discussing the matter. I remember that afterwards some of the Colonial Bank directors said it was very prejudical to the Colonial Bank, but I do not remember it at the time. 46. Did it never strike you, or the parties who were negotiating, that, if you could pass an Act insisting upon the winding-up of a concern under the Companies Act, you could have also passed a clause saying that the second meeting of the Colonial Bank shareholders would not be necessary ? Would that not have been a simple way out of the difficulty ?—No doubt the Legislature can do anything, but we did not know that they would do so, and we wanted to make as few changes in the Act as possible. 47. At this stage, now, do you deem it advisable to withdraw from the liquidation of the Colonial Bank under the Companies Act ? —I think it would be a very good thing for the shareholders, and for the customers of the Colonial Bank, if some alteration could be made whereby there would a little latitude allowed, and a less prompt liquidation of everything. 48. It would be in the interest of the customers who are also on the "B " list?— Very much. 49. Would it or would it not be in the interests of the Bank of New Zealand?—lt would not be against the interests of the Bank of New Zealand, because the Bank of New Zealand would not take any undue risks. The risks would have to be taken by the Colonial Bank. I think it should be to the advantage of the Bank of New Zealand, because they could by that means conserve business which might otherwise be thrown away owing to the liquidation of the accounts of the parties. 50. What do you mean by throwing away ?—Well, suppose there is an account in the "B " list, and the customer is doing well, and adding to his capital year after year, but so slowly that the time the liquidators have at their disposal will not be enough to put him in a position to warrant the Bank of New Zealand taking over his account. If the Bank of New Zealand were empowered to take over that account, with certain supervision, at the risk of the selling bank, then the business might be preserved instead of being put into liquidation, and the account being destroyed. 51. Have you any suggestions to make to the Committee in respect to this matter ?—I have not thought that out, and should like time to consider it. I think, if the powers of the liquidators were enlarged so as to obviate the necessity of their going to the Court in these matters, it would be a good thing. 52. Anything else?—l think an extension of time should be allowed for the liquidation. I have not thought out these matters, and should like to prepare suggestions, if I may be allowed. 53. There is no objection to that; you can be recalled and asked questions. 54. The Chairman.] You mean suggestions of your own ? —Yes. 55. Hon. Mr. Seddon.] You have no objection to saying now that not only are the shareholders of the Colonial Bank, but the customers are prejudiced by the winding-up ?—Yes. 56. You say the Bank of New Zealand is also placed at a disadvantage ?—I think so. 57. In what way?— The Bank of New Zealand are obliged to take such measures as will keep them safe. They may be harsh measures, but they are obliged to take them. They cannot undertake unsafe business. 58. You have practically to do what the liquidators of the Colonial Bank direct: if they press, you must press? —In some cases, yes. If they bring to our notice that, in their opinion, an account is getting unsafe, clause 11 of the agreement provides that, "If the selling bank shall consider that any steps or proceedings are necessary for the protection of the said accounts, or any of them, in the said ' B ' and ' C ' lists respectively, the purchasing bank shall, on receiving written instructions from the selling bank, take such steps and proceedings." We are bound to take them if they choose to consider that any account requires proceedings taken against it. 59. The Chairman.] That is, at the risk of the selling bank, is it not ? —Quite so; but we lose the business. We get the odium, and lose the account. 60. Hon. Mr. Seddon.] Have there been such notices served on the Bank of New Zealand ?— Yes, I think there have. 61. Now, there have been statements made that the Bank of New Zealand was unduly and harshly pressing Colonial Bank customers—in fact, communications have been received to that
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effect. This, tnen, would refer to communications from the liquidators ?—I do not know that. I do not think the Bank of New Zealand has done anything contrary to this agreement at all. At the same time, it is my opinion that if some of these accounts had been old Bank of New Zealand accounts they would have had different treatment from the officers of the Bank of New Zealand, because the whole risk of them would then lie at the doors of the Bank of New Zealand. But here the risk is not so, for we have got cover for the "B " accounts. Therefore, while the Bank of New Zealand has done nothing wrong, the accounts are now being treated on a liquidation basis practically. No further advances can be made to any of these accounts without the sanction of the Colonial Bank liquidators. I have in my mind a very large account where the Colonial Bank liquidators refused to sanction advances for the purchase of raw material, which it is absolutely necessary for the customer to get in order to carry on his business, and the Bank of New Zealand does not consider it a safe risk, and will not advance itself, and between the two the customer is being injured. 62. Do you not think it is monstrous for you banks to place these people in such a position ? Do you think Parliament guaranteed these two millions to enable you to place people in that position ? —I do not think they did. I am very sorry for it, and if I had to take choice as to acting the same part in this matter over again, I would not act the part I did. But Ido not think any of us foresaw this. We did not foresee that the liquidators of the Colonial Bank would not advance sufficient money for the purchase of the raw material to a trading concern. It is suicidal for those concerned, but we cannot help it. 63. Have you any cases in your mind where, if you had been free agents and the customers were clients of the Bank, you would have done that ?—We would have done it certainly. We should have nursed the accounts, and probably there are accounts now that we are nursing where we have provision for possible losses against them in our books. 64. Does not that mean that there is so much loss to you if these customers' accounts, which might otherwise be continued in the bank, are put into liquidation ? —Undoubtedly, if they are put into liquidation, and the accounts disappear, we shall not make so much as if these customers were allowed to carry on. 65. Have you made any representations as to this unfortunate state of things to the Government prior to this ? —No, I do not think I made any special representations. It is not very long since the position has become emphasized. I think I have mentioned it recently in conversation with yourself, sir. 66. You have not approached the liquidators with a view to coming to some settlement in respect of fixing definitely the cover wanted to enable you to take over the accounts in the " B " list ?—There has been a good deal of correspondence between the liquidators and the Bank of New Zealand, but so far it has not come under my own notice for arrangement as a whole. I think the liquidators have adopted a rather red-tape and unyielding attitude. I suppose they feel that they have not any latitude, feel bound by the clause in the Act, and cannot get away from it. They are purely and simply liquidators. Ido not for one moment say that they are not strictly doing their duty. No doubt they are advised by their solicitor, and are doing their duty strictly and conscientiously. 67. .But, in the meantime, while they are doing their duty the shareholders are losing their money, and the customers of the bank are being harshly treated. ?—Yes, the customers are harshly treated, and the shareholders have lost their money through certain steps having been taken that I know of, where the customers have been very harsbly treated. 68. The Chairman.] Still, the liquidators have no option to do otherwise, have they?—No; at any rate, they consider they have no option. 69. Hon. Mr. Seddon.] Who have they anything to fear from ? Have you had the accounts sufficiently long in the " B " list to fix what you think is a safe cover, and to take over the accounts ? —Yes, what we think should be provided for as capital for several of these accounts. I think it would be impossible for the liquidator to present these people with the capital that is required, and perhaps they would get more by the liquidating of these accounts than by presenting the parties with sufficient capital. 70. But, in the meantime, if the customers cannot get the necessary accommodation from you, and they have to give away all their flesh, would not that mean a further loss to the Colonial Bank? —Yes, but they would get everything the customer has. Instead of presenting him with a number of sovereigns, to enable him to go to another bank, they would skin his bones and take all he has got. As far as the Bank of New Zealand is concerned, they simply lose an account. They take no risk. They would rather lose an account than take any risk. As far as the customer is concerned, it is very bad for him. 71. Then, it will be almost a miracle if any of these customers pull through ?—Some of them may. They may get guarantees from their friends-; but certainly several of them will have to suffer unless something be done to alter the position. 72. Is it not a very tedious and expensive process to keep these liquidators and the whole of these things going for years ? —Yes. 73. How long do you think ? —Well, if the accounts have all to be liquidated, I think it will take longer than the two years. 74. Do you think, at the end of two years, that the £604,000 involved 'can be suddenly wound up without injury to the colony ?—I do not think there is all that remaining, but I think there will be half a million. I think it will be distinctly injurious to the colony to prolong all this financial trouble. 75. Are the directors prepared to meet the liquidators to see whether some arrangement can be come to ?—I think the directors would be prepared to do that, so long as they are not called upon to take any undue risks ; but we could not enter into any fresh agreement which would mean more risk to the Bank of New Zealand.
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76. Where does the shoe pinch with the liquidators ? What do they fear from the shareholders, or any one else ? Where is their difficulty ? —I should not like to say, sir. I think this : that they are not paid for taking any risk. They get their pay whether they take any risk or not, and, under the circumstances, they unfortunately prefer not to take any risk, and they feel, of course, they are always liable to be controlled by the Court. In one case where they applied to the Court and recommended certain things the Court did not grant them, by which, I may say, the shareholders had to suffer. 77. Are there some accounts which are in such a position that, with a little nursing, there would be no necessity whatever for them to go to the Court at all—where there would be no writings-off or compromise required —in this " B " list ?—Yes ; I am of opinion that, with nursing, there are some accounts that would come round without any writings off. There are other accounts where some writing off might be required, but not nearly so much if the account is nursed and carried on as if promptly liquidated and knocked to pieces. 78. Then, if an asset was in a position to pay 19s. 6d. in the pound, for that 6d. it would have to go before the Court ?—That is the view the liquidators would take of it. 79. You know, in respect of this purchase, the accounts which are put under the "C" list? —Yes. 80. Were you here when Mr. Booth was giving his evidence, and used these words in answer to a question put by Mr. Montgomery: " We never intended from the first to take over the accounts in the 'C ' list " ? —I do not remember hearing Mr. Booth say that. 81. Very well. Speaking of the directors of the Bank of New Zealand, if he has made that statement, I ask you whether it was a correct statement —that from the first the directors of the Bank of New Zealand never intended to take over the accounts in the "C" list?—No, I should not say the directors felt like that, although I think this : that they no doubt felt very doubtful if these accounts would ever be in a position for them to take over. But I do not think they had a hard and fast decision arrived at in their own minds that they should never take them over, or have nothing to do with them. 82. Would you think it was proper or fair for the selling bank and the purchasing bank directors'to'come to or sign an agreement, and then that such a reservation should be made as that which Mr. Booth told the Committee was positively arrived at ?—No, I do not think it would be fair, and I do not think it was the case. 83. He has sworn that it was ?—Perhaps he misunderstood the question. 84. You say that if there was such a reservation it was improper?— Yes. But talking of the board as a whole, there was no such resolution, although, as I say, we might have had doubts about the probability of our taking over the accounts. 85. The Chairman.] Mr. Booth said, in his evidence, " The accounts in the' C ' list were accounts that we had no intention from the beginning of taking over; but, of course, we were quite willing to meet the wishes of the Colonial Bank, and work the accounts in the ' C ' list for three months " ?—I cannot indorse that, and I do not think the directors will. 86. Hon. Mr. Seddon.] He uses the "we " ?—I do not think he had any right to do that. 87. You say that if he had that mental reservation it was a most improper thing ?—I should not like to pass any opinion about Mr. Booth's conduct in this matter. 88. Well, if there are two parties making a bargain, and it is reduced to writing, and if they have got a cover, as in this case, and they sign the agreement with a mental reservation that it should not be passed, what would you say ? —I would only like to go so far as to say that there was no mental reservation in the minds of the board. 89. The Chairman.] As far as your own mind is concerned ?—I can speak for the others too. I know they had no mental reservation. I think still that Mr. Booth somewhat misunderstood the question. 90. Hon. Mr. Seddon.] What has been Mr. Booth's attitude in respect of the accounts in the "0" list? Has he ever supported taking them over? Let us test his reservation with his subsequent action. Has he been averse or otherwise to taking over the accounts in the "C" list?—l do not think the accounts in the " C " list were ever put into such a position that the Bank of New Zealand would be justified in taking them over. 91. The Chairman.] Is that not coming a bit towards Mr. Booth's statement ?—No. Mr. Booth refers to his sentiments from the beginning, before he was ever asked about them. 92. But if, as you say, the " C " list was never in a position to be taken over, then, of course, the Bank of New Zealand could not think of- taking them over ?—But that is a different matter altogether from what Mr. Booth refers to. 93. Hon. Mr. Seddon.] Mr. Booth here says, " But, of course, we were quite willing to meet the wishes of the Colonial Bank, and work the accounts for three months." Was that your intention, or did you honestly intend to take them up ? —-We honestly intended to take them up if they were placed in a position to enable us to do so. 94. You got the cover you asked for, did you not ?—We got the whole thing covered. It was entirely the selling bank's risk from the beginning. 95. You could out of the cover for the " B " list utilise that money for the " C " list, in case of any loss? —No ; the whole of the " C " list was covered to us from the Colonial Bank from the beginning. If we entered into any separate agreement afterwards as to taking over any account in the " C" list, I do not think, under this agreement, that the cover for the "B " list would have come in. It was allocated. In clause 10 it says, " The purchasing bank shall be entitled to apply surplus arising from any of the said marginal sums in the 'B' list in aid of any deficiency which may arise in any account in such list until the whole of such accounts in such list shall have been taken off, liquidated, or adjusted." That refers distinctly to the "B " list.
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96. " As stated in the agreement, the Bank of New Zealand is to hold the sum of £327,305 (being part of the assets shown in the books of the Colonial Bank), pending the taking-over, realisation, or readjustment of certain accounts, set forth in the 'B ' and 'C ' lists." That is from, your letter of 2nd October, 1895 ? —That is quite right, but it does not say that the amount set aside for the " B " list can be spent for the " C " list, or vice versd. 97. Has the bank been advised whether or not the amount for the "B " list can be applied to the "C " list ?—I do not think so. The "B " list has a broad guarantee for anything that might occur, but there was never any special provision by which a part of the " umbrella cover" for the " B '' list could be taken for another purpose. 98. What is the cover for these 1i5t5?—£272,072 for the "B" list and £55,233 for the "C" list. 99. Is that a sufficient cover? —We considered it a sufficient cover so far as the " B " list is concerned. With regard to the "C " list, the whole account was always at the risk of the Colonial Bank. 100. So were all these accounts bearing the cover—the question is whether the £327,000 was sufficient cover?—We had more cover than that. The whole of the "C " list was covered; but in the case of the " B " list we could only retain £272,000, and in the case of the " C " list we could get more. 101. But if you had an unlimited cover, how can you say that the Bank of New Zealand was not in a position to take over the accounts? You say that you are simply working the "C " list as agents ?—That is all we ever did. 102. Then, what do you want with cover, if you are only working the list as agents?—l think that grew out of the fact that before the accounts were put into a separate list they were in the "B " list, and a certain cover was retained. At all events, it was at that time. That £55,000 would be about the sum required for the "C" list. Afterwards it was found that more was required ; but the thing was so uncertain that the Bank of New Zealand refused to take any risk with regard to the " C " accounts. 103. Were the whole or any of the parties whose accounts were put into the " C " list notified of this arrangement you were making in respect of placing all these accounts on these conditions in the " C " list ? —No ; I do not think any of the parties concerned in the " B " or " G " lists were notified about that. It was simply arranged between the two banks. 104. In other words, at the will of the two banks, they were victimised or otherwise, and not made acquainted with the fact, and were kept in entire ignorance ? —The business was handed over from one bank to the other, and under certain agreements between the two banks of which the customers were not aware. 105. It is rather a high-handed and un-British proceeding, is it not ? Have you ever known, in your experience as a banking expert, anything similar, where people's accounts have been put into one position and another, and they have not known anything about it ? And in accounts like the "B " and "C " lists, where they might be ruined ? Have you ever known anything similar ?— I have not been personally acquainted with anything that bore so hardly upon the customers of a bank ; but I think the purchase by the Union Bank of Australia of the Bank of South Australia had a similar effect as regards the customers. 106. Have you had any experience in liquidating a bank in your time ? —Yes, I have. 107. What bank is that? —I liquidated the Oriental Bank in China. 108. I suppose they had no " A," " B," or " C " lists there ? —No ; I did not have very much difficulty, the accounts being all good, in getting them taken over. 109. There was no cover wanted ?—Not beyond what the customers possessed. 110. Do you think that three months was a proper time to give, any large trading concern in the colony to see if they could be provided for in the agreement for accounts in the " C " list?—l think it was a very short time. 111. Do you think it was possible for any large trading concern within three months, unless it was very strong indeed, to have been put in such a position as to work out its own salvation ? —lt was a matter of difficulty, no doubt; but I was then negotiating on behalf of the Bank of New Zealand, and, as the Colonial Bank directors agreed to it, it did not become part of my duty to suggest a longer time. 112. You would not consider any particular corporation or person whose accounts were in the " B " list were specially favoured by having their accounts put in the " C " list?— They were not. 113. Were they prejudiced?—As it happened, I-think it was unfortunate for them. 114. Would it not have been better if they had been put in the " D " list altogether than to have had this three months' working by you as agents ? —Yes; but they were operative accounts, and, being so, they could hardly have been put in the "D " list. The "D " list was composed of accounts worth money, some of them, but inoperative; whereas some of the accounts in the "C " list were highly operative. 115. Then, being highly operative, what was to prevent you putting them into the "B" list, and taking a larger cover ? Was there anything to prevent you ?—Yes. We had not ascertained the actual security for the accounts, and did not care about taking them, as we took the accounts in the " B " list, for that reason. 116. Were you unanimous in creating the "C " list, and putting the accounts therein?—l think we were unanimous. 117. As far as you were concerned, you did not make the reservation that you never intended to take these accounts over from the first ?—Certainly not; nor do I think the other directors made that resolution. 118. Did you intend to take them over ?—lf they were made out to be good enough for us to take over.
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119. The Chairman.] But you said they never were. It would be the same at the beginning as at the end ?—I did not prejudge the matter. 120. Hon. Mr. Seddon.] You know Mr. J. G. Ward?— Yes. 121. You are acquainted with the J. G. Ward Company in existence?—l know that there is such a company in existence. 122. Were the private affairs of the late Colonial Treasurer improved by the banking legislation ? —I am afraid that is going into private accounts, and that I cannot answer that. 123. You have told us that these persons who are in the " B " list would be prejudiced by the legislation. Were the accounts of persons or corporations in the "C " list prejudiced or benefited by the banking legislation of 1895 ?—I think I can say this : that, however much customers in the " B " and " G " lists have been prejudiced, they were not benefited to any extent by that legislation. If there was anything, it was the other way. 124. What do you mean by " the other way " ? —They were prejudiced more than benefited. 125. Your answer to this question is this : That persons and corporations whose accounts are in the "B " and "C " lists were prejudiced by the banking legislation?—l would not like to say that. Some of the accounts were not at all prejudiced. Some of the accounts have been taken over by the Bank of New Zealand, and are going on just as they did formerly in the Colonial Bank. Others are still in the list ; some may be liquidated, and it is undoubtedly to their prejudice that such a state of things should be. The accounts in the "C " list are undoubtedly prejudiced. 126. The accounts in the " C " list are absolutely prejudiced?— Yes, I think so. 127. And prejudiced without the parties being consulted or knowing anything about it ?—Yes, that is so. 128. Will you explain how they were prejudiced ?—No doubt, if the Colonial Bank had retained their business instead of having sold it under these circumstances, these accounts would be carefully worked so as to bring out the least possible loss. For instance, if a good offer was made for the assets, the acceptance would bring out more to the Colonial Bank than a refusal of the offer. Ido not think the Bank of New Zealand would have refused any such offer as that. In such a case it would be unlikely the directors would refuse such an offer as that, and in various other matters the customers would be treated with more leniency and kindness, in order to bring out as much as possible; whereas, under present circumstances, there is nothing for them but liquidation. The Bank of New Zealand will not take the accounts, the Colonial Bank cannot keep them, and consequently the accounts must be prejudiced. 129. Do you think it is in the interests of the colony, or of any particular district, that any of these large trading concerns should be suddenly forced into liquidation ? Do you think that it was carrying out the intention of the Legislature when it rendered assistance to the Bank of New Zealand? —No. Ido not think the Legislature could foresee that. It is undoubtedly against the interests of the colony to have any large financial failures. 130. If there is to be a forced liquidation of the accounts in the " B " and " C " lists, we might just as well have let the bank go itself ?—I may say that I did not contemplate that the liquidation of the Colonial Bank would take the turn it did. I thought, from my previous experience of liquidation, that the fullest time would be given to people to do the best they could. 131. In other words, the colony came to the rescue of the Bank of New Zealand to prevent liquidation, and thereby placed the Colonial Bank into liquidation ?—Practically it amounts to that in some of the accounts. 132. Has there been, to your knowledge, any interference by the Government, or any member thereof, in respect of the purchase by the Bank of New Zealand of the Colonial Bank ?—No, I do not think so. 133. The Chairman.] Are you in a position to give a definite answer? Do you know?—So far as I know, there has not been. 134. Hon. Mr. Seddon.] From the beginning of the trouble in connection with the banking legislation, and the trouble incidental thereto, has the Government, or any member thereof, been specially benefited ?—The Government have been benefited by the bank being placed in a more secure position. The country has been benefited, but not the Ministry specially. 135. Has the Ministry, or any member thereof, been specially benefited by the banking legislation ? —Not beyond the general good done to the country. 136. I mean privately ?—No, they have not. 137. The Chairman.] Apart from the benefit to the country? —Apart from the benefit to the country, there has been no benefit conferred upon any member of the Ministry. 138. You are speaking so far as your knowledge goes?—l know of that. 139. Hon. Mr. Seddon.] Has every precaution been taken by the Government to safeguard the interests of the colony in respect of the guarantee, for which they were responsibe, of £2,000,000 to the Bank of New Zealand and Estates Company? You were a party to the negotiations, and know the action of the Government from beginning to end ?—That refers to the guarantee. Ido not know what the safeguards were then ; but since I appeared on the scene the Government has been most careful to conserve the interests of the colony. 140. You knew the position of the colony in 1894 financially—its commerce and trade?— I did. 141. You knew, generally, also the position of the banks doing business in the colony at that time ?—Yes. 142. What would have been the result had the colony refused to come to the rescue of the Bank of New Zealand in 1894 ?—I think the result would have been very disastrous to the banks doing business here. I think those who had no other resources or business beyond the New Zealand business would probably have suffered very severely. 20—1. 6.
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143. Were the banks weak or strong at that time?— They were much weaker than they are now. 144. What had led to that weakness ?—The Australian crisis of 1893 principally led to it. The withdrawl of deposits in London from the banks doing business here—in fact, from all the Australian banks—also led to it. 145. Were the prices of our staple articles of produce high or low at that time ?—I think that all round the prices for produce in 1894 were lower than they were known to be before or since. 146. What effect would these low prices have upon banking institutions and trading concerns in the colony ?—A very bad effect. 147. Then, in your opinion, owing to these causes, if the Bank of New Zealand had gone into liquidation, there would have been widespread disaster?— Certainly. There would have been ruin to half the people in the colony. 148. Do you think the whole of the banks doing business here would have been able to keep their doors open if the Bank of New Zealand had closed its doors ? You know now the position of the Colonial Bank which has been disclosed since, do you think that, viewed from that standpoint, that bank could have gone on with the Bank of New Zealand in liquidation ?—I do not think the Colonial Bank would have been worse off than other banks. 149. You mean that all or most of them would have gone?— Well, that is very difficult to say. 150. There would have been a great risk ?—I would like to say this : Such a thing would probably have reacted on the other colonies. The other colonies being in a very depressed state at the time, if the crisis and want of confidence spread to the other colonies the whole of the banks doing business here might have gone. It is difficult to say what would have happened, but that disaster would have happened is perfectly certain. 151. Is there any bank that could have given to the colony accommodation to the extent of £1,000,000 suddenly at that time ?—I am not prepared to say that there was no bank that could have done so, but I think it is very unlikely, because I think they would have required all their own resources to tide them over such a crisis. 152. It is not likely, owing to the weakened condition of the banks of Australia, and owing to the low prices, that they would have come to the assistance of the colony when their own existence was at stake ? We had £1,300,000 altogether locked up. We had nothing to go en with, and we should have required a million of money for the colony ?—But the Queen is entitled to have the money first, and you are entitled to take that money out of the safes of the bank. 153. At all events, suppose your view is correct, by the Government taking that money it would have meant depleting and putting the institution in a worse position to do business with their clients ? —What I mean is this : that farmers and others have advances from the bank, and probably they have twice or three times enough as security to cover such advances. But they would have been sold up in the liquidation of the Bank of New Zealand, and there would have been no one to lend them money on their farms, and they would have lost them or had to sell at a third of their value, or probably less. If the whole of the farmers between here and New Plymouth were suddenly called upon to realise in such a case, who would there be to purchase their properties ? The customers of other banks would probably have had all they could do to get their own business carried on. Business would have been paralysed entirely, and the colony's purse-strings would have been tied up. 154. Then, in your opinion, Mr. Watson, even viewed in the light of subsequent events, and the extension of the assistance, was the action taken by the colony in 1894 justifiable and beneficial, or otherwise ?—I should think, looking at it from the Government point of view— from the information which they then had—it was certainly justifiable to prevent the disaster. 155. Would you have recommended it?—l should like to know more about the situation. I really cannot 156. You have been President of the Bank of New Zealand, and you know the position it was in ; you were at that time inspector of the Colonial Bank, and had a general knowledge of the banks in the colony. The question is whether it was in the interests of the colony as a whole ?— Yes; in the light of the whole subsequent events, I should have recommended it. 157. The Chairman.] But if you had been called upon to act in the emergency—placed in the position of the Government —with your expert knowledge of the whole position, would you yourself have recommended what was done by them ? You would have had to decide promptly, as they did ?—I should certainly have recommended some such steps, perhaps not exactly the same. 158. Hon. Mr. Seddon.] Of course, many people are wise after the event?— That is just it, sir. 159. But did any other course at that time strike you which, as an expert, you thought might have been done with the same result ?—Yes; I had other views at the time, but I was not in any way mixed up or consulted about the matter. 160. However, generally speaking, you are of opinion that it was a wise thing to come to the rescue of the Bank of New Zealand ?—Yes; I am of opinion, as things have turned out now, that it was better to undertake the responsibility the Government have done than to allow disaster to overtake New Zealand at that time. 161. Do you think there is any very great risk of the colony losing, either lightly or heavily, in respect to its guarantee, and the assistance it has rendered ?—No, sir ; with expert management and care, I do not think the colony will ultimately lose anything in connection with its guarantee or assistance to the Bank of New Zealand. 162. What profits are required now to be made by the bank to meet the extra tax put upon it owing to the advances which have been made?—We want to make about £90,000 a year. After paying interest on the deposits, and 4 per cent, on the £2,000,000, we want to make about £90,000
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net. We want to pay £50,000 to the Assets Board, £17,500 for the Government £500,000 preference shares, and it would be advisable to pay, if possible, a dividend on the capital called up to the shareholders on the second call. That is, after paying salaries, interest on the deposits and the £2,000,000, and everything else, we want to make about £90,000. 163. What did you make last year, irrespective of the £54,000 taken from Profit and Loss Account ? What were the net profits ?—That £54,000 was unusual. That was the dregs, as it were —not foreseen in the previous year—to clean up the Australian business. We do not expect to do that every year. Had we not written that off we should have made about £106,000 last year. 164. Well, from the outlook this year, do you think you will be able to make the £90,000? — It depends upon how long this inquiry is to last. We will not make very much if it lasts much longer. It is quite true that there is business leaving the bank every day on account of this inquiry. People do not stop to think. They say, "There is something wrong here; we will withdraw our accounts." Every day we hear of it from our branches. 165. Do you not think that the difficulty between your directors and the Colonial Bank liquidators as to these accounts has had something to do with driving your customers away ?—That would have something to do with alienating the sympathies of those interested in the lists ; but in this I am speaking of depositors are leaving the bank, and it is the backbone of the bank's business which has been attacked since the opening of the proceedings here. I did not take such a circumstance as this into consideration when I made my computation of the profits last year. 166. Do you not anticipate that it is going to be an annual occurrence? —It will not be an annual occurrence with me here, anyhow; that lam certain of. 167. The bank has got any amount of money on deposit, has it not ?—The bank's financial position is perfectly sound at the present time, and must continue to be so. 168. In fact, the bank has got too much, and that is the trouble at the present time, and you have to find investments for your money ?—We have got very good investments for our money. 169. The Chairman.] You have no difficulty in finding good investments ?—No, we can do all we want with our deposits. The Bank of New Zealand has more facilities than other banks doing business here on account of the number of its branches. -170. Hon. Mr. Seddon.] It has been reported that banks, being unable to buy drafts, are actually shipping produce on their own account, and at their own risk. Has the Bank of New Zealand being doing anything of that kind ?—No. The Bank of New Zealand conducts a very large business in the shipment of produce for its customers, but it does not do anything on its own account, except in the shipment of gold. 171. I am glad to have that answer, because it has been currently reported that, through failing to buy drafts, the banks are shipping on their own account ?—The Bank of New Zealand is not doing that. 172. In respect of the London business of the Bank of New Zealand, have you had any reports from the auditor there ?—Yes. 173. Is the business there safe and satisfactory ?—Yes. 174. What is the position in London as regards deposits?—We have been paying off deposits in London. We look upon them as more unstable than the deposits here in the colony. The slightest little whisper or rumour of any depression in the colonies causes the English depositors to withdraw their money very speedily, and that led very greatly to the difficulties of Australia in 1893. Some of the best banks are not taking any deposits in London at all. The Commercial Bank of Sydney, for instance, which was reconstructed during the crisis, has paid off all its London deposits. The Bank of New Zealand, now having plenty of deposits in the colony here, are doing the same, and are not taking any fresh deposits in London, but are paying them off as they mature. 175. Then, if in the balance-sheet a reduction in deposits is shown, you have been parties yourself to making the reduction ? —Yes, that is so. 176. Without this being made known to the world, might it not tend to shake confidence ?—Oh, no, Ido not think so. I should probably say something to the shareholders about it at the halfyearly meeting—the only time I do say anything to the public about the affairs of the bank. 177. But have you reported this to the Government officially? —I think probably the auditors in their statement have reported it. 178. But you as President, in a matter of policy of this kind, have you made a report to the Government officially ? —I do not think 1 have ; but Idoit by forwarding the auditors' statements, with my confirmation or otherwise, as the case may be. 179. Do you not think that in a case of this kind it would be advisable for you, as President, to take the responsibility of communicating it where it is a question of policy, and where matters of serious moment are involved —do you not think it advisable that the Government should be officially informed of it by you?—l think I have informed you personally about it, but do not think I officially reported it to the Colonial Treasurer, because it would be only duplicating the auditors' reports to him. 180. Do you not think it would be better to communicate officially, and put on record any question of policy of this kind?—As I have already said, it would be duplicating the auditors' statements which I forward. As they are seen—and this is quite an outside thing—l do not think any good object would be served. 181. Do you say that the auditors' statements refer to your reducing the deposits in London? —I think so. 182. We come now to the Australian business. Mr. Booth stated here that you had come to the conclusion to close up the Australian business. Is that correct or otherwise ? —-That is not correct. I think Mr. Booth went too far in saying that. 183. Will you give us your view of the position?— The directors do not wish to do the same class of business in Australia that was done in former years. They wish only to do very undoubted
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business as an adjunct to the exchange business, which it is necessary to conduct there ; and I think that, so far from Mr. Booth's statement being correct, if we had not branches in Australia now, we should at once consider about opening them for exchange purposes. 184. Do you find that a profitable business is done in exchanges ? —Yes, a necessary business. The exports from this colony are very much more than the imports; and the only way we have of getting our money back is by the Australian exchanges with London. Very often we have to get a shipment of gold coin here to meet the requirements of trade. I may say that Ido not think Mr. Booth understands all that, and possibly he gave his own ideas of the matter, and said " we " by mistake for " I." 185. Do you speak as "I," or do do you speak as "we"?—l think I speak as "„we." I do not think the other directors will back up what Mr. Booth said about closing up the branches in Australia. 186. We will take the New South Wales business. You had a change in the managership of the New South Wales business, had you not?— Yes. 187. Who was managing it when you became President ? —Mr. Wilson. 188. What became of Mr. Wilson? —He was offered the chairmanship of the Civil Service Board of New South Wales. 189. Who has taken his place?— Mr. Parfitt. 190. Have you had any reports from Mr. Parfitt as to the business and position of the bank there ?—Yes. 191. How did he find it?—l think he had been over there before inspecting it, and before he was appointed inspector in Australia he had been over specially looking into things. And Mr. Butt had also been over there quite recently, and we had no reason to disagree with Mr. Wilson's report got in our time; and Ido not think that Mr. Parfitt's report differed very much to what we knew with regard to the Sydney business. 192. Supposing there had been a profit and loss account made out for the Sydney business, would it have shown a profit and loss since the legislation ? —I think, taking the writings-off into account, it would have shown a loss, but the good business gives a profit. The loss occurred in the dead business. I think all the operative business we have in Sydney now —and it is a very large one—is highly payable. 193. You think now that you have cleaned the slate you have got a good business?— Yes. 194. You are satisfied that, with the writing-off of the £50,000 last year, which you say was largely caused by Australian losses, you are on the safe side now ? —With a certain amount in the Contingent Fund. 195. Do you say there are some other losses yet to be met in the Australian account?— Yes; they might occur. 196. How much of the Contingent Fund do you think is required to meet your estimated Australian losses? —I shall be glad if none of it will be required. The provision necessary to be made in future under the Contingent Fund is not by any means so well defined that you can expect me to say how much loss there will be here, and how much there will be there. It is more or less indefinite. But we consider —exercising our judgment from all we know—that we have made ample provision in that Contingent Fund to meet any undefined losses. 197. But did you not tell the Committee that £200,000 would cover everything, and now you have taken £254,000, according to your own actions ?—Well, last year, according to the knowledge we had, we thought it would. 198. How came you to be out by £54,000 in twelve months ?—Well, things did not improve in. Victoria, and we made losses in realising some of our securities in South Australia, too, further than we had anticipated at that time. 199. Now, when you were estimating that £200,000 for contingent liabilities and set it apart, had you not a list showing the accounts and writings-off that were deemed to be advisable to make provision for ?—Yes, we had. 200. You deemed it prudent to ask that there should be £200,000 set apart for contingent losses ?—Yes. 201. What proportion of that was, in your opinion, required for contingent losses in Australia, or what proportion was set apart ?—I do not think it can be brought out proportionately like that. We took a certain number of accounts, both in Australia and New Zealand, and taking them altogether we gauged the proper amount of provision that we were to ask for to be set aside to cover possible or probable losses. On one account we might not make any loss at all, and on another we might. It is extremely unlikely that we should not lose on the whole, and extremely unlikely that we should lose on the lot. 202. Did you want £20,000 on the Australasian business ?—Yes, certainly. 203. Did you want £40,000 ?—Yes. 204. Did you want £60,000?— Probably. 205. Then, £60,000 and £50,000—that is £110,000?— Ido not say we wanted £60,000. On some accounts we wanted nothing, but we wanted to make certain provision for Australia and New Zealand. 206. Could you not say that you at least required one-fourth for Australian losses in the Contingent Account ?—Yes, we could have done that. 206 a. Well, you have taken £54,000, and I want to know how much more you want —that is £104,000 ?—Well, we do not think we are going to lose £170,000 in New Zealand. Some of that is wanted to cover accounts in Australia. 207. Has the Auditor been over to inspeot the Australian business ? —Yes. 208. Has he reported upon it ? —Yes.
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209. Is his report satisfactory or otherwise? —His report did not come as a surprise. We had various reports from Australia. As a direct outcome of his visit, and of his and our scanning the reports from others, we wrote off some £43,000 out of the £54,000 for the Australian business. 210. You have a branch at Adelaide, have you not ?—-Yes. 211. What is the position of that branch ? —We have not a very large business in Adelaide. What business we have taken up and continued there we consider very sound. 212. And Melbourne, what business are you doing there?—We have a large business in Melbourne, principally exchange. 213. What is the total amount on deposit in Australia?—l unfortunately have not brought my papers this morning, but it is published in the Gazette there the same as it is here. 214. It is published separately in the Gazette notice ?—-Yes, of each colony. 215. It is not in the Gazette for the Colony of New Zealand. You do not give that in the balance-sheet for the quarter statement ?—No, but the averages are published. 216. When we want to find out, then, what the deposits are there, we have to get the Victorian Gazette ? —Yes ; but the banking record gives it. They give the averages. 217. I would like to get a statement of the deposits in London, the deposits in the colony, and the deposits in Australia, and in Fiji ? —Yes, sir, I can get that. 218. Are your deposits in Australia increasing or decreasing?— They keep fairly steady. 219. You have told us the business is satisfactory in Sydney and South Australia. What about Melbourne ? —All the new business we have taken up there is perfectly satisfactory. There are some old things, just as there are in Sydney and Adelaide, for which we made ample provision. 220. You have got £170,000 left in the Contingent Fund?— Yes. 221. Do you think that will more than cover the losses in Australia and New Zealand ?—ln a large business like ours there is always a certain amount of losses made, and probably I should not be far wrong in stating the yearly loss at £30,000. 222. That is, current losses?— Yes; but these current losses may be on old accounts, and may lie in the books and be discovered four or five years hence. It is the same in all banks. 223. Then, am I to understand that you are going for five or six years to take £30,000 off the Contingent Fund ?—No ; but the £170,000 will possibly be required to meet deficiencies on accounts in the books now. I should think it would be prudent to estimate, in such a large business as ours, that about £30,000 of bad debts would be discovered afresh to provide for each year out of profits. 224. You are going to lose £30,000 a year on new accounts? —I mean to say that in the general business of the bank we shall get off very well if we do not lose more than that. 225. The same as in every other business, I suppose there is a percentage of bad debts ?— Yes. 226. What is about the percentage of bad debts to the business done ?—lt very much depends upon the country one is doing business in, and whether there is very much competition. It is more sometimes than at others. Sometimes the losses are heavier in bad times as, they are in insurance companies on account of fires. 227. Could you give us a computation for the last year showing the percentage ?—lt is a very difficult thing to do. The Bank of New Zealand cleaned up last year by its writings-off, and it is hardly fair to say that the few thousands of pounds which we took for the New Zealand business last year would be an average of what would be wanted every year. I think we should want to set aside more in the time to come than what we did last year. 228. You set aside £80,000 last year, did you not ? Surely you are not going to tell the Committee you want £80,000 a year for losses ? —No ; but very little of that was for New Zealand. The whole thing has been unusual of late in the Bank of New Zealand during the transition period. In future years, about £30,000 should be sufficient to meet probable bad debts. 229. After making provision for this, you are satisfied that you will make at least £75,000 over and above this ?—Yes, lam satisfied that should be made. I think more than £75,000 net should be made by the Bank of New Zealand, because I think in New Zealand there will be an expansion of business in the near future. 230. You estimate at least £75,000, with a prospect of very much more owing to the expanse of the colony generally ? —Yes. 231. Touching this £54,000 you are keeping as a nest-egg, why not take the £54,000 out of the £200,000 set apart ?—lt would not matter whether we did, or whether we did not. We considered it was necessary to keep £170,000 over for unascertained losses to be safe, and to wipe off everything we knew. 232. You have just shown that that has to be spread over five years? —I do not think so. I mean that over and above the £170,000 we shall require £30,000 a year out of profits to keep us safe from loss. 233. You are not going to lose £170,000 next year?—We may. 234. How long do you think it will take to exbaust this £170,000? —It is very difficult to say how long it will take to work the accounts into a safe position; but the £170,000 has nothing to do with the £30,000. 235. I want to know how long it will take to exhaust this £170,000 ?—I cannot say. It depends entirely how long the accounts take to work into a safe position. 236. Will you want it this year ? —No. 237. Will you want it next year ? —We want to keep it there. 238. This is almost as bad as the secret reserve? —That secret reserve was required, and so will this be probably. We had £29,000 out of it, and probably we shall want £29,000 of it this year.
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239. Was not the £54,000 taken out of old accounts and unascertained losses before the 31st March last ? Mr. Booth has sworn that was taken to meet contingent losses mentioned in the agreement ?—The whole thing was taken in the lump. We cannot say we have made provision for bad and doubtful debts unless we set that £171,000 aside. 240. Do you not think it would be more in accordance with the intention of the Legislature—in fact, in compliance with the Act—to have taken the whole of the old losses out of the £200,000 and the new losses out ot the Profit and Loss Account, reserving the £200,000 for the old accounts? —No. We consider that it is unnecessary to write off everything. We know what requires to be absolutely written off, and we retain about £171,000 to meet losses, which we can only form an indefinite estimate of. 241. You know of £54,000 positive loss, do you not? —We know that; but there may be recoveries upon it, or some of it. 242. But why not take that out of the £200,000? —It would not matter. We would have to replace so much into the fund again to make provision, so that it does not matter how the entries are made. We have to get the money there. _
Thursday, 27th August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] A number of balance-sheets were handed to you at a previous meeting, Mr. Watson, and you were asked to distinguish from amongst them any showing bills under discount set down separately under the head of "Liabilities." You mentioned that the WellingtonManawatu Railway Company did not state in their balance-sheet whether bills under discount were so treated; and you further said you did not think they had any bills under discount. Is it possible that that might be the case with some of the other companies whose balance-sheets you referred to ? —Yes ; I had no knowledge of it. 2. You said that the New Zealand Farmers' Association did not show bills under discount as liabilities, but you did not say if you knew whether they had any bills under discount or not ?—I should like to say that I do not wish it to be inferred that any of those companies had bills under discount which they did not show, but from the balance-sheets placed in my hands I could state that the bills discounted did not occur in the liability column. 3. I think the day before yesterday you promised to supply a statement of the net profits of the Estates Company for each year from its formation. Have you got that statement with you this morning?— Yes, I have brought two statements here—one showing the net balance of profit and loss for each balance-sheet since 1891. 4. That was the year of its formation, was it not ?—Yes; and because we could not make it agree with the figures about which I was asked, I brought another statement showing the revenue received from stations for each year for the same period, but neither of them agree with the figures furnished to me. It may be that the revenue from trading concerns is added in to stations in these figures, but it is not the net income after balancing. 5. Then, there will be some confusion, will there not ? —Yes, they will not agree with these figures. 6." In 1891 I notice on the 31st March the balance of profit was £114,350 ; in 1892, £43,638 ; in 1893, £24,805 ; while 1894 shows a loss of £33,504; 1895 also shows a loss of £44,707; 1896 shows a profit of £29,292. Do the sums stated in this list agree with the balances put in by you the other day ?—I would like to explain that. 7. Hon. Mr. J. McKenzie.] Is it with regard to stations, or to the whole concern ? —The whole concern. I would like to say that the interest on the debentures would be deducted before the profits or losses were arrived at. I should also like to mention at this point that it has been stated here that the directors of the Bank of New Zealand may have been wrong in declaring dividends whilst they knew that a deficit remained in the Estates Company. I should like to direct your attention to " The New Zealand Bank Act 1861 Amendment, 1889." Section sof subsection (3) says, " In making up balance-sheets from time to time for the purpose of declaring and paying dividends the Board may, if it thinks fit, discard the said liquidation account," —that liquidation account refers to the Globo Assets Account, —"and may make up such balance-sheets without reference to the state of such liquidation account or the said assets, and may pay dividends from profits on current business without regard to the estimated surplus or deficiency of the said liquidation account or the said assets at the time of making up such balance-sheets or paying such dividends." 8. Hon. Mr. Seddon.] What is the date of that ?—lt is the Act of 1889. I may say that it is within my knowledge that the directors of the bank at that time looked upon this as an authority for them to ignore any deficits in the Estates Company. 9. And you declare profits which, if they had taken the Estates Company's accounts into consideration, they could not have made ?—That is so. 10. The Chairman.] There is a second statement showing the revenue received for stations from the 31st March, 1891, to 1896. To 31st March, 1891, seven months and a half, it was £16,265 7s. 2d.; 1892, £72,991 14s. lOd. ; 1893, £39,391 3s. 5d.; 1894, £35,897 Bs. 6d.; 1895, £12,356 4s. lOd.; 1896, £54,801 2s. lid. ?—Yes. 11. Are these returns prepared from any statement in possession of the bank or the Estates Company?— They were prepared by Mr. Cuff, the accountant of the Estates Company, from the books. I think Mr. Mackenzie's figures may include returns from the trading concerns. There were considerable amounts on account of the cost of raising debentures, which come into these balance-sheets of later years, which showed large losses—losses which did not refer to the working of the estates.
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12. Have you seen this statement yourself ?—No ; I got this from the accountant. The balance-sheets are in regular order for each year ; but I think Mr. Mackenzie's figures refer to certain income without taking into account certain costs. 13. You were also to supply copies of the agreement between Messrs. Buller and Litchfield, and also with Mr. Butt, and all correspondence, if any, leading up to such agreements ?—I do not think there was any correspondence. I think I was asked for all agreements. These are the ordinary agreements with officers of the bank, referring to the three months' notice, and these are the two letters given to Mr. Buller and Mr. Litchfield. [Agreements and letters put in.] There is an agreement given to myself by the bank as to the payment of my salary, and the agreement with Mr. Butt, with a letter from the General Manager. That is ail the correspondence I can find. 14. Have you got the statement asked for of the deposits in London, New Zealand, and other colonies separately?— Yes, Sir. This is a statement of deposits held at the various places on the 31st March last. [Statement handed in.] 15. This makes up the total amount of the deposits as shown in your last balance-sheet ?— Yes. 16. Was there anything you promised to get which I have not mentioned ?—There are two statements with reference to the transfer of shares. One shows the total number of transfers since the 31st June, 1894, with the date of the transfer; and the other is a statement of those who have not paid their calls in full. In passing this in, I should like to say that power was delegated by our board to certain persons in London to pass transfers. There is a register kept there, and the transfer to Mr. Thumwood, which was referred to in my evidence, was passed in London. I thought I had particulars of it this morning; but if the Committee desires it, I shall ascertain the names of the persons who got authority in London to pass these transfers. 17. Yes, if you please ; that might be advisable ?—Very well, Sir. 18. Hon. Mr. Seddon.] At the time we adjourned the other day, Mr. Watson, I was examining you in respect of the £54,000 taken from the Profit and Loss Account this year on account of writings-off ? —Yes. 19. You are aware that by law you are required to lay the balance-sheet of the bank's business for the year before Parliament ?—Yes. 20. Why did you not disclose the fact that you had taken that £54,000 from the Profit and Loss Account instead of taking it from the Contingent Fund of £200,000 set apart for contingent liabilities? —The balance-sheet to be laid before Parliament is, I understand, to be the balance-sheet after writing off and providing for bad and doubtful debts for the year. We provided out of profits for that £54,000, believing it was necessary to retain £171,000 in the Contingent Fund. 21. Have you got the balance-sheet there ?—Yes. 22. Will you show the Committee in that balance-sheet any reference to the £171,000, the balance of the Contingent Fund? —No; there is no reference made to that here, but we did not consider that such reference was necessary. All we are asked to do with regard to bad and doubtful debts is to provide for them. 23. But that £171,000 exists, does it not, and why is it not shown?—lt was not deemed necessary to show it separately in the balance-sheet. 24. But it was specially mentioned, when the legislation was passed, that the recommendations of the Committee of last year were to be adopted ?—Yes, but it was not enacted that it should ba shown in the balance-sheet separately. 25. Under what head is it shown?—lt is shown under " Other liabilities." 26. Do you think there is any objection to having that given separately in order that Parliament may see how far the directors have gone to meet liabilities, and to enable it to see whether the directors' action is correct or otherwise ?—I do not think there is any special objection beyond this : that it would be disclosing year after year to our opponents in business the amount we thought it necessary to write off that £171,000. I think full information is given of it to the Colonial Treasurer. 27. You have already disclosed the fact that you anticipated the £200,000 would be required. That was to be provided, was it not ? —Yes ; but the various times for which it was required were not disclosed. It might interfere with our business. The Auditor's statement every half-year, which I forward to the Colonial Treasurer, gives a full account of that without mentioning private accounts. 28. You have said that you think it will take about £30,000 a year in addition ?—Yes. Of course, that is an average ; but I should hope it would be less in good years. 29. Do you expect it will take any more than you have taken for the last year—£s2,ooo—on old accounts? —We made what we considered then ample provision. 30. Is it likely to increase the amount to be taken on account of the old accounts—to increase or decrease ?—I hope, decrease. 31. If it decreases, then £171,000 would cover a number of years ?—I am talking apart from that. We consider the £171,000 will be required, or it will be safe to have it there. 32. During what period?—l cannot say that. It just depends on the time and how the accounts work out. 33. Will it take a year?—We cannot close that up in a year. 34. Will it take two years ?—That, I think, would be too short a time. 35. Will it take three years ?—Some accounts may come out all right, and we have made ample provision for others. If things improve in Australia, we might not have to use all that money. 36. The present position, we may take it, is exactly similar to what you called the secret reserve previously ?—Yes, something similar. What is talked about as the secret reserve is simply interest for the most part charged on account, but which were not taken into the profit of the bank and distributed, because it was a moot question whether loss might not be made on the accounts. Therefore the interest was reserved in that way, and to provide for such loss, if necessary.
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37. When you do not disclose the £171,000, we may conclude that you have got it in the same way as the secret reserve?— Yes, of which we make the Government aware, but it is not disclosed to the public generally. 38. Have you told the Government you took £54,000 out of profits instead of out of the £200,000 Contingency Fund ?—Yes. 39. Are you sure of that ?—Yes, because we told the Government that the £54,000 was used out of the Profit and Loss Account for bad and doubtful debts, and also that the £171,000 was outstanding, so that they must have had that knowledge. 40. Have you any recollection of the date when you told the Government ?—I suppose it went in with the half-yearly report of the auditors. 41. Will you tell the Committee at the next meeting when this was done, and make sure that you disclosed it to the Government ? —Yes. There was no intention of hiding it from the Government. 42. You said, in answer to Mr. Montgomery, that you intended to give the fullest information to the shareholders at the annual meeting?— Yes, the fullest information as to general business. I do not mean to say that that information will be given to-day. 43. Will you disclose anything more to the shareholders than you have disclosed to Parliament in the balance-sheet ?—I do not think so. Of course, we may disclose this —we shall have to deal with the Profit and Loss Account. That is not disclosed here. That will be a matter for the shareholders to deal with. 44. Does not the la ,v provide as to how you are to dispose of the profits of the bank ? What have the shareholders got to do with it?— The law does provide for it. The matter is not in a fit state to be dealt with at the present moment, and cannot be dealt with until some matters now pending are concluded. 45. In your balance-sheet I see no provision made to pay interest upon the preference shares ? —No ; that will have to come out of the profit. 46. Was it provided for in the estimated liabilities ? —ln the Profit and Loss Account. It must be paid out of the Profit and Loss Account. 47. The -question is whether or not provision is made for it ?—I have just said that the provision is in the Profit and Loss Account balance. 48. Do you intend to submit that to the shareholders, or is it required that payment of that interest has to be passed by the shareholders ? —I think it must be as the Act stands at present. 49. Then, if the shareholders refuse to pass the resolution to pay, your contention is that you will be unable to pay it ?—No, I do not say that. 50. Section 11 of the Act reads as follows : " So long as any liability on the part of the colony shall continue to subsist under this Act, the balance of the net profits of the bank for the year ending on the 31st day of March, 1896, and for each subsequent year ending on the 31st day of March, shall, after providing for the amount of dividends payable in each such year on the guaranteed shares and preferred shares respectively, be applied in manner following—that is to say " ?—lt does not say that the provision is not to be made at the shareholders' meeting. They pass all the other dividends, and there is nothing to provide that they shall not pass that. It is a dividend, and not an interest-charge. 51. Have you been advised as to that matter, because we should put it as intended by the Legislature, without reference to anybody?—l take it the colony should have a clause in the Act to allow it to get these dividends before the colony's half-yearly balances. At present the money cannot be got until the bank makes its half-yearly balance-sheet. I should think the colony should get it in its own balancing period so as to enable it to pay the interest on its bonds. 52. Would not this apply to the two-million guarantee? —No ; the two-million guarantee is represented by debenture bonds in the hands of the bondholders, which entitle them on a certain date to receive a certain amount. But there is no agreement between the bank and the colony with regard to the preferred shares of that nature. 53. Do you not think it should be so that the payment of interest on those shares should be a preferential claim ?—Yes; I think the Government should receive interest on those preference shares, in order to meet the interest they pay on bonds sold to provide the money for these preference shares. 54. It is the latter, is it not, as you are advised, that has got to be passed before it can be made payable ?—At all events, it cannot be done until we deliberate upon the balance, and that cannot be done until two months after the balancing date, which is too late for the Government interest. The money might not be there to meet it from profits. 55. In other words, the Government will have to meet the liability on the bonds, and may not get the money until some time after from the bank :is that so ?—That is so. I think it is necessary and right that there should be legislation on that point. 56. Have you any objection to produce the advice on that subject ?—I do not think we took any legal advice upon it : it appeared to be so plain to us. 57. You have no objection probably to get advice?— No. 58. The matter wants looking into, and if it is as stated by you it wants remedial legislation ? —I do not know that there is any necessity for advice. Clause 11 says, "So long as any liability on the part of the colony shall continue to exist under this Act, the balance of the net profits of the bank for the year ending on the 31st day of March," &c. Well, we cannot tell what the net profits are until we have made provision for bad debts. We first make' provision, and must also get our London balances, which do not come in until May or June. We must ascertain the net profits first. 59. Is it the shareholders who ascertain that, or the directors ?—The directors have to ascertain it.
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60. Very well. Where is the interest payable? —In London. 61. What is the date ?—There is no provision for when it is payable. 62. Does it become a liability the moment the Government have paid the interest on the bonds ?—No, sir. The bonds were merely issued to find funds for taking up the shares, but one transaction has nothing to do with the other. 63. There is no liability of the bank on account of these bonds ?—No liability to the bondholders. 64. But my question refers to the colony ? —Well, the bank has issued share-certificates to the colony, but there is no time mentioned for the payment of interest, or rather dividend. 65. Look at section 6 : " The proprietors of such preferred shares shall be entitled, out of the net profits of the bank, to a fixed, cumulative dividend of £3 10s. per centum per annum on the amount for the time being paid up thereon." There is nothing about it being paid half-yearly ?— No ; " half-yearly," in section 7, alludes to the debentures, not to the shares. The conditions attached to the payment of the debentures are here, but it has nothing to do with the shares. 66. The colony is the owner of these preference shares, and I ask whether that is not a liability to the colony ? —Yes, but out of the bank's revenue. We must first ascertain what that is. I think it would be well to legislate to have the dividend paid at the same time as the colony has to pay the interest on the bonds, without making it dependent on the bank's balance. 67. At all events, you would not consider that your balance-sheet disclosed a true and faithful account of the bank's business unless you had made provision for interest on these ? —We do not consider it necessary to make provision, as we make provision for the payment of interest on the guaranteed shares, or for the writing-off of bad debts. We think it should be paid out of the balance of Profit and Loss Account before anything is paid to the Assets Board. 68. You have put down in your balance-sheet £52,000 this year?— Yes. 69. Is the provision made, then, for this £17,500 in that ?—Yes. 70. How can you then pay £50,000 to the Realisation Board, and £17,500 out of dividends to the Government on account of these preferred shares, when you have only £52,000 altogether. In other words, how can you pay £67,500 when you have only got £52,000 —how can you pay £50,000 to the Realisation Board?— These net profits will be used first for the preferred-share dividend, then what is over goes to the Realisation Board. I should like to say there is not £17,500 due here. The shares were only issued in January, and this only extends to the 31st March, so that there are only two months and a half which have run. We only had the Colonial Bank business seven months this year, and from this source there will be more next year ; and we also had a large amount in London pending the falling-due of debentures, on some of which we were paying 5 per cent., and only making about 1 per cent, on the money held to pay them. 71. Still, would the £52,000 cover the interest on the preference shares from January to March, in addition to providing £50,000- for the Realisation Board?—l do not think it would quite do so, but it would probably come out within £1,000 of it; and payments to the Realisation Board are fixed by law to be cumulative. 72. The interests payable to the colony are not cumulative ? The colony will have to pay them ?—lt is cumulative under section 6. 73. For the holders of these debentures that were issued to raise the £500,000 the interest is not cumulative as far as they are concerned ?—I think it is. If they do not get it out of one year they will out of another. 74. Would there not be a nasty word used if you did not pay the interest?— Yes; but I do not think there is any doubt about the payment of interest on the preferred shares. 75. You are talking about shares, and lam talking about debentures. The holders of the debentures are entitled to have their interest as it becomes due ?—T think it will be quite proper to have legislation effected in order that the colony should get it from the bank at the same date as it is payable to the debenture-holders. 76. If we do not, we shall have to pay it out of consolidated revenue ?—Yes, and lose interest during the time you lie out of it. 77. What is the profit and loss on the trading concerns for the year ending the 31st March, 1896 —that is, these trading concerns taken over from the Estates Company by the Bank of New Zealand when adjusting affairs last session? I will give you the statement submitted to the Committee last year. [Statement handed in] ?—I may say that this was entirely private last year. It was never published. 78. I do not want to get the information as you have it, because particular trading concerns might be identified; but what I want is a statement showing the total book-value, the latest ascertained value, the percentage of profits on book-values and on latest values, separately ? —I do not think there will be any difficulty in getting what you want. I may say that what was known as book-values last year have no bearing now on the bank, because they have been written down to their actual value. 79. You took them over at their book-value ? —No; we took them over at the actual value, because we wrote off, if you remember, a sufficient sum from the £1,850,000 to write down the trading concerns to the actual value of last year. 80. But I have here your book-values, which were £566,655. It is quite simple; you took them over at £421,000 ? —The book-values have no existence at all. 81. I want to find out what they would pay if they had been kept at the old book-value and what they would pay now?— Yes, I will get that. The old book-value at the 31st March, 1895, was £585,000. 2BW 82. These are the trading concerns of the Bank of New Zealand; they were given in alphabetical order. £585,000 was the book-value, and £421,000 was the latest value—that is, including the Waikato coal-mines? —Yes ; but that £421,000 is much reduced now by sales, * 21 —I. 6.
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83. You might give the total amount of sales, and how it has worked out since the 31st March, 1895. Now I come to the question of officers and management of the bank. Is it true that all the other directors of the bank, with the exception of yourself, were adverse to the appointment of Mr. Mackenzie as General Manager ?—No, it is not true. 84. And if any statement has been made to that effect, you say it has been made in error ? —I think so, and I think you know it yourself. 85. I heard the statement made, and came to the conclusion that there had been a change of front since the time I was interviewed ? —That statement was incorrect, sir. 86. You have heard it stated—and I think you stated it yourself—that the directors waited upon me in reference to the difference of opinion amongst themselves in respect of Mr. Mackenzie's appointment as General Manager ? —Yes. 87. Was that interview at the wish and suggestion of the directors ? —Yes, I think so. 88. Was there any miuute about it, or was it simply a conclusion arrived at amongst themselves to come and see the Premier ?—I think it was in that way. Ido not remember any particular minute about that. 89. At the interview you have said that I declined to advise, as it was no business of the Government, and was a matter of detail, and expressed to them that, if they wished it, I would give my own views on the situation ?—You declined to interfere. You heard some remarks very favourable to Mr. Mackenzie, and some very theatrical remarks against him. 90. The fact is, the directors put before me the little differences they had amongst themselves before they came to see me ?—To the best of my recollection, that is what happened. 91. It has been reported and suggested that you had threatened or had absolutely used your veto in respect of the appointment of Mr. Mackenzie—that is, you would agree to no one else being appointed General Manager ? Is that correct or otherwise ?—Nothing of the kind. I might have expressed opinions as to certain officers being unsuitable. 92. I may say I have been told, and by a member of this Committee, that he had it on the best authority that you had exercised your veto ?—I have never exercised my veto yet. 93. Have you ever used your veto, or threatened to use your veto, in respect of any person other than Mr. Mackenzie ? —I have no recollection of having used my veto, or having threatened to use it, on any occasion. 94. In other words, you did not intimidate or force your co-directors to appoint Mr. Mackenzie ?—No, I certainly did not attempt to intimidate them. I have never done that; and as to forcing them, I could not force them. 95. You were pretty evenly divided, were you not, in respect of the appointment of Mr. Mackenzie ? Would I be safe in saying there were two and two ? —Well, sir, I would put it this way: There were certainly two in favour of him, and another two who did not express to me any strong feeling against Mr. Mackenzie personally. 96. The Chairman.] Any strong feeling? —They did not express any strong feeling averse to his appointment. Ido not say we did not have discussion. It will be in the recollection of everybody on this Committee that matters cropped up just at that time which made discussion amongst the directors a likely thing, and this discussion actually took place; but I can only recall one among the directors who was ever decidedly averse to Mr. Mackenzie's appointment. 97. Hon. Mr. Seddon.] Who was that one? —That was Mr. Booth. 98. You have stated that you have heard Mr. Booth himself inform Mr. Mackenzie that he was in favour of his being appointed?— That was some months previously. 99. Were there any reasons given for the change of opinion in respect of the appointment ?—I fancy that the reason would be in some circumstances that were found out afterwards. As I said before, Mr. Booth is a man of a very suspicious nature, and he thinks that Mr. Mackenzie and myself knew things—and not only we, but every one connected with the Colonial Bank—that we did not know. However, Mr. Booth is, as I say, very suspicious regarding the conduct of other men, and he may, for all I know, honestly believe what he says he did ; but he should not go so. far as to say, or to leave it to be inferred, that all the other directors were with him at that time, because it was not so; and you yourself heard a director denounce Mr. Booth's language at the time. And I would like to say, further, that, while Mr. Booth's opinion can only amount to a suspicion, others are ready to swear that they never knew the facts —but Mr. Booth thinks they did know —not only Mr. Mackenzie and myself, but the other inspectors and managers of the Colonial Bank. 100. In other words, then, the cover that you have decided upon demanding from the Colonial Bank on the " B " and " C " lists shook the confidence of Mr. Booth in the administration of the bank by the officers ?—Yes, I suppose to a certain extent that is right; but Ido not know, of course, what Mr. Booth actually thinks. 101. Was it a surprise to you? You see, you have changed your position from inspector of the Colonial Bank to that of President of the Bank of New Zealand, which was the purchasing bank.. Did the position of the Colonial Bank, as disclosed since, prior to that purchase surprise you ?—lt did, sir; some things surprised me very much. 102. Would surprise of that kind tend to shake your confidence in the management of the affairs of the Colonial Bank?—No, it would not. 103. Would the altered condition of affairs —the low prices or valuations —affect them at all?— They affected them to a considerable extent. 104. I suppose you must take a certain share of responsibility in connection with the Colonial Bank and its management ? —Most distinctly I do take a certain share of responsibility. 105. Do you think, in becoming a purchaser of the Colonial Bank, that the provision the bank sought was moderate or reasonable, or did it err on the side of safety ?-—On the side of safety. 106. Has that been borne out by the working of the accounts since, or otherwise?— Yes, with the exception of an account now in the Bankruptcy Court, I think it has been borne out very well as being on the safe side.
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107. Is there anything, to your knowledge, with respect to Mr. Mackenzie that would warrant the strictures which have been passed upon him by one of your co-directors ?—No, there is not; and I never heard strictures passed upon him, or any fault found with him, before I heard the language in this room, at which I was very much surprised. 108. Since the appointment of Mr. Mackenzie, and at all your board meetings, and in the business he has transacted for the bank, in the advice he has tendered, and in his management generally, have you heard any strictures passed with respect to his conduct in any way ?—No, not only have no strictures been passed, but I have asked Mr. Johnston —and, I think, Mr. Macarthy— and they said they knew of nothing against him whatever. At various times during my life for the past twenty-eight years I have met Mr. Mackenzie in different parts of the world, and I have never known him as anything else but an upright, honourable, and able gentleman ; and I think it would be very difficult to get a better man for his position. 109. Do you think Mr. Booth intended it more from a policy point of view—that probably, in the interests of the bank, it would be better to separate you and Mr. Mackenzie —and not a question of his ability and integrity ?—That may be so, sir. 110. You heard Mr. Booth's evidence, and it took you by surprise ?—lt took me entirely by surprise, that which I heard him say here. Of course, I suppose every one on. this Committee knows that there is a certain amount of jealousy amongst the Bank of New Zealand officers in consequence of Mr. Mackenzie and myself attaining the positions we did in the bank; but that is a sort of thing that would soon pass away. Ido not think that any friction on the part of the staff' exists now as to that. I can quite understand that had we in the Colonial Bank had two Bank of New Zealand officers placed over us we would not be human if we did not feel it at the time ; but that is a very different thing to saying that a man is not capable for his work. 111. It has been stated positively that there has been a number of the Bank of New Zealand officers retired to make room for officers of the Colonial Bank. Is that so ?—That is not so. I may say —and I do not think it will be divulging the secrets of the Bank to say so —that, on the Act being passed which gave the Bank of New Zealand power to purchase the Colonial Bank, I myself caused a circular-letter to be written to the officers of the Bank of New Zealand saying that it was not expected that any of them would lose on account of the amalgamation of the Colonial Bank ; and, so far as I can recollect, Ido not think any of them at all have lost in any way. Certainly no man was dismissed in order to make room for any officer of the Colonial Bank, and I should like very much if any one would point out a single case were an officer of the Bank of New Zealand has lost in position by the purchase of the Colonial Bank. 112. Will you swear that any statement made to the effect that since the Colonial Bank has been purchased a number of Bank of New Zealand officers have been retired to make room for officers of the Colonial Bank is absolutely untrue?— Absolutely untrue. I should like to know one instance. Ido not know of any. 113. Mr. Green, the member of Waikouaiti, stated that he knew that since the purchase of the Colonial Bank by the Bank of New Zealand, officers have been retired, and Colonial Bank officers put in their place. Is that correct or otherwise ?—Absolutely incorrect, as far as lam aware. 114. Have you any objection to give us a return showing the number of officers that have been retired from the Bank of New Zealand since the date of the purchase?— That have been retired? 115. Yes?—l would like to say this with regard to this matter :In a large service like ours, where there are about six hundred employes, it always happens that one or two have to be dispensed with annually. Unless their faults are very serious indeed, we do not dismiss them ; we allow them to send in their resignations. If I were therefore to send you a list of those who were compelled to retire, I should have to include those men, and it might do some of them harm. I cannot recall to my mind more than three, since the purchase of the Colonial Bank, who have been retired compulsorily in that way; and the retirement of these three was certainly on account of very grave faults, and passed unanimously at the board. That would have taken place if there had been no purchase. With regard to those who have resigned on other grounds, we had a great many resignations, principally in Auckland, amongst the clerks owing to the mining boom, and other banks had too, I believe. The Australian banks reduced the pay of their officers about the same time as we did, and some of the clerks found that they could better themselves. Unfortunately, it is always the smart ones who go, and we were very sorry to lose them. 116. There is not much difficulty in getting clerks ? —There is just as much difficulty in getting good clerks as in getting good msn for anything else. Ido not say that those who remain are not smart men, but smart men have left us. We were very sorry to lose the services of some of our men. There was Mr. Bhodes, manager at Ohinemuri, who left us to take about double his pay or more as manager of a large mining syndicate. There was Mr. Ewen, who was manager at New Plymouth, and left us to take the position of manager of the New Zealand Insurance Company here. There was Mr. Boyd, of Greymouth, who left us to go with Mr. Ziman; and in all those cases we should have been very glad if they had remained with us. 117. You are positive there have been no retirements of Bank of New Zealand officers to make room for Colonial Bank officers ?—Perfectly positive, except for misconduct, there have been no compulsory retirements in the bank since we purchased the Colonial Bank's business. 118. You say that now there is a better feeling amongst the officers —they are getting more reconciled ?—Yes, I think so ; and it was only a matter of sentiment from the beginning. 119. In respect of promotions, has there been any friction or unpleasantness?—l think that some of the young officers thought they should get some more important appointments than we were able to give them. They will get them if they remain in the service; but in all cases the appointments are given to older men, who have greater claims. 120. I suppose you will admit that it is essential to the well-being and safe and satisfactory working of an institution like the Bank of New Zealand that the officers should be in perfect harmony and work together ? —Yes, I think that is very advisable.
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121. Have there been any officers of the Colonial Bank who have been put into positions where, if the Bank of New Zealand was worked more economically, there would be no necessity for their appointments at all ?—I do not think so. 122. Say, for instance, there has been a manager or principal agent, with whom you have put an assistant, probably from the Colonial Bank—in other words, that there is a surplus of officers at any of the branches?—l do not think so. In some of the branches the Bank of New Zealand has more than doubled its business by the acquisition of the Colonial Bank. There are only assistant managers in three large towns. In one of these towns I am thinking about, the business coming over from the Colonial Bank was greater than the Bank of New Zealand had before. It is a very large business, and certainly requires an assistant manager ; and there are only three assistant managers—one at Dunedin, one at Cbristchurch, and one in Auckland. That is all. They are not very highly paid, and I think their presence is absolutely necessary to weld the business, and the board thought so with me. 123. You thought it politic to put these officers there as assistant managers owing to the customers of the Colonial Bank going to that particular bank ?—Certainly. 124. Was there any friction between these officers on the staff at these particular places in consequence ?—I do not think so. 125. Did you request the board to grant the agreement to the Government Auditor?—No ; I think I related how that took place before. 126. I am cross-examining you on your replies ?—The way that took place was this : When Mr. Butt was offered the position of Government Auditor, he hesitated somewhat about accepting it because of his long service in the bank, where he was well known, and because of his being a member of the bank's Pension Fund, and not yet having arrived at the age when he could get pensioned. Well, in conversation then the members of the board said that if for anything else than misconduct he did not remain in the position of Government Auditor he would undoubtedly be received back again into the bank's service, and that, so far as the Pension Fund was concerned, arrangement might be made by which he could still remain a member of it. Afterwards I was advised myself, and so was Mr. Butt, that the minutes passed by the board sanctioning the payment of our salaries might be rescinded by other minutes, but that if we got our agreements under seal such agreements could not be so rescinded. Consequently we both got agreements prepared. Mr. Butt got his from his solicitor, and I got mine from my solicitor. I did not put Mr. Butt's agreement before the board in any other way than that in which I put other minutes before the board. I did not put it to the board, or request them to pass it in any way; and Ido not think any one was more astonished than Mr. Butt when he heard that Mr. Booth said I did so. I spoke to him, and he said he was very sorry Mr. Booth went out of his way to say that, because it looked from what he said that we were acting in collusion. I say it is entirely incorrect to say that I pressed it upon the board. I merely put it before the board as I would any of the draft minutes which I am called upon to put before them. I agreed with it at the board. 127. Was the agreement agreed to?—lt was. 128. You said that agreements were made in respect to Mr. Buller and Mr. Litchfield ? —I have sent in copies of the letters. 129. But I notice that in their case the agreement was not under seal of the board, the same as yours and Mr. Butt's. If, in your opinion, it was necessary to make yourself and Mr. Butt safe by making your agreement under seal, why did you not put Mr. Litchfield and Mr. Buller's under seal ?—The cases were different. 130. Where is the difference ?—What was given to them was merely a promise that they should be continued in their employment for a certain time. 131. But could that not be withdrawn? You say your own could not be withdrawn by resolution ?—They could not withdraw the promise ; but in Mr. Butt's and my case, we had been appointed by the Government, and the Government had requested the bank to pay us our salaries. The bank issued instructions to pay our salaries month by month, and could have rescinded that minute; and the conclusion we came to was that we should get our agreements under seal. I was advised that my position was not a safe one. It was something like Judge Edwards's once was. 132. You did not tell the Government this?—l mentioned it afterwards. 133. After Mr. Butt and you were safe, with the deeds in your pockets, you told the Government ?—ln my own deed, I did not ask for anything more than I should have got. With regard to Mr. Butt, I believe that neither he nor myself saw the gravity of the point in the case of his deed. It did not occur to me that it was placing Mr. Butt in an improper position at the time, but afterwards, when I thought over it, it did occur to me that it might be viewed in that light, and then, I think, I mentioned it. I forget whether I mentioned it to you or to the Colonial Treasurer at the time. 134. Was this shortly after the transaction, or some considerable time after ?—A month or two afterwards. 135. But viewed from the ordinary standpoint as to what construction might be put upon this transaction, do you not think it would have been better to take the Government into your confidence—first, as to Mr. Butt losing his position in the bank, and, secondly, that there was a doubt as to your appointment?—l think it would have been. Undoubtedly, if I had to do the same thing over again, I should mention it to the Government; but I may say that we were working day and night. It was just after 1 came into the bank, and we were very busy indeed getting hold of the threads of the business, and it did not occur to me, nor did it occur to any of the board, that Mr. Butt was being placed in an improper position. 136. Have you taken legal advice as to whether or not, in case the Government came to a conclusion that there should be a change as to the Presidentship, and the bank having entered into a deed to pay you the money for ten years, that will not put the colony and everybody connected
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with the matter in a peculiar position ?—I do not think so. It is only for so long a time as my appointment is good, and if that appointment is revocable in any way, I cannot draw the pay. 137. As you are advised there is an end to that agreement with the bank if you are retired by the Government ? —Yes, if properly retired. 138. What do you mean by properly retired ?—lf I am retired from the position I cannot draw the pay. That is my opinion. 139. It does not bear out the construction that you may have the full term, while there is a possibility of your being retired under the law ?—The agreement is only to secure my salary while I am President. I do not think there can be any exception taken to that deed. I am advised that it is a perfectly proper position to take up. As regards Mr. Butt, he is perfectly willing, and has been since I first spoke to him about it, to cancel his deed. I am not willing to cancel mine. 140. Will you tell the Committee where the doubt lay in your position—you are appointed under statute ?—Yes, but the board have to pay the salary, and they made a minute that they would sanction that salary. But they could rescind that minute, and then I might be President there without a salary. That would not suit me.
Monday, 31st August, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] At the last meeting, I think you were asked, and promised, to produce a statement showing—(l) the total book-value of the Estates Company's properties; (2) their latest ascertained value ; (3) the percentage of profits on book-values ; and (4) the percentage of profits on the latest ascertained values. Have you that statement ?—Yes, Sir, it is here. Total at 31st March, 1895, of the trading concerns, £567,657. It was reduced at that time by writings-off to £421,062 ; amount written-off, £146,600. There have been since sold, reducing book-values, £116,416, and reducing the written-down values £103,342. Since 1895 there have been sales to 28th'August; 1896, making the old book-values £431,422, and written-down values £317,820. The earnings for the year ending 31st March, 1896, were £29,614, showing 6-56 on old values, and 931 per cent, on the written-down values. These are the trading concerns which some people say do not pay. 2. Were there any other statements you had to produce?— With regard to the delegated authority to persons in London to transfer shares, I have this to hand in :— " Transfers of Bank of New Zealand Shares. — London Register. " Transfers on shares on the London register are passed by the bank's attorneys in London, Mr. R. H. Glyn and Mr. C. G. Tegetmeier, or either of them. The power of attorney under which they act is dated 25th September, 1894, and was given by the late board of the bank in London prior to their resignation upon the transfer of the head office from London to the colony. The clause of the power of attorney under which transfers are made is as follows : ' For and on behalf of the board of directors of the bank for the time being, to consent to the transfer of any share or shares in the capital of the bank from any shareholder or proprietor thereof, to such person or persons as the said attorneys or attorney may deem fit and proper.' The power of restraint upon transfers, vested in the President by ' The Bank of New Zealand Share Guarantee Act, 1894,' was delegated by the President, so far as London register transfers are concerned, to Mr. C. G. Tegetmeier, with the condition that every transfer, after being approved of by Mr. Tegetmeier, should be submitted for the approval of Mr. R. H. Glyn, the chairman of the bank's London board; and, after having been passed by him, should be placed before the Agent-General for New Zealand for his sanction. Each of the parties is required to indicate his approval by writing, upon the transfer, and, without such indication of combined assent, no transfer is placed on the register. The Colonial Treasurer's approval of this arrangement was signified at the time it was made, in October, 1894." I was asked a question as to whether the £54,000 taken from the profit and loss account for bad debts was disclosed to the Government, and replied that I thought it had been disclosed in the Auditor's statement forwarded to the Government by myself. I find that it was so; on the Ist July, 1896. 3. Hon. Mr. Seddon.] What is the date of the balance-sheet ? —The 31st March. 4. When was the balance-sheet transmitted to the Colonial Treasurer ?—About the Ist July, I suppose. The London accounts have to come out and be worked up for the local balance-sheets, The balance-sheet was laid on the table of the House, I believe. 5. At all events the Government was not informed till they had the balance-sheet complete ?—• No; I informed the Government afterwards, in the remarks made upon the presentation of the balance-sheet. I was also asked if I did not think I should have got a legal opinion as to the payments of dividends on the preferred shares being provided for before the net profits were ascertained. I have since got a legal opinion, which is that they form part of the net profits, as I thought. I have not been told that it requires a resolution of the shareholders. I was not asked to get that. 6. That is the real point, whether or not that amount could be paid without a resolution of the shareholders ? —I think it could, but we have to ascertain the net profits first. I have no doubt it could, as the Act specially says it is to be paid from the net profits ; but the net profits have to be ascertained first. 7. The Chairman.] Is that your own opinion, or is it from legal advice?—l am giving the information from legal advice. I thought it would be the regular way to do it. I was further asked a question with regard to the retiring officers, whether I would find out what officers had left the Bank of New Zealand. I find that from the whole staff, since 18th November, 1895, there were
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seven officers who retired on pension, five officers compulsorily retired for various causes, and thirty officers resigned to get better positions elsewhere. That is forty-two altogether, out of six hundred employes, at different points. 8. At all events, there are only five who have retired by the direction of the directors?— Yes; five for misconduct, and so on ; and five out of six hundred is not a very large or unusual number. 9. You bring this statement forward with a view- to negativing the assertion made publicly that you had retired Bank of New Zealand officers to make room for Colonial Bank officers ?—Yes ; no such thing was done. 10. Does that complete all the matters which you were asked at the last meeting to procure information about ?—Yes, that completes all the notes that were taken. 11. Hon. Mr. Seddon.] Have you at any time refused to send to the Colonial Treasurer any information which, in the opinion of the Board of directors, should have been given to him ?— Never. 12. You have heard Mr. Booth's evidence to the effect that the directors, outside yourself, have made a request that the Auditor should communicate with the Government. Do you know of any reasons for such a request?— No. I called upon the Auditor, and he stated that he knows no reason. I saw him the night the evidence was given, and asked him if he knew any occasion on which information did not go to the Government which the Board desired to send; and he said " No." I asked him to call on Mr. Booth, and we did so ; but Mr. Booth declined to state what it was. I also asked the other directors, and they have informed me that they do not know what was referred to. 13. Has the Auditor power at any time to communicate with the Colonial Treasurer direct if he thinks fit ? —lt is compulsory upon me to forward to the Colonial Treasurer what the Auditor desires me to forward ; and if Ido not the Auditor can do it himself. I will procure and put in a copy of the Auditor's regulations which will show that. 14. Have you refused to send on at any time anything that has been given to you by the Auditor which, in his opionion, it was desirable the Government should be made acquainted with ?— Never. 15. Is there any objections to the course suggested by Mr. Booth, and if so, will you state the nature of them?—l must say, that I cannot understand Mr. Booth. Mr. Johnston is a director appointed by the Government the same as lam myself. I cannot understand Mr. Johnston holding a sort of cabal with any of the directors apart from myself, and coming to the conclusion that something should be secretly, and surreptitiously sent in to the Colonial Treasurer without the full Board determining the matter. I cannot understand Mr. Johnston doing any such thing; and I cannot understand what Mr. Booth means. Ido not think there should be two Auditors going over the same ground. I think the one Auditor should be the Chief Auditor. When asked my opinion about it, I said that I thought there should be a permanent Assistant Auditor appointed, as I do think that Mr. Butt has somewhat too heavy work to do. Ido not see how such an Auditor as is suggested could be of service at all. lam perfectly certain that if the directors pointed out anything to Mr. Butt—even an individual director—and told Mr. Butt that, in his opinion, information about that should go to the Colonial Treasurer, Mr. Butt would never refuse to send it along ; and I cannot make out what necessity there is for another Auditor to send in any information unknown to and behind Mr. Butt. 16. I do not think Mr. Booth wanted individual representations to be sent to the Colonial Treasurer. I think what he wished to have was that the directors, outside the President, at a Board meeting, might resolve that certain representations should be made to the Government ?— But I cannot understand Mr. Johnston joining in a thing like that, or seethe necessity for it myself. I know that Mr. Booth has for a long time been very much opposed to myself; but I cannot see how Mr. Johnston, who is also a Government director, should join in a secret like that, and keep myself in ignorance of what was going on with regard to the affairs of the bank. I do not think he would be doing his duty if he did so. 17. Do you not think this is a reflection upon Mr. Butt, that it should be necessary that representations should be made by him, either through the Board as a whole or by one of the directors, exclusive of his own reports to the Government ? —Mr. Butt thought so, and stated to Mr. Booth that night that he thought it was a reflection; but Mr. Booth did not think it was a reflection on Mr. Butt. 18. At all events, your impression was that there was a want of confidence expressed in respect of the auditing, and that there was something that Government ought to be told which they were not ?■—l do not think there was. There is nothing in my mind, and I know much more about the bank than Mr. Booth, and the little he does know about bank matters he mostly learnt from myself. The time he spends in the bank cannot post him up ; but he suddenly makes up his mind about things, and may have done so about that. 19. You say positively there is nothing, so far as you know, that has been held back from the Government ? —Absolutely nothing. 20. No impropriety brought before the board which the Auditor sought to keep back? —Mr. Butt would give you information about that better than I can, but he assured me that there was not. 21. At all events, and from your reply to Mr. Booth's statement, it seems that you are not entirely a happy family?— Mr. Booth is the only one. He is the only one I ever heard say that Mr. Mackenzie was not an able man; and I fancy he does not like me because I voted for Mr. Mackenzie getting that position. 22. Do you think it is in the interests of an institution such as the Bank of New Zealand to have differences such as the Committee must come to the conclusion exists ?—Well, I fancy there must
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always be differences of opinion, and perhaps it is a good thing there should be. Ido not think it has done any harm to the business of the bank. I should be sorry to think that on any point Mr. Booth or myself recorded opinions adverse to one another from such disagreement. We meet on friendly terms enough, and transact the bank's business as well as we know how to. 23. You said, in answer to a question by Mr. Tanner, that the papers used at the time you were coming to conclusion in respect of the discussion respecting the agreement had not been kept ?— Yes. 24. What papers did you refer to then, were they private notes of the individual directors, or were there any draft agreements which were drawn out and not kept ?—There were a lot of notes and memoranda taken at the table as the discussion went along, which, so far as any I took were concerned, when the agreement was signed were all destroyed. 25. Those were the papers you referred to which had not been kept ? —Yes. 26. There was no formal draft agreements ?—-No ; if so they were handed back to the lawyers. We never saw anything but the agreement. 27. Do you think it was a proper thing to destroy papers like that ?—They were very likely destroyed. What is the use of them ? 28. You do not know of any of them ? —I do not know of any of them. 29. Were any rough drafts or agreements drawn up for submission to the Committee last session ?—There was a scheme proposed by the bank to the Committee—that is, a printed document. 30. Was that submitted by you to the Committee ?—Yes ; I think so. 31. Is it upon that draft that the report of the Committee of last session was founded, and upon that report the legislation ? —Yes, Sir, I think it was upon that in a modified form. 32. Now, you referred to some agreement in which Mr. Mackenzie was to be appointed General Manager. Was he the only officer mentioned in that agreement, or were there to be, in respect to that, other officers appointed and other positions to be filled up by officers of the Colonial Bank ?— I asked Mr. McLean, as I promised to do, if he had that agreement, and he said he had not kept it. I cannot get a copy of the agreement. However, there are Mr. Butt, Mr. McLean, Mr. Mackenzie, and Mr. Murray who know of that agreement besides myself, and who can give evidence with regard to what was in the agreement. The only distinct recollection I have about the agreement is that Mr. Mackenzie and Mr. Butt were to be joint General Managers in the event of the amalgamation of 1894 taking place. 33. Was that agreement in your possession, or whose possession was it in?—lt was in my possession at one time, and was handed over by me to, I think, Mr. McLean, with the other agreement. 34. At all events, it has not been destroyed or put away on account of this inquiry?— No. I have no recollection of seeing that agreement since 1894. 35. It was, then, an agreement in reference to the first proposed amalgamation, as being one of the terms ?—Yes, and alluded to in the other agreement put before the House. It was said that the officers were to be taken from each bank according to their standing in the bank and amalgamated together as a staff, except as related to particular appointments as provided by the agreement. 36. You would know it again if you saw it ?—I would know the agreement; I think it was in my own writing probably, and signed by Mr. Murray and Mr. McLean. I would not swear to the terms of it if I saw it in print, beyond those relating to Mr. Mackenzie and Mr. Butt. 37. At all events, is there any impression that this agreement was destroyed or kept out of the way for the purpose of not giving information ? —That is incorrect ? —That is quite incorrect. 38. Is it possible that the Government, or any member of the Government, heard or knew of anything in respect to the existence of such an agreement? —I think it is quite possible. 39. It was not one of those things kept as a profound secret under the declarations made by bankers ?—No; I go further, and say I think it is likely the Government did know about it, although it was Mr. McLean's or Mr. Murray's business to inform them, and not mine. I did not act as a principal on that occasion. 40. You would not be surprised if you were told by Mr. McLean or Mr. Murray that the Government were made acquainted that there was such an agreement in existence ?—No, I would not be surprised; I think it is very likely they were. 41. There was another matter which came out here in your cross-examination which requires explanation. Where is Mr. Forbes now, the bank manager, to whom Mr. Hallenstein transferred his shares ? —I think he is somewhere in New Zealand. He has retired in ill-health at the age of 54 years, and will come upon the pension-fund next year. 42. Do you think he is a man equal to Mr. Hallenstein on the share list ?—I never thought he was so wealthy a man as Mr. Hallenstein; but from the particulars of his means given to the bank at the time—l have looked it up again since—he is quite able to pay any calls that may be made on him. 43. The question is : have the calls made payable since been paid ?—lt would be seen from the list I handed in; but Ido not think there are any unpaid. I could not tell from memory, but Ido not think there are any calls outstanding on account of Mr. Forbes. 44. In connection with this there was rather a peculiar circumstance—namely, that your bank manager at Dunedin has written to Mr. Hallenstein and told him that if he paid up his call they would allow him to transfer his shares ?—I stated that from memory. I have asked the bank to correspond with Dunedin and find out about it. I have not yet ascertained exactly about that. 45. You depend entirely for information in respect to proposed transfers from the officers in the branches, do you not ? —Not always. We have records at the head office ourselves. In this particular case, Mr. Forbes was not well-known at the Dunedin office; he was manager at Wairnate. With regard to his means we had ample information before us.
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46. Are there any other officers of the bank who have had shares transferred to them ?—I do not recollect any cases. 47. Do you not think it is an undesirable state of affairs to take your own officers in preference to men of such standing as Mr. Hallenstein ? Does not the fact of having men like Mr. Hallenstein holding shares give tone and stability to the concern ? —Yes, we have Mr. Hallenstein still owning a large number of shares. That was a small quantity in comparison with what Mr. Hallenstein holds, or held. Where there is no reason to doubt the ability of the parties to pay calls, I think transfers ought to be effected; people should not be prevented from doing business so long as the bank shares are not weakened. I may say that I recollect perfectly well when this transfer came up, that Mr. Hallenstein had been allowed to understand that the transfer would be passed. We should not, however, have passed it on that ground had we not been perfectly satisfied that Mr. Forbes was able to pay the calls. 48. Mr. Hallenstein holds a very good position in this colony, and as matters looked from your evidence the other day, I thought it was desirable in the interests of all concerned to have the matter cleared up. Was it, in your opinion, a bond fide business transaction as between Mr. Forbes and Mr. Hallenstein, without any interference on the part of the bank?— Certainly, I have no doubt about it. -49. Are you satisfied it was a genuine contract, or did Mr. Forbes buy the shares through a broker ?—That I do not know. 50. It would be important for you to ascertain that ?—Yes, I can probably ascertain that from the transfer-book. 51. It has been stated here that there was a big fall in the prices of properties in the trading concerns, &c. I want to know if the fall in prices took place after they came into the hands of the bank, or previous to that time ?—lt is very difficult for me to answer that question. Ido not know how many years it took for some of these properties and trading concerns to fall into the bank's hands. Probably some of them might have been considered as in the bank's hands twenty years ago, and probably some were acquired by the bank about 1891, when the Bank of New Zealand Estates Company came into existence, but practically they had been conducted by the bank's funds long before. I should say that their falling into the bank's hands arose principally from the depression ; and if things had not become so depressed in the colony the Bank of New Zealand Estates Company would never have existed. 52. At all events, you are in a position to say whether the losses occurred prior to or subsequent to the properties falling into the hands of the bank ? —No, I am not prepared to say that. Depreciation in values no doubt occurred after, but the banking business in connection with them was while they were under advances to the bank. 53. You have told the Committee that you searched, and could not find any information as to the actual position of affairs immediately prior to Mr. Murray interviewing the Government in reference to the colony coming to the assistance of the bank ?—I can find nothing except the books in the bank. I can find no statement or anything used by Mr. Murray—no balance-sheets, and nothing at all of that kind, beyond the ordinary books of the bank. 54. Now, if there had been a balance-sheet prepared for Mr. Murray, and subsequently submitted to the Government, do you mean to tell me that you could not find a record of that balance-sheet, or a copy of it, kept by the bank ? —I do not think it is possible that any such balance-sheet of the whole bank existed, because, as I understand, Mr. Murray got cabled instructions from London. 55. There are no records in the office ?—No ; Mr. Murray would probably take it with him if it existed. 56. Do you not think there should have been a record kept ? Do you think it fair to you that you should go into the institution, and that suddenly a matter of importance should crop up, and you to have no record of it ? —I do not know the circumstances of it. 57. We will say that a balance-sheet was promised, showing the position of the bank from a given date, by Mr. Murray, and that subsequently, in accordance with that promise, a balance-sheet was submitted by Mr. Murray; should there not be a record of that, in justice to the bank, simply as a matter of business ? —I think so. 58. Do you think it would be kept In London or here ?—The head office was in London at that time, and that was the only place where such a balance-sheet could be prepared ; consequently I think it would be in London. 59. Do you not think it is inconvenient, if there are such records, that duplicates should not be sent out here to you ?—Of course Ido not know anything about this particular balance-sheet. I do not know what was done, and I do not like to blame people who had the business in hand then, not knowing what the position was. 60. Did you submit to the Colonial Treasurer yourself a balance-sheet, showing the position of the Bank of New Zealand on the 17th October, 1894?— Ido not remember a balance-sheet, but I remember informing the Colonial Treasurer of the position. The 17th October was only five days after I got my appointment. I may have done so. 61. Who was Mr. Andrews ? —Mr. Andrews had been Resident Inspector in Australia of the bank for some years, and he was brought over here to New Zealand by myself as acting general manager. 62. Will you look at that (Printed document put into witness's hands) ?—This is a different Mr. Andrews. This is his brother. 63. What is he? —He is manager at Lyttelton. 64. What was he at that date ?—-He was chief accountant at that time. 65. Was that prepared by him ? —Yes. 66. Will you look through your files and see if you have not got a copy of the letter ?—I will see, Sir. This is a letter from Mr. Murray to the Secretary of the Treasury, dated 21st August,
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1804 (printed in Exhibit No. 56, p. 7) : " Sir, —I have the honour to enclose, as desired by you, a statement of the assets and liabilities of the Bank of New Zealand in the colonies, as at the 25th June, 1894. The figures for London are not available in the colony, and have been written for. I have added, in a memorandum attached, figures explanatory of the amounts shown in the balancesheet as due to and by the Bank of New Zealand Estates Company.—l have, &c, John Murray." 67. Will you give the position now, as disclosed by that balance-sheet on the 25th June?— The liabilities of the bank as shown by this are :— In New Zealand. In Australia. £ s. d. £ s. d. Notes in circulation ... ... 439,413 0 0 20,941 0 0 Bills in circulation ... ... ... 19,010 17 8 4,617 1 3 Balances due to other banks ... ~. 3,511 12 7 4,263 0 3 Deposits-Government ... ... 402,661 9 10 119,353 10 4 Not bearing interest... ... 1,409,013 12 4 180,030 17 11 Bearing interest ... ... 2,836,319 11 2 196,55111 2 5,109,930 3 7 525,757 0 11 89,860 15 9 Bank of New Zealand Estates Company (Limited) —Credit balances, deposit in name of Estates Company jointly with Messrs. Jaffray and Glyn, being cash proceeds of realisation not otherwise specified ... ... ... ... 347,117 13 11 £5,546,908 13 3 £525,757 011 68. By that balance-sheet you tell the Government .that you owed the Estates Company £89,000?— That is so. 69. You are aware that the bank claim £45,000 advance from the Estates Company at the same date? How do you reconcile the two statements? Outside the realisations you show that £89,000 was due to the bank by the Estates Company. By the adjustment made the bank is now claiming £45,000 from the Estates Company ?—I do not think the one thing had anything to do with the other. The explanation here is very vague. I could not pick it up as I read it. There is a note here, which says, " The item £89,860 15s. 9d. should not, properly speaking, be shown on the other side, and should be deducted on this, because it is pro forma representing assets transferred from one concern to another, appearing formally in the books as credits to certain accounts. The Auditor in London insisted in treating the items as realisations.—J. M." Well, they say it should be deducted. I say it is added in. It does not appear explicit on the face of it. Ido not think it had anything whatever to do with the £45,000, because the £45,000 was the amount due by thevarious estates themselves in their current accounts. 79. Do you mean dealing separately with the estates ?—Yes ; and this would appear in the books as ordinary accounts, rather than with the Estates Company. lam certain it had nothing to do with this in any way. 71. Was that £89,000 ever put before the Committee last year?—l think that probably an alteration was made between the 25th June, 1894, and the time that the Committee sat. I can look into this matter. 72. I wish you would, because I have not been able to fathom it ? —Yes. 73. You give the liabilities on the 25th June at £5,546,908 in New Zealand, and in Australia £525,757—that is, £6,ooo,ooo?—Yes. 74. Looking at the balance-sheet for March 31st, you find the total liabilities are given as £11,125,504? —Yes ; but there are the accounts in London. 75. Do you think there are £5,000,000 in London ?—There is the capital, which is not taken in here, and all the London deposits, amounting to over a million. 76. That is £900,000 capital; that would, with the deposits in London, be £2,000,000; but still there are £2,000,000 to be accounted for? —I suppose all the amounts in transitu, which are very large, would be there too. 77. You have £5,000,000 to account for between these two balance-sheets. I allowed the million for capital and the deposits at Home ? —Yes; the deposits amounted to one million and a half, and then there is £1,000,000 for bills payable and other accounts in transitu. 78. A million of money?— Yes, quite. 79. Could you get this completed and explained, because I cannot reconcile the two myself ?— I understand that what you want me to get is a balance-sheet of the bank as at this date, 25th June, 1894? 80. Yes; I want to see whether any change took place between the 31st March and the 25th June, 1894 ?—Yes. I assume that the balance-sheet at the end of June would be sufficient, if we cannot get it at this particular date. 81. Yes, that would do. I think there was one made up on the 25th June for the whole bank ? —That was before my time, but I will look into it. 82. Will you give us the assets on that date, according to the balance-sheet you have now before you ?—Yes ; they are as follows : — * 22—1. 6,
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In New Zealand. In Australia. £ a. d. £ s. d. Coined gold and silver and other coined metals ... ... ... ... 557,543 16 11 239,942 16 1 Gold and silver in bullion and bars ... 29,891 711 28,200 0 0 Notes and bills of other banks ... 25,257 15 4 12,51118 8 Balances due from other banks ... 973 14 0 7,113 0 2 Landed property and bank premises ... 288,809 14 4 88.717 0 11 Notes and bills discounted ... 653,970 8 7 94,570 8 4 Other advances ... ... ... 2,712,473 8 6 870,622 17 3 Shares in Bank of New Zealand Estates Company (Limited) ... ... 1,850,000 0 0 6,118,920 5 7 1,341,678 1 5 Bank of New Zealand Estates Company (Limited), as per annexed statement 654,790 3 11 £6,773,710 9 6 £1,341,678 1 5 83. Now give us the totals?— The totals are £6,773,710 9s. 6d.—£1,341,678 Is. sd. : total, £8,115,388 10s. lid. Total liabilities in Australia and New Zealand, £6,072,665 14s. 2d. 84. That is the position on the 25th June, 1894, as disclosed by that balance-sheet?— Yes. 85. You went before the Committee at what time?— About a year after this. 86. Did you make search to see if you could find anything by way of letter received from Mr. Murray on the 29th June by the Premier?—l asked in the bank to see if there were any copies of Mr. Murray's letters or memoranda which he had at that time,, and I was told there were none there. He had his private letter-books, and did not leave any records in the bank of his visit to Wellington On that occasion. 87. Have you, in the records of the Bank of New Zealand, at the present time, anything relating to matters contained in this letter. Mr. Hutchison : I object to evidence being obtained in this way. Discussion. The Chairman : We are here to elicit all the information we can in reference to these matters, and I consider this is quite in order. 88. Hon. Mr. Seddon.] Whose signature is put to that letter, and what is the date of the letter?— Mr. John Murray signs the letter, and the date is, " Wellington, 25th June, 1894." 89. Is there a reference in that letter to a balance-sheet ? Mr. Hutchison : I object to this mode of getting in evidence, and ask that your ruling, Mr. Chairman, be recorded in the minutes. 90. The Chairman (to witness).] Do I understand that you searched for these papers, and that they could not be found ?—We have not succeeded in finding anything, Sir. I have already stated to the Committee that, when Mr. Murray was here, the head office was not located in Wellington. He merely occupied a room in the Wellington branch; and it is not likely that he would have left anything more in the Wellington branch than he would in the Masterton, or the Palmerston North branch. If he had any records he must have taken them back to Auckland, for these records are not known here. 91. The Premier has asked you whether you have found any record or any original document which you have been searching for ?—I have not been able to find any copy of this letter. 92. Hon. Mr. Seddon : I will read the letter I received from Mr. John Murray. Mr. Hutchison: I object, Sir; it cannot be put in evidence in that way. There is a proper way of getting a document in, by the Premier giving evidence. Discussion. The Chairman : I do not see any objection to the letter being read, and shall say it can be done. 93. Hon. Mr. Seddon.] Letter of 25th June, 1894, from Mr. John Murray. [The letter here referred to is included in Exhibit No. 56, p. I.] You have heard that letter read. Since you have been placed in the position of President of the Bank of New Zealand, do you agree, first, with the statement as to the condition of the accounts and the deposits, and generally with what Mr. Murray states here ? Would that be a fairly correct statement to put before the Government ? —I have no reason to think there is any wrong statement in that letter. 94. As President of the bank, and with the experience you have had of working the bank, would you now say that the statements then put to the Government fairly represent the position of affairs ?—I do not think the statement in that letter was meant to be a representation of the bank's affairs. There is no allusion made to a balance-sheet in it at all, and Mr. Murray, I understand, had nothing before him at that time from which he could speak definitely as regards the bank's entire position. The document which was put in my hands a few minutes ago was a balance-sheet of that date. That balance-sheet was not furnished at the time by Mr. Murray to the Government; and I assume that it was not in his hands and could not have been until after that time. Mr. Murray does not state the position of the bank at all. He says that in his opinion the £2,400,000 would be ample cover for any risk the Government may run. In stating that, I believe he stated what he honestly believed to be the case at the time,
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95. In giving the number of current accounts, the amount of deposits, the number of share holders, and his statement in respect of the depositors, do you consider that that information was correct ?—Of course I have never gone into the matter, at that time, 1894. 96. Did you furnish the Committee with a statement of the number of shareholders last year? — Yes, but that was a year later. I have no reason to think, after reading that letter, that it is wrong. It seems quite correct as far as I know. 97. Do you concur with Mr. Murray in his statement as to what would have followed—the widespread disaster to the colony—unless the colony had come to the rescue of the bank?— Yes, undoubted disaster would have come to the colony had not the Government come to the rescue of the Bank of New Zealand. 98. In that respect you support Mr. Murray's statement in this letter?— Yes, I support his statement that the result would have been disastrous to the colony if the bank had been allowed to collapse at that time. 99. Do you support his statement that the colony is not likely to lose by having come to the rescue?— Yes, I do not think the colony will lose anything if the bank is properly worked. 100. I will read you another letter, and I will ask whether you have searched for this in the bank : [The letter here referred to is dated 29th June, 1894, and included in p. 2 of Exhibit No. 56.] 101. Have you found any record of that?—No, Sir. Mr. Hutchison : Then, it ought not to go down as evidence. I object that that evidence is not being adduced in the proper way. Discussion. The Chairman: It is an important document, and I shall rule that it can be admitted. 102. Mr. Montgomery : I ask what general rule is to be laid down with regard to any document brought forward by any member of the Committee. The Chairman : I cannot give any ruling in anticipation. 103. Hon. Mr. Seddon.] The following is a most momentous document, and I am going to make a most unusual departure—namely, in giving the contents of a confidential letter : [Wellington, 4th July, 1894 : The letter here referred to is included in page 2of Exhibit No. 56.] lam taking a most exceptional course in supplying a Ministerial minute. Have you searched among the records to find if there is a copy of the cable message sent to your London agents which is referred to in this letter? —No, we have not searched for a cable message. 104. You have given us a list of cable expenses and the date of payment to Mr. John Murray for cable messages. I ask you whether you will search and see if you have got a copy of that cable message ?—I think copies of those cable messages can be got by writing to England for them. They are not in the Wellington office. We have not got a return of all cable despatches, but will try and get it. Mr. Murray did not leave any records behind him. He had no more to do with the Wellington branch office at that time than he would have had with the Petone or Te Aro branches, beyond the fact that he had a room in the Wellington office. 105. The next letter I will read is : [The letter here referred to is dated sth July, 1894, and is included in page 2of Exhibit No. 56.] Have you ascertained whether that was complied with ?—We have not searched for that particular thing, but we shall do so. I should take it that it was complied with by the sending in of the balance-sheet from which I have just read the figures. 106. Will this help you to find those documents, because for the purpose of the Committee's inquiry it is essential that we should have them. [Wellington, sth July, 1894: The letter here referred to is dated sth July, 1894, and is included in page 3of Exhibit No. 56.] Then comes a clue as to where the information can be sought and where you can get it from ? —Yes. 107. Will you ask your Auckland branch whether they have copies of these letters and the balance-sheet ?—Yes. 108. The Chairman.] To expedite the business will you inquire by wire?—-Yes. 109. Mr. Hutchison : Well, these three letters are to be treated as evidence in the meantime ? Discussion. The Chairman : I will take a note of the objection of the honourable member. 110. Hon. Mr. Seddon.] Now, during this inquiry a question was asked of you which was out of place, and in my opinion was in very bad taste—whether Mr. Seddon was not often in your house ?—Yes, I thought the question was out of place. 111. Did I during the negotiations for the banking legislation visit your place, or did I at any time during the negotiations silently, secretly, and surreptitiously ask you to take part in the negotiations ? —No, Sir. I may say that the Premier has very seldom been in my House—not nearly so often as I could wish to see him, but at no time do I remember him talking to me on the subject of these negotiations. Ido not think it ever took place ; lam almost certain it did not, and Ido not recollect seeing the Premier in my house during session time. 112. When did you remove your family to Wellington? —In April, 1895. 113. Did I ever see or speak to you —in terms good, bad, or indifferent—in reference to your appointment as President of the Bank of New Zealand ? —No, Sir, nor did any other man until I got the appointment. Until I received the appointment no man connected with the Government ever spoke to me about it. 114. I understood you to say, when under examination I think by Mr. Hutchison, that the cover of £55,000 in respect of the accounts in the " C " list was still retained by the Bank of New Zealand?— Yes, there had been no payment of money over it. 115. Does the amount of £55,000 stand to the credit of the Colonial Bank — that is the inference I deducted from your remarks in answer to the question by Mr. Hutchison?—l said that no money had been paid over on that account.
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116. You have it still to credit, have you?—No ;itis a matter of accounting. By the request of the Colonial Bank, it was transferred to another account, as they arranged to take security separately for it in some other way. 117. Then, if your answer to Mr. Hutchison has been that the bank retained the whole of that £55,000, it has to be qualified by the reply you now give to me?— Yes, what I now say is a correct explanation of the matter. 118. The Chairman.] Your answer is, that it is placed to the credit of another account, and you hold it there for the liquidators of the Colonial Bank? —It was placed to the credit of an account, and they themselves arranged the matter by taking security, I understand, in their own books for it. The matter has been finished so far as the Bank of New 7 Zealand is concerned. They arranged it elsewhere. 119. Hon. Mr. Seddon.] You are still positive that there has been no writing off on account of the " C " list ? —Perfectly positive that there has been no writing off to bad debts or losses. 120. On all the accounts of the " C " list ?—Yes. 121. Did you say that the guarantee given for the £20,000 and £5,000 influenced you in agreeing to the purchase of the Colonial Bank ? It was stated here in a question put to you that you had made such a statement ? —I never made such a statement as that, that I am aware of. 122. Will you answer the question, Yes or No, were you satisfied with the purchase irrespective of that condition?— Yes. 123. And you say that you have never stated that this guarantee of £20,000 and £5,000 influenced you in respect of the purchase of the Colonial Bank? —It did not influence me. It being on the side of the Bank of New Zealand I certainly did not object to it. 124. Mr. Montgomery put a question as to whether you asked Mr. Murray what he gave to the Government, and you replied "No " ? —I certainly did not ask that question of him. 125. Had you any conversation with Mr. Murray with reference to the position of the Bank of New Zealand at all ?—Yes. 126. What was the nature of the conversation ?—We had a good many conversations. They were more or less of a general character, referring to the capacities of certain of the principal officers, and the bank's trade, and in some cases to individual accounts. I understood that he was not in possession of information regarding the exact standing of the bank at that time, or of the bad debts which accrued during the preceding year or two. But, generally, he gave me more information with regard to the advances and trade of the bank, and possibly with regard to the histories of the officers, than I would be able to get elsewhere. 127. Mr. Murray, as far as he could, did help you? —He did help me. 128. Do you remember asking the Government, after assuming office as President, what information they had at their command at the time the colony came to the rescue of the bank ?— No, I have no recollection of doing that. I should hesitate to do such a thing, as it might be considered an impertinence. 129. You stated, in answer to Mr. Montgomery, that shortly after you took office, and after investigation, you came to the conclusion that the bank was to the bad between £300,000 and £400,000 ?—Yes. 130. About what date would that be?—lt was certainly within a couple of months after my taking office. 131. Was it before the balance-sheet of the 31st March, 1895, was compiled or after ? —Before. 132. Why was that not stated in the balance-sheet—why was it not told to the meeting of shareholders ?—I think I did state it in February, 1895. 133. You show in that balance-sheet a profit and loss of £383 lis. lid., whilst, according to this evidence, you say you were short between £300,000 and £400,000 ?—Yes; but that was six months afterwards. On the 7th February, 1895, I stated to the shareholders at the meeting that " we found, after making careful examination into the bank's affairs, and in which examination we were ably assisted by the Government Auditor, that there were losses to be provided for somewhat exceeding £300,000." That was within four months of my taking office. 134. At that time had you come to the conclusion that you could go on, notwithstanding these losses that you had made public ?—ln preference to stopping the bank, certainly. 135. Was anything brought under the notice of the Government between the time you made this statement, on the 7th February, and June ?■ —No ; we were not in a position to put the affairs properly before the Government until we got the Estates Company's balance-sheet made up to the 81st March, 1895. The head office of the Estates Company was then in London, and all the transactions were managed from there. There were large sums lying to the debit of profit and loss there, of which we knew nothing until we got the whole thing transferred here. On that balancesheet of 31st March, 1895, after we had had time to deliberate on it, we came to the Government. 136. You say that the reports of the officers confirmed these conclusions about the loss of between £300,000 and £400,000? —Yes. We found that more was subsequently wanted for these accounts. 136. You said this also, that " the reports were misleading and the position was not borne out by subsequent events." That is, that there were greater losses than was discovered by the officers? —I do not mean that the reports were misleading in the sense that they were intended to mislead. Of course, things got worse and worse in Victoria, and, I think, certainly they did not put down enough; but Ido not think the reports were intended to mislead. Before arriving at a conclusion as to the £54,000 necessary to be written off, I specially sent the Auditor to Australia. Now, I may go a little further, and say that the Premier suggested to me that I had better do so, because, he said, he had some information himself with respect to some of our business over there, and the consequence was that Mr Butt went over to Australia and looked into things very narrowly, and came
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back with a recommendation that it was necessary to write off some additional money; and consequently £43,000 was found to be necessary. I have never been able to get to Australia myself as yet. 138. Had the directors of the Bank of New Zealand, before the purchase of the Colonial Bank took place, any information supplied by their officers in respect of the position of the Colonial Bank ? —Yes, the fullest information. 139. Who supplied the information —what officer? —Mr. Mackenzie brought up all the balancebooks —I mean the books which contained an epitome of the whole transactions at a branch —to Wellington. They were gone over by Mr. Andrews, by Mr. Buller, and by Mr. Litchfield. 140. Did Mr. Butt ever have an overhaul of that report?—He had an overhaul, but he did not make any report to the Board. 141. And there was no reluctance on the part of the Colonial Bank to have their accounts fully investigated ?—No. Every facility was given to us. 142. And they were, you say, overhauled and investigated by the officers of the Bank of New Zealand ?—Yes. 143. And you had the advice of the officers before making the purchase ?—Yes.
Tuesday, Ist September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] Mr. Watson, you were asked to obtain further particulars with reference to the transfer of Mr. Hallenstein's shares to Mr. Forbes, and to ascertain whether they were bought direct from Mr. Hallenstein, or through a broker ?—Yes ; they were bought through a broker. I have a copy of the transfer deed. I notice that Mr. Hallenstein's signature is here, buying through his attorney Willi Fels, and it is witnessed by a broker in Dunedin, named John Logan. It was afterwards found that there was no power to sign by this power of attorney, and the bank requested that a new power of attorney should be got. That power having been obtained, the shares were passed. 2. Have you any information to give with regard to any correspondence which may have passed between the Bank Manager and Mr. Hallenstein ?—We sent down to Dunedin for that. Ido not know whether that letter in reference to the power of attorney was in my mind, when I said there was a transfer specially sanctioned. 3. You promised to get a complete balance-sheet up to the 30th June ; have you got that ready yet ? —That is being prepared. 4. In the event of your evidence being completed before that is ready, will you forward it to the Committee ?—Yes. I have got a note from Mr. Gibbs, the accountant, with regard to the difference. I was asked by Mr. Seddon yesterday a question about the large difference between liabilites shown in Mr. Murray's statement of the 25th June and the bank's balance-sheet published a few months previously. Mr. Gibbs says here : " The statement at June comprises New Zealand and Australian figures only, and, in the absence of London figures at June, I can only account for the difference roughly as follows: To the June statement add other items comprised in the balance-sheet at March : Capital and reserve fund, £954,000; difference in bills payable, £1,390,000 ; London office account, £2,005,000 : total, £4,340,000." That accounts for the difference. I was also asked with respect to the amount of £89,860, which did not seem to be explained. The £347,117 represents the proceeds of realisation, and the £89,000 also represents realisations, but realisations they were not sure about —such things as sales from one company to another. For instance, Morrin & Co. might buy something from the Onehunga Ironworks; but they were not quite sure about it until the thing was worked off. That is what was explained in that balance-sheet. I was asked also to look for any records of Mr. Murray's correspondence or telegrams. There is absolutely no correspondence in the office; but in looking over the London board minutes for that time, which we have in our possession, I find Mr. Murray's telegram to London after the two million guarantee was anthorised. That is all I have been able to get. This telegram is dated the 30th June, 1894 : " Bill has passed authorising guarantee two millions preference capital, 4 per cent., ten years. Bank then to redeem and cancel. One million held at disposal of bank ordinary business, other million to be invested subject to approval Colonial Treasurer. The colonial Government has power to require London board of directors call up £500,000 reserve liability. Little probability their doing so. Government to appoint President and Auditor. Head office and board of directors to be London, Wellington. Government desires to know whether board will support acceptance conditions. It is exceedingly desirable that money raised soon. General satisfaction expressed in colony." 5. Does that exhaust all that you were asked yesterday to produce to-day ?—Yes. The Chairman : I may state for the information of the Committee with reference to the letters handed in by the Premier yesterday, I have now ascertained that the letter which caused some comment as to who it was addressed to, was addressed to the Premier. The heading "To the Colonial Treasurer," was simply a printer's error. 6. Hon. Mr. Seddon.] Mr. Watson, in answer to a question by Mr. Montgomery, you said that you believed, in reference to the bank's balance-sheet and the discrepancy owing to what has been discovered subsequently, that the directors acted honestly from 1888 to 1894. You were speaking practically of the time since the board was located in London. Would not the directors be guided solely by what the officers of the bank reported to them ?—Yes ; I think so. 7. Have you ascertained for yourself what officers there were who reported to the board, and upon whose reports the board approved and passed the balance-sheets? —No, Sir, I have not gone into that at all.
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8. Would you do so?— Yes, I can make inquiries. I should like, however, to state here that on an analysis it does not seem to me that there is very much to complain about, whether the directors did or did not know exactly the position. There was only £376,000 ascertained bad debts in the bank in 1895 after a very bad year, and after the Australian crisis. The bulk of that was in Australia. There was not much in New Zealand. I do not know that they would be justified in stopping the dividends for the small amount of bad debts known to exist in New Zealand. In Mr. Murray's letter to you of June, 1895, he made a strong point of the bank stopping its dividend. He said that would bring the bank down, and if the directors had in mind that the fact of stopping the dividend would bring the bank down, I do not know that they would be justified in stopping it for such a small amount of bad debts. 9. You are aware that there was some legislation passed by the Atkinson Government in 1889 ? —Yes. 10. There was a clause in that Act as follows: "In making up balance-sheets from time to time for the purpose of declaring and paying dividends, the Board may, if it thinks fit, discard the said liquidation accounts, and may make up such balance-sheets without reference to the state of such liquidation account or the said assets, and may pay dividends from profits on current business without regard to the estimated surplus or deficiency of the said liquidation account or the said assets at the time of making up such balance-sheets or paying such dividends." Do you think that was honest legislation— that though one part of the bank was insolvent and in liquidation they could go on paying dividends by Act of Parliament, and were authorised to do it ? — I am hardly competent to judge. The legislators ought to know what is for the good of J the colony better than I. I may say that the same thing was repeated in 1894, when the bank was allowed to consider the £1,850,000 as of par value. It was really continuing the Act of 1889. At all events it was the law of the land; and I know that Mr. Glyn looked upon that as a reason why he should not take the losses of the Estates Company into account. 11. In 1895, at all events, when you found out the position of the Estates Company, you did not think it was honest to go on paying dividends when the Estates Company was practically insolvent and its shares worth nil ?—That is so, Sir. Moreover, we knew very well that if the estate's were hot separated from the bank the bank would not thrive under our hands. We knew that, and we did not want to go on with a concern that we knew would not do well. 12. In your opinion, then, under that clause in the Act of 1889 the Bank of New Zealand could have gone on paying dividends ?—Provided the bank's own losses were made good in current business. 13. Would it be under that legislation of 1889 that Mr. Glyn and the London directors would be acting in declaring dividends ?—Yes. 14. That would be done by them owing to the reports of officers as to the condition of the bank and of the legislation passed in 1889 ?—Yes, I think so. They had nothing else except the reports of the officers of the bank in the colony. They had no knowledge of their own. 15. You said, also, that you did not think the Bank of New Zealand should wreck itself in any year because there was a loss in the Estates Company. What would be a fair time to give in assessing the position as to properties and accounts before writing them down ?—A time of acute depression and panic would certainly not be a time for writing down properties. I think, as a rule, when anybody buys an estate or trading concern, or anything of that kind, they take an average of a certain number of years—five years, probably —of the returns from the properties, and value it according to that. 16. For the last year things have taken a turn for the better, and trade and commerce has been fairly good, has it not ? —Fairly good. 17. Is the time opportune now, do you think, for cleaning the slate of some of those doubtful accounts you have got ?—-I do not think confidence has been quite restored from the bad times. For instance, we have a trading concern which I have in my mind now. It is a business which pays over 10 per cent., and it is close to one of the largest towns in the colony, but there is not enough enterprise amongst the people to take it out of our hands. Confidence has not, I think, been fully restored. There has been such a depression in recent years—it is so very recent —that people have not had time to regain confidence yet. 18. Then, you want a little longer time before you are in a position to work these concerns off? —Yes; but we have done a good deal in selling our trading concerns. 1-9. In answer to Mr. Montgomery you made this statement, which is contradictory to your evidence in another part. You said, " The loss on the buildings must be added to the good-will." That is, in reference to the purchase of the Colonial Bank. Did you intend that, or was it a slip?—• It very much depends upon how the question was asked of me. Of course, if it was put to me so as to make it appear as a reproach to the Bank of New Zealand, that they gave more for the buildings than they were worth, it is probable I said we made a good bargain, because of the small amount paid for good-will. We did not make a loss on those buildings ; we got full value for the purchase as a whole. 20. Well, as the answer is given it is very bald, and simply amounts to this : that the loss on good-will would be £30,000 ?—That would be necessary to show that we did not make a loss on the buildings. As questions are put they must be answered. I have explained in another place very clearly that we were quite willing to pay £75,000 for the good-will, and accept any loss that might be made in the realisation of the buildings. Of course, any question put to me to try and twist that may elicit a different answer; but that is my answer. 21. If you were making up a balance-sheet, on realising you would put the loss on the buildings separately, would you not, in writing-off? —Oh, yes. 22. In writing off the good-will, would you keep that separately ?—Certainly; it is kept separate now.
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23. According to the answer you gave to that question, you would make the good-will £105,000 instead of £75,000, because you said the loss on the buildings must be added to the good-will?—■ Yes, because I did not want to show that we thought we had made a loss of £30,000. I was driven into that corner by the question. I wanted to show that the good-will was worth so much more in reality. 24. Was the £75,000 paid for good-will, in your opinion, full value for the good-will of the business of the Colonial Bank ?—No. 25. You do not think it was? —No, I do not. 26. You stated in answer to Mr. Montgomery that the £20,000 for which security was given by the Colonial Bank was good at first, is good now, and was always good?—So I believe. 27. You stated, also, that the full meeting of the board passed the advance of £20,000, and that there was no dissent recorded ? —There was no dissent recorded ? 28. Was Mr. Booth present ?—I think so, Sir. 29. You have stated that the advance was made in accordance with the solicitor's advice?—lt was. Mr. Cooper has looked into that matter and satisfied himself. The solicitor has certified to it. 30. Then, if Mr. Booth stated that the conditions upon which the advance was made have not been complied with, he is in error, is that so ?—Yes. I have no doubt that Mr. Booth stated what was his impression, but at the same time he had not looked up the matter. 31. At all events, the matter has been looked up, and you find it has been certified to by the solicitor? —I looked up the matter and referred it to Mr. Cooper, and he assures me that the thing was done in proper order. 32. I think it is only fair to Mr. Booth to say that that has been ascertained since the question was put by the Committee? —Yes. I have looked it up since. I was under the impression that it was right, and have looked it up and found it to be so. I have no doubt Mr. Booth thoroughly believed what he stated to the Committee, but he does not spend so much time in the bank as I do. 33. You stated, in connection with the £5,000 bill of exchange, that you had made arrangements for a portion of the business, and that in respect to this business your agent, under your instructions, had demanded some bills of exchange, is that correct ? —Yes, Sir. There was a stipulation when the advance was made that the bank was to get a certain proportion of the bills of exchange of the party to whom the advance was made. The Government Auditor came to me and complained that we were not getting those bills under good credits. I said, " Well, we had better write down to the manager of the branch and see that he gets them." I believe that was done. The manager of the branch, I believe, asked for £10,000 of bills of exchange and he got £5,000. 34. Was the Colonial Bank acquainted with this? —Not that I know of. They had nothing to do with it. 35. They had nothing to do with it ?—No. 36. Was any demur made ? I suppose they became acquainted with the facts and the transaction ? —I do not know they did until long afterwards. 37. I think you said the bill itself was met, and that it was on a firm of good standing in London ?—lt was met; but afterwards a hitch arose with regard to some matter in connection with it. 38. In answer to Mr. Hutchison, you stated that an attempt had been made to injure your private honour, and that your private honour was being impugned in respect of the £4,000 draft ?— Yes ; that was so. 39. Have you anything further to add to the evidence in answer to Mr. Hutchison's question in respect to that matter ? Have you satisfied yourself that there was no other draft except the one to Mr. Mullins in Timaru ? —There was no other that I know of. 40. Have you made any inquiry as to whether there was a draft on Mr. William Evans of Timaru ? —Yes. I have not made inquiries of the Colonial Bank about it; but I have made inquiries. 41. What has been the result of the inquiry?—l was assured that no such draft had ever been drawn. 42. In reference to the first agreement as to amalgamation prepared by Mr. Murray and Mr. McLean, you have stated that you had no recollection of the terms of the agreement being concurred in by the Colonial Treasurer ?— No, I had no recollection of it. I think a correspondence took place which showed that the Government did not quite concur. The correspondence was printed in the newspapers. 43. I have here a letter of the 11th September, 1894, embodying the agreement addressed to Mr. Ward, Colonial Treasurer. [The letter here referred to will be found as Exhibit 48a, page 7.] The Colonial Treasurer would be aware of this agreement from that, would he not ?—He would be aware; but you asked me whether he concurred in it or not. 44. With this there is another important letter which I wish to put in as I did yesterday, and if it is the pleasure of the Committee I will read it, as I intend to ask some questions on it. It is dated the 12th September, 1894, and is addressed to the Premier. Mr. Hutchison : Anything that appears in a Parliamentary paper, of course I do not object to being treated as available ; but anything not so available I should object to. Hon. Mr. Seddon : I think myself that it is important. [Letter of 12th September, 1894, read, from Mr. J. G. Ward.] 45. Mr Hutchison.] Mr. Chairman, are you going to let that letter in as evidence ? I take objection to it. Discussion. The Chairman : This is an important letter bearing on circumstances that we have to inquire into. I shall rule that it can be handed in.
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46. Hon. Mr. Seddon (to witness).] You have heard that letter read, and from that you will see that the Government were well posted as to what was going on in respect of the proposed amalgamation in 1894 ?—I think the question asked me was whether it was within my knowledge or not that the Colonial Treasurer concurred in the proposal; and I think the correspondence which followed on the proposals being sent in to the Government will show that they did not concur. They wanted other safeguards, which the banks did not see their way to give, and the thing fell through. 47. There was an Act passed in 1894 ?—Yes. 48. You have stated that the Government did not intimate to you that they were not agreeable to the amalgamation of the banks ?—No, Sir, I had nothing to do officially with the Government at that time. Mr. McLean and Mr. Murray were the principals. 49. What is the date of your appointment ?—October, 1894. 50. Were you President on the 23rd October, 1894 ?—Yes. 51. You are aware that the following clause was passed in the Act of 1894, dated the 23rd October : "It shall not be lawful for the Bank of New Zealand to amalgamate with any other banking company or corporation, whether by way of purchase or sale of assets and business or otherwise howsoever, without the consent of Parliament." You are aware that was passed?—Yes. 52. It was introduced by the Government, and there was an end to the amalgamation proposals ?—Yes, Sir, and I think it was a great pity. 53. In answer to Mr. Hutchison, you have stated that the whole of the directors of the bank recommended that another bank's business should be purchased or acquired, so as to increase the earning power of the Bank of New Zealand ?—Yes. 54. Are you aware whether any attempt was made to acquire the business of the National Bank ?—Yes; I know that an attempt was made by the Bank of New Zealand to acquire the business of the National Bank. 55. Do you know whether Mr. Coates, the General Manager of the National Bank, was interviewed in reference to the matter ?—To the best of my recollection the principal negotiations that went on were conducted in London; but I think I am not wrong in saying that Mr. Coates was spoken to on the subject, and that Mr. Andrews, the Acting General Manager of the Bank of New Zealand, saw some of the National Bank people in London about the matter when he was at Home. 56. You have stated that you took an active part in respect of acquiring the business of the Colonial Bank after you became President ?—Yes. 57. Did you act in this respect on your own authority, or on the authority or with the concurrence of your co-directors in the Bank of New Zealand ?—I always acted in concurrence with the directors. 58. Any inference now that you acted on your own responsibility would be incorrect ? —Yes. I heard no such inference made by anybody. 59. Now there was a conference between the directors of the Bank of New Zealand and the directors of the Colonial Bank at a certain stage. Who called the meeting ? Was there any communication sent calling the meeting, or was it informally that they all met together without notice?- I want to find out whether the Colonial Bank directors wrote asking you to meet them, or whether you wrote asking them to meet you, and whether there is any correspondence on that ?—I do not remember any correspondence at the time the legislation was passed. I think it was generally understood that the Colonial Bank were willing to have their business purchased by the Bank of New Zealand. It was the Colonial Bank that was in Mr. Hoskings's mind when he drafted the Bill, and it was generally spoken of by the Colonial Bank people and the Bank of New Zealand people at the time; and so far had it gone that at the time the legislation was passed Mr. Mackenzie had put his balance-books into the hands of the Government Auditor for inspection. I know that, and I know that he was here in Wellington at the time. Ido not think there was any particular advance made on either side, or that there was any correspondence. 60. It has been stated that an agreement, notwithstanding the legislation passed in 1894, was drawn up between the directors of the Bank of New Zealand and the directors of the Colonial Bank before the session of 1895 ; is that correct, or otherwise ?—There were some negotiations then, but nothing eventuated from them. 61. Then, the law was not set at naught ?—No. The Bill said that no amalgamation could take place and no purchase. No purchase took place and no amalgamation took place. The Bill did not say no negotiations should go on. 62. Then, there was no agreement entered into prior to the session of 1895 ?—There was nothing that ever came to anything. I could not say who took the initiative. The parties were here in Wellington, and it was a matter of constant conversation. Naturally, when the Act was passed they met. Ido not remember any particular letter. 63. Mr. McGowan.] I should like the witness to answer the question as to who took the initiative. A meeting could hardly take place without a conference, and surely there would be a letter to show who called the conference ?—Mr. Macarthy reminds me that he and Mr. Mackenzie and myself had meetings on more than one occasion to discuss these things, and no doubt we arranged amongst us that the conference should take place afterwards ; but I could not say that it came from one side or the other. We were both willing to meet and arrange these matters. 64. I want a plain answer to the question, Who called the conference ? —I do not know who called it; but I think it was probably arranged at one of these meetings which we had. 65. The Chairman.] There would surely have to be a formal resolution convening it ?—After, there would ; but Mr. Mackenzie came to us and showed us the balance-books, and it was looked upon as a foregone conclusion that the purchase would be made, the Bank of New Zealand eliminating all bad accounts.
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66. Hon. Mr. Seddon.] I have brought you now to the commencement of the session of 1895. Here is an enclosure to a letter. Will you look at that, Mr. Watson. [Letter handed to witness.] ? —I know the letter very well. 67. Will you read it?— There are some things here that are confidential to the Government. I would ask that that confidence be maintained, Sir. If the Premier thinks it should be read, I will waive my objection. 68. There is nothing there but what is disclosed in the Banking Committee's report. lam prepared to let the matter go in if you will withdraw the plea of " confidential" ?—Very well, Sir. [The letter here referred to will be found as Exhibit No. 62.] 69. You see there that you immediately advised the Government of the position in which you found the Bank of New Zealand ? —As soon as possible, Sir. 70. At that time, you mentioned yesterday, you found there was a deficiency of between £300,000 and £400,000 ?—Yes, that is so, in the bank. 71. Which you brought subsequently before the shareholders in February?—l did. 72. What are those letters [documents handed in]? —The first is a letter from myself to the Colonial Treasurer. 73. What is the date ?—The 23rd July, 1895, with several enclosures. 74. What are the enclosures —just mention them ?—First, a letter of the Auditor with (2) the aggregate balance-sheet of the Bank of New Zealand ; (3) combined balance-sheets of the Bank of New Zealand Estates Company and Auckland Agricultural Company (Limited), 31st March, 1895; (4) combined balance-sheets of the Estates Company and Auckland Agricultural Company pro formd; (5) balance-sheet of the Bank of New Zealand Estates Company, 1895 ; (6) balance-sheet of the Auckland Agricultural Company, 1895, and combined balance-sheet of the Bank of New Zealand Estates Company and Auckland Agricultural Company, 1895 ; and, pro forma, the same companies' balance-sheet after writing down ; a letter from the Auditor to myself, a letter from the Colonial Treasurer to myself, and a letter from myself to the Colonial Treasurer dated sth August. 75. Do you recognise those communications?—l should like to have them compared with my own books before making myself responsible for everything. They are printed, and there might be a figure' out here and there. 76. The Government have the originals and can get them certified to ? —I have no doubt they are correct. 77. There is no objection to those being handed in to the Committee?—l do not think there is any objection to them. I think these have all been before the Committee of last year. 78. But that was a secret Committee ?—Yes. 79. The Chairman.] The question is, are they correct ? —I will have to examine them first, and compare them, before I can certify to them. 80. You recognise them generally, but think there is a possibility of an error in the figures. They will be forwarded to you and you can verify them, and then they will be put in as Exhibit No. 49 ?—Yes. 81. Hon. Mr. Seddon.] Will you look at these letters also?— One is a letter from myself to the Colonial Treasurer, dated 23rd October. There is also a letter from Messrs. Haggitt Brothers and Brent to the Secretary to the Treasury, enclosing the certificate of the Chairman of the Colonial Bank as to the execution of a contract. [See Exhibit No. 50.] 82. Mr. Hutchison: Can the witness refer to something which has been written by some other person ? 83. Hon. Mr. Seddon.] The correspondence, so far as you are concerned, which is just given, was what you had sent from your bank ? —That letter of the 23rd October was sent by me to the Colonial Treasurer. There is a letter of the Secretary to the Treasury to me of the 19th November, and another letter by myself to the Secretary to the Treasury, of the 20th November, and there is a copy of the certificate signed by the directors of the Bank of New Zealand. 84. The Chairman.] You recognise all those as being copies of the original documents?— Yes, subject to .verification. The Chairman : Subject to such verification by you, these several letters will be marked as Exhibit No. 50. 85. Hon. Mr. Seddon.] I have some other important letters here, I want you to look at those that you can verify?— There is a letter of the 19th November by the Secretary to the Treasury to myself. Then, there is a letter from me to the Colonial Treasurer, dated the 21st December. There is a letter from the Secretary to the Treasury to myself on the 7th December, 1895; a letter from me to the Colonial Treasurer of 12th December, 1895 ; a letter from the Secretary to the Treasury to me, dated the 28th January, 1896 ; a letter from me to the Colonial Treasurer, dated the 3rd February, 1896; letter from the Secretary to the Treasury to myself, dated 7th February, 1896 ; and from the Premier to myself on the 13th February, 1896. That is all so far as lam concerned. 86. The Chairman.] Very well, these several letters will be included in Exhibit No. 51. Will you look at these letters ?—Confidential correspondence relating to the Bank of New Zealand reserves, in 1893. This is the commencement of the whole of the banking troubles, and going as far back as October, 1893. Mr. Hutchison : I object to that. Mr. Watson cannot speak as to that correspondence, which was before he was appointed President. Discussion. 87. The Chairman.] I rule that the witness can be asked questions on the subject of this correspondence ?—I am advised that the proper course would be for me to submit this to the board, as it is a confidential letter which deals with the past business of the bank. There would probably be no objection to it, but that is the proper course to take. I could probably verify it. 88. Will you ask for the consent of the board to have the word "confidential" withdrawn from the letter and produce it to the Committee ?— Yes. * 23—1. 6.
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89. Hon. Mr. Seddon.] On the question of the future management of the bank, have you any recommendations to make to the Committee ? Do you think it is necessary that an auditor should always remain in Wellington to assist the directors ?—I think that Mr. Butt, having both the bank and the Assets Board's affairs to audit, has a little too much to do, and that it would be advisable that he should have assistance. I do not think a separate auditor apart from his department is necessary. 90. The question is this : Mr. Booth stated that the board wanted an auditor in Wellington to assist the directors. The question is, is it the business of auditors to assist the directors, or should it not be the business of the General Manager? —The General Manager. I think they could get their own officers to do that. They can easily appoint any officer they like to give them any assistance they require. 91. What officers are present at board meetings to assist the directors? —The General Manager and the secretary of the board, and the Government auditor is always there to assist. 92. Is it usual for special bank auditors to be in attendance at directors' meetings ?—Do you mean in other banks ? 93. Yes?— No. 94. Then, why in this case?—l do not think it is necessary. 95. Then, I suppose it takes up a considerable amount of his time. How often does the board meet? —The regular meeting is once a week. They generally take from about half-past two to about half-past six in the afternoon, and very often, owing to the unusual things which have happened to the bank during the last year or two, the directors have met as frequently as three times a week. 96. Then, according to this the auditor is wanted not as an auditor in the ordinary banking acceptance of the term, but to attend the board meetings to keep the board straight ?—lt is new to me that the directors want any such auditor. 97. Mr. Booth has sworn in his evidence that an auditor is wanted to be present in Wellington, and to assist the board ?—He has never brought it up at any board meeting. 98. You say that the proper officers to do that are the bank officers —the General Manager and the secretary to the board?— Yes ;or any inspector or officer the board wishes to appoint. It must be better for the board to have their own appointee than any one else appointed, if they wish him to do their behests. 99. Is it usual for an officer of the bank to advise as to every advance made from the head office ?—Yes, generally. 100. Is the Auditor consulted in respect of such advances ? —Yes ; I think he is consulted with reference to every important advance. 101. What is the latitude allowed to managers outside the head office, or have you fixed limits? ■ —They differ, according to the importance of the branch. 102. Can you state the maximum at any branch that is allowed to be made without consulting the head office ?—I would rather not. I think it would be very mnch against the bank's business to speak of the inner working of the bank like that. 103. You stated that there were some terms in respect of the agreement which were not laid beforethe House. These refer to private accounts. What was the explanation of that reply ? Were you referring to the " B " list?—l should like to know the question put. 104. It was whether the agreement contained all that was agreed upon between you and the Colonial Bank ?—No ; it did not. For instance, it did not contain what was agreed to be held against the several accounts in the "B " list. That was not set forth in the agreement. 105. That was what you intended by that reply ?—There were items in the lists themselves which were not set forth in the agreement. That is what I intended. 106. And as those referred to private accounts, that is why they were not placed in the agreement ? That was your answer to that question ?—Quite so. 107. Is it correct to say that at the beginning of the negotiations for the purchase of the Colonial Bank there were only three lists ? —As far as I recollect, that was so, Sir. 108. Was the Government, or any member of the Government, consulted as regards there being three or four lists, or anything in the lists ?—No, Sir. 109. You have stated that the directors were unanimous in deciding not to take over the accounts in the "C " list. At what date was that decision come to?—lt would be towards the end of the three months. 110. It was towards the end of the three months ? —Yes. 111. In your opinion, is there sufficient left now to cover the liabilities in respect of the "B" and " C " lists in the hands of the Bank of New Zealand?—As I stated before, the Bank of New Zealand took no risk at all as regards the "C " list. The accounts in that list are guaranteed to them. With regard to the "B " list, the directors consider the cover is ample. 112. The directors consider the cover is ample ? —Yes, 113. You stated, leaving the lists, that you asked the Colonial Treasurer if he had any objection to Mr. Litchfield and Mr. Buller getting agreements for three years?—l mentioned it informally; I did nothing officially about it. 114. Are you sure you did to the Colonial Treasurer?—To yourself; I do not recollect whether you were Colonial Treasurer or not at the time. 115. Mr. Ward was Colonial Treasurer ?—I did not apply to Mr. Ward; Ido not think he was in Wellington at the time. 116. In answer to Mr. Maslin, there is this statement: "As things have turned out with the Colonial Bank, I do not think there was sufficient provision made for bad and doubtful debts." What date did you refer to there ?-—I referred to the date on which we took over the business in 1895.
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117. But you were Inspector of the Colonial Bank. Do you think at that time there was sufficient provision made for bad and doubtful debts ? —I think the directors acted in what they thought was the best way in the interests of the bank. 118. If there had not been sufficient provision made by the Colonial Bank for bad and doubtful debts, who was responsible ?—The directors 119. And did the directors act upon information received from their officers, or on their own responsibility and knowledge ?—I am responsible for the correctness of the reports I made to the directors. That is as far as my responsibility extends. 120. Are you satisfied, in the light of subsequent events, that when you were Inspector of the Colonial Bank you advised the directors, and put the position, as far as you knew it, fairly before them ? —Yes, as far as I knew it, I always put the position fairly before them. 121. When did you leave the Colonial Bank? —In October, 1894. 122. Was Mr. Mackenzie General Manager then ?—Yes. 123. Do you think it is possible for the position of the Colonial Bank to have altered so much, judging from what you found when you came to examine the accounts in 1894 and 1895, or is there anything that you know which would account for the alteration specially ? —Yes, there were some things. 124. Will you explain them to the Committee ?—I could not go into matters of private accounts, Sir. 125. You recognise that your own position is prejudiced by the position in which the Colonial Bank was found subsequently, you having been the Inspector of the bank ?—I recognise that some people might view it in that light; but I recognise also that no specific charge has been made against myself, except in that one matter of the £4,000 draft in Timaru, which I think has miserably failed. There is no other specific charge made against me that has been maintained. 126. Mr. Hutchison : Is the witness to be permitted to answer that that charge has miserably failed? 127. The Chairman.] I did not hear the remark the honourable member complains of ?—I was asked, Sir, whether I recognised that my own personal character was likely to suffer through these matters. I answer that no specific charge had been made against myself, except that one attempt about the draft for £4,000 at Timaru, which attempt had miserably failed. 128. I do not think it is right for you to make a remark of that kind?— Then I will modify it and say that the only specific charge made against me has miserably failed. 129. I will ask you to withdraw the remark that the charge has miserably failed, because it is not for you to say before the Committee that a charge has miserably failed. Hon. Mr. Seddon : There was no charge made. A question was asked, and the witness replied. Discussion. 130. The Chairman.] The witness would, in my opinion, have been perfectly justified in saying that, in his opinion, the charge had not been proved; but I think he went too far in saying to the Committee that it had miserably failed ?—I can only say it was an attempt on my honour which proved a complete failure. 131. Hon. Mr. Seddon.] Would you advise the General Manager with respect to accounts at the time you were Inspector of the Colonial Bank ? Did he act on advice from you, or who are responsible for the recommendations made to the General Manager?— The Managers and Inspectors are responsible in giving advice for the ordinary working of the bank. 132. The General Manager was your superior officer ?—Yes, in the Colonial Bank. 133. You would report to him, and he would be the means of communication direct to the board? —Yes. 134. You communicated with the General Manager ? —Yes. 135. And he communicated direct with the directors ? —Yes. 136. In respect to these transfers, will you say now that the shareholders are as good as they were prior to the passing of the legislation of 1894 ?—Yes, I think so. Of course, I mentioned before that some persons had been depleted of their means by paying calls in the Bank of New Zealand and other companies, and were not, perhaps, so wealthy now as then, but otherwise they are as good. 137. Did you inform the Government, prior to the passing of the Act, that the directors were bound to transfer?—l do not think I did officially. 138. Do you not think it was a matter of sufficient importance in order to stop dummyism? —There was no dummyism; we could not trace any. 139. You think it was a legitimate speculation in shares, because the record shows that there were a large number of transfers which came in at a particular date ?—I do not think there was anything unusual. 140. Was the Auditor aware of this ? Is he ever consulted in respect to the transfers?— Yes, he attends the board meetings, and transfers are always looked into there very carefully. 141. Do you think there is any objection on the part of the board to submit to the Government Auditor all transfers before dealing with them? —I do not think there will be any objection ; but, as it is at present, I think the matter is put into my hands particularly by the Act of 1894.
Wednesday, 2nd September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] Have you any documents to hand in to the Committee this morning, Mr. Watson ?—I was asked to get a statement showing the names of the officers who reported to the board of the Bank of New Zealand from 1891 to 1894, and on whose reports the balance-sheets
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were prepared. On making inquiries at the bank as to the method adopted in conducting the business at that time, I found that during the period in question, practically all the information available to the General Manager in the colony was also available at the head office in London. Copies of all returns, with the exception of those of a merely routine character, were supplied to London by the branches. Press copies of all General Manager's local correspondence inward and outward, also of Estates Company correspondence, were furnished to the London office, together with copies of all inspectors' and managers' reports upon the branches, so that the head office was in almost as good a position as the General Manager to form a judgment concerning the circumstances and position of the bank during the period named. At each half-year, the usual half-yearly returns were forwarded to London by the branches, copies being sent to the General Manager in Auckland. The profit or loss at each branch was first transferred to Auckland, and after being combined there, the net result was advised to London, first by telegraph and afterwards by letter, supported with full details. In London, of course, the results were checked by the auditors from the returns forwarded to London office by the branches. The practice of the General Manager, after the net result was ascertained, was to review in a special letter the issue of the year's working, commenting generally upon the circumstances which had led to the results shown. The decision of the board with regard to the disposition of profits, or as to the provision necessary for losses, would, however, be formed not exclusively upon the reports of the General Manager, but generally from the information in the possession of head office furnished in the reports of the inspectors, managers, and agents at the various branches. The Committee wanted to know who were tbe officers who reported to the board, and on whose reports the balance-sheets were prepared. Having stated the method adopted in making provision for bad debts, I now put in a short list of the general managers, managers, inspectors, and assistantinspectors. Attached to it is the statement I have just given to you. I may say that statement was prepared by the confidential clerk who has acted in the head office for the General Managers during all that time, and who is now in the office with me. I was also asked, Sir, to show, so far as I could, the position of the bank on the 25th June, 1894, made up from the books at our disposal, I now hand that in, and, in handing it in, I may point out that it differs from Mr. Murray's statement in-so far as the Fiji business is entered here. This is the New Zealand, Australia, and Fiji business only. We were not able to get the London business out at that time, and we should have to supply the London accounts. We sent Home to London the colonial accounts, but the London accounts were not sent here from London. This shows the amount of credits, amounting to £2,537,900. In these respects it will differ from Mr. Murray's statement, but in other respects it will show that Mr. Murray's statements were quite correct. I was also asked to get the board's sanction to have the word " Confidential" taken off a certain letter. The board meets this afternoon, when I will put that before them, and will try to get what you desire. 2. This statement has only been made up recently ? —lt is made up from the books. 3. The date on the document simply means the date on which it was made up ?—Yes; I think it is certified to by the accountant of the bank, Mr. Gibbs. 4. Is there anything further ?—Nothing further. I had a note about examining and verifying printed correspondence which took place between the bank and the Colonial Treasurer ; but I understood afterwards that that was to be done by the Secretary to the Treasury. 5. "That is correct as regards some letters which passed between the bank and the Colonial Treasurer. I think you were asked to look over the printed copies of some letters sent and received by yourself as President. These will be submitted to you with your evidence ; and, if found correct, you will please notify the Committee when handing them back with your evidence '?—I understand, Sir. That is all I have to put in. 6. Hon. Mr. Seddon.] When under examination by Mr. Montgomery, you stated that the directors were unanimous up to a certain date in their opinion as to the purchase of the Colonial Bank. At what date was that: about what time ? Was it long before the agreement was made, or shortly before ?—lt was some time in September —about the middle of September. 7. Were there one or more members of the board who were opposed to the purchase?—Of course, I can only give my impression as to that. 8. Would there not be a resolution passed by the directors approving it ?—Yes, there was a resolution approving it by the directors; but when the purchase was made, as I mentioned before, a division was taken, and dissent expressed, although no dissent was recorded in the minutes. 9. Who were the members dissenting?— Mr. Booth dissented, and, I think, Mr. Macarthy, whose position was that he thought he might force the Colonial Bank into giving the Bank of New Zealand a better bargain. Mr. Johnston, Mr. Kennedy, and myself voted for the purchase. 10. You heard Mr. Booth giving his evidence, by which he appears now to be of the same opinion as yourself, Mr. Johnston, and Mr. Martin Kennedy ? You heard him say that he believed the Bank of New Zealand had made a very good purchase ?—Yes ; I heard him say so. 11. I now come to the question of the appointment of Mr. Mackenzie. You heard Mr. Booth say that the President from the first wanted Mr. Mackenzie appointed manager. Is that so ?— Yes, that is so. 12. You say there was an understanding that Mr. Mackenzie was to take the position at the first?— Yes; as I told you, it was settled between Mr. Murray and Mr. McLean, and afterwards it was agreed to by our directors, and I heard Mr. Booth himself express it so to Mr. Mackenzie. 13. Then, was this statement correct: "Mr. Watson pressed for Mr. Mackenzie's appointment, and the whole of the other directors were opposed " ?—No, that is not correct. 14. At all events, you have stated that the appointment was made by resolution, and the whole of the directors, except Mr. Booth, consented ?—Yes ; that is correct. Anyhow, the whole of the rest of the directors were for it. Mr. Booth alone dissented.
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15. Yesterday you stated that, as regards the first overtures for the purchase of the Colonial Bank, you could not understand how it was brought about. Had Mr. Murray anything to do with it in 1895?—N0 ; Mr. Murray had nothing to do with that. He was not in the colony at the time. 16. Are you sure that Mr. Murray had nothing to do with bringing about the negotiations?— Oh, yes. He came here at my own request. I consulted with the directors available in Wellington before sending for him, and they agreed to his coming. Mr. Booth was not here; he was in the Wairarapa at the time, and I did not consider it necessary to consult him, as I had the majority of the directors; and Mr. Murray, I think, dissipated some illusions that were in the minds of the staff, and communicated by them to the directors at that time. For one thing, Mr. Andrews computed that the Bank of New Zealand would lose 25 per cent, of the Colonial Bank business, and Mr. Murray urged the directors not to take that view. He said that the Bank of New Zealand officers must have fallen away from what they were if they would lose 25 per cent, of any business they got hold of. Mr. Murray turned out to be perfectly right in that contention. There were other matters which his experience and knowledge of the bank enabled him to put very clearly before the board. He quite saw the necessity for rehabilitating the Bank of New Zealand by the acquisition of the business of another bank, and the impossibility of extending their business to any appreciable extent without such acquisition. 17. You see I have it here: "The negotiations for the purchase of the Colonial Bank were resumed after the legislation passed, and I think these came from the Colonial Bank." That is your evidence in answer to Mr. Hutchison ?—lt came from the Colonial Bank when the General Manager was up here with all the balance-books at the time, but I do not know that there was any correspondence or anything of that sort on the subject. He might have been asked to walk into the office with these balance-sheets —or I think it was the other way, now that I come to remember; I think the Inspectors went into the Colonial Bank and looked at the balance-sheets. 18. I want you to give us some definite evidence, because we cannot quite reconcile your evidence as stated yesterday ?—Both parties came together without any one taking any particular lead in it. Some of the work was done in the Bank of New Zealand, and some in the Colonial Bank. Ido not think any one took any particular lead, or initiated the matter in any way. 19. You said, in answer to Mr. Hutchison, that you thought both banks brought up the agreement : " Legal assistance was called in, and it was then drawn up by the legal gentleman." Do you mean that you had amongst yourselves drawn up the draft agreement, or simply as to the prices and terms ? —We came to the conclusion point by point as to what should go into the agreement. No doubt it was a somewhat crude and not a legal thing. We had all the points down. One suggested one thing and one suggested another, and these were debated ; and when this was done we called in a legal gentleman to put the agreement into shape. 20. Then, you are not correct in stating that the bank directors drew up an agreement and then called in a legal gentleman?—No, I have not said that. Both banks drew up a draft agreement in their own way, which was afterwards put into legal phraseology and shaped by the legal gentleman. I mean to say the lawyers did not agree upon the points ; we did. 21. You came to conclusions on given points ?—Yes. 22. You gave those to the lawyers?— Yes. 23. Having agreed to certain points, you would not say that was an agreement?—lt was a draft that was to form the agreement—the clauses. 24. The following question was put to you from Mr. Hutchison: "Did a clerk engross the agreement of the 18th September" ? Were these heads you have mentioned handed to the lawyer, or as hinted at, or as your evidence goes to show, that you drew up the agreement first of all, gave it to the clerk to engross it, and then gave it to the lawyers? Is that the position?—No. The lawyers came there and discussed the matter —that is, afterwards —and pointed out improvements in what we all wished to have done, and took our notes with them and made up the agreement. 25. Was there any agreement drawn up by the directors themselves, and engrossed by a clerk ? —Well, Sir, an agreement could not be an agreement until signed. There was no such agreement engrossed or signed. 26. Did the bank directors draw up a draft agreement, and get that draft agreement engrossed by the clerk ? —I do not think so, except through the solicitor. 27. Mr. Booth said, m reference to Mr. Mackenzie, that a much stronger and more capable man was wanted. I suppose it is unnecessary to ask you the question whether you concur in that? —I have already stated that I think Mr. Mackenzie is the most capable man they could get for the position. I hardly think Mr. Booth is capable of judging a man of Mr. Mackenzie's experience. Mr. Booth's experience only extends over about a year and a half; he only coming in occasionally. 28. 1 think you stated here that there were no writings-off of directors' accounts, and that if there were you would not tell the. Committee. Does that refer to the directors in the past ? —That refers to the present directors. I have not gone over the past business of the bank. 29. You know that there is legislation in respect to this, that directors are not to have overdrafts. Have you given any of the present directors overdrafts ?—I would have to look carefully into the accounts before I could answer that. The regulation is well known. 30. You are not in a position to answer it to-day? —I cannot, upon my oath, say whether a few shillings might not be given. I can swear that the regulation is known, that they should not have them. I would not like to answer that, one way or another. I will get the particulars. 31. The Chairman.] Will you ascertain and let the Committee know ?—Yes, Sir; but I am in a difficulty. I cannot see how I can without disclosing private accounts. There are no writingsoff. 32. Hon. Mr. Seddon.] I only asked the question because of your reply before, "there are no writings-off, and if there were I would not tell the Committee"? —Well, I think it amounts to that now.
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33. The law says that they must not do it, and I take it that from your position as President of the bank you are responsible that the law is not broken, because you have the power of veto?— Yes, Sir; I never sanctioned any such thing. 34. It is a matter both for you and the Auditor to see that the law is complied with? —Yes, distinctly. 35. The Chairman.] This is not a matter that you can have any difficulty in answering, simply to ascertain and assure the Committee that the law is being complied with ? —I shall make inquiries and let the Committee know what I can. 36. The Committee simply, in reply to the Premier's question, wants to know whether the directors are keeping within the law, which says they shall not do a certain thing ?—I may say I have not sanctioned any overdrafts of that nature, and that there are rules to prevent such overdrafts. 37. And if they do exist, you will be able to say so? —If so, it is without my consent. 38. But I understand you will ascertain the fact whether it has been done since the passing of the law ?—Yes. 39. Hon. Mr. Seddon] As to the second Bank Bill, who promoted that second Bill of 1895 ?—I think the Government did. Of course, in the first instance, the banks came to the Government to get it promoted. 40. What took place ? Did the bank or the bank's solicitor prepare a Bill and submit it to the Government ?—I do not think so. There are no charges in the bank for the drawing up of that Bill. 41. It was an important measure, as it deals with the " C " list, the products of the " C " list, and so forth ; and the question is, who promoted it ?—The legislation to pass the agreement was asked for by the banks, but I do not think the Bank of New Zealand or its solicitor drafted the Bill. 42. You come to that conclusion because no charge was made for it ?—Partly ; and also because I was asked a question about it in the other Committee. .43.. Haye you inquired from your legal adviser whether he had drafted any Bill and submitted it to the Government ?—Yes, I did. 44. Did he say he did or did not ? —He said he did not. 45. I shall now proceed to the Estates Company. What was the date of the formation of the Estates Company?—lB9l. 46. What led to the formation of the Estates Company?— The accumulation of properties and dead accounts in the hands of the bank. 47. The company was formed, and debentures were floated in London? —Yes. 48. What were the terms and rate of interest, and what did the debentures fetch ?—The terms were 5-J per cent, interest for, I think, twenty years. I am speaking from memory. They were payable at 103 at due date, but redeemable at 5 per cent, on three months' notice. 48a. Mr. Hutchison.] Was it not 105 ?— 49. The Chairman.] If you are not sure, it would be well that you should have a statement of the facts before you to refresh your memory was 105, and I am sure of it, because we have paid the premiums since. lam speaking from memory, without any statement before me. 50. Hon. Mr. Seddon.] You must be in the position to know what the debentures fetched, what the discount was, and the loss on the transaction? —Yes, I know that. However, Ido not know exactly what the debentures fetched, and I do not think that information is available in the colony. 51. It is already on record?—l do not think that information is in the colony exactly. The loss remaining and not provided for of the cost of floating the debentures was brought before the Committee last year, but the original cost of floating them, with all the little expenses, has not been given. 52. We have it on record that it was £200,000? —It was a good deal more than that. 53. Will you find out? —I will find out if I can. I do not think the information is in the colony. 54. It is on record here, and has been given, I think, by Mr. Hanna; and I want to know what iid the debentures fetch ; the expenses in connection with the flotation ; what the debentures fetched, loss from discounts, and giving the net amount received by the bank ?—I will try my best to get that, but I do not think it is available, because I have not been able to ascertain exactly myself. The accounts were kept in London at the time. 55. Mr. Hutchison.] It is common knowledge ?—lf it is common knowledge I do not know it. 56. Hon. Mr. Seddon.] I want to know the amount received by Baron Schroeder for the debentures. He took £1,500,000, did he not ?—He helped in the flotation of the million and a half. 57. I want to know the amount he received for interest ?—He received 5-J per cent. —at least, the debenture-holders did. 58. And I want the amount shown of what was received by the repurchase back by the bank at the 5-per-cent. premium?— Yes. 59. That 5 per cent., added to the cost of flotation will show what the bank lost by the flotation ? —As I stated to you, I do not think the exact amount is available in the colony. 60. Mr. Montgomery.] Including the date of conversion of the £750,000, and the £750,000 redeemed? —They have all been redeemed. 61. But they were redeemed separately at two separate times?— Yes.
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Thursday, 3rd September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] You had a letter yesterday, Mr. Watson, which you said you could not read without the consent of the directors to the withdrawal of the word " Confidential," which you promised to obtain. Have you done so ?—I was asked to find out —first, the original cost of raising the debentures at Home, and the cost of redeeming them. They are working at the figures in the bank now. It will take some little time to do. 2. You will be able to obtain that ?—I do not think I can obtain the exact cost. 3. But approximately you can ?—I still think I shall not be able to obtain the exact charges. 4. Not accurately? —No. On another matter I was asked if there were any directors of the bank who had had any overdrafts. I find that, for the last three weeks or so, the executive of the bank have been looking into this question. There are two cases where directors of the bank, having large balances to their credit, have got small overdrafts in other accounts. In one case—■ it is at Wellington—a director has many thousands of pounds to his credit, and he has got an overdraft on another working account. In another case —it is a matter connected with two of the branches —in one branch a director has an account to his credit in excess, but has got in another branch an overdraft to work his account; but the general outcome is that the bank owes this gentleman money, instead of this gentleman owing money to the bank. About a fortnight ago the Auditor referred the matter to the Solicitor-General to have his opinion as to whether such as this constituted an overdraft within the meaning of the Act. The Solicitor-General declined to advise the Auditor on that point, and then the Auditor applied to another solicitor for an opinion. I have got an opinion on this matter which is as follows : "I have considered the provisions of clause 55 of ' The Bank of New Zealand and Banking Act, 1895,' and I am of opinion that that section prohibits any overdraft being allowed to a director or official on any account. The words 'on any account whatever' are capable of two meanings: (1) They may mean, ' for any reason whatever,' or (2) 'on any opened account whatever.' Bearing in mind the object of the provision,—namely, that those mentioned in the clause are prohibited from overdrawing an account—l am of opinion that, although the two directors whose accounts have been referred to me have been and are largely in credit on the general balance of their accounts, yet any one of these accounts being in debit, although fully covered by the credit balance of the other accounts, constitutes a technical breach of the section. In the one case the debit is a very small one upon an account kept at the head-office, where the principal account, with a very large credit, is also kept. In the other case the debit is a small one, and exists on an account kept at a branch distinct from where the principal account is kept. In this case, also, the principal account is largely in credit, while the debit on the other account is very small. In each instance, however, it appears to me that the directors have misconstrued the section, and that no director ought to have a debit balance on any one of any accounts he keeps at this bank.—Theo. Cooper, 3rd September, 1896." That is the position, sir, and it will be corrected, as in future there will be no such thing as a technical breach. In reference to a letter marked " Confidential," about which I was asked, I may say that a meeting of the board was held yesterday, at which I obtained leave to remove the word " Confidential" from the letter dated 9th October, 1893. The letter has also been compared by a couple of clerks in the office. [Series of letters read and marked Exhibit No. 55. The Premier here read a series of letters and cable messages which are included in Exhibit No. 56.] 5. Hon. Mr. Seddon.] You are one of the attorneys of the Estates Company?— Yes. 6. Did you go into matters affecting the estates after taking charge ?—-I went into the matter so far as it would enable me to judge of what was best to be done with the estates in the future. I did not go into any back history of the estates. 7. Who looked after the financing and managing part of the estates?— The colonial manager, under instructions of the board of attorneys. 8. Who was the manager when you took office as an attorney ?—Mr. Hanna. There was no general manager when I took office as an attorney. 9. How long did Mr. Hanna remain in your employ after you took office ? —Speaking from memory, I think about five months. 10. Why was Mr. Hanna retired ?—Mr. Hanna himself expressed a wish to leave to get back into the service of the bank, and it was felt by the other attorneys and myself that although Mr. Hanna was highly capable in some respects he had not that expert knowledge of estates and their management which was absolutely necessary for us to have in a manager. Accordingly, Mr. Hanna was given a very important post in the bank—the position of district inspector—and we appointed Mr. Foster, whom we believed to have expert knowledge in the management of properties and produce. 11. Did Mr. Hanna accept the position of district inspector?— Yes. 12. How long did he remain in that position? —A few months only. He got the offer of a better position in the New Zealand Insurance Company, and he resigned his position in the bank to accept that. 13. He resigned of his own accord?—Oh, yes ; and left on very good terms with the bank. 14. Could you give the Committee a return or estimate showing the percentage of cost of management during the years 1892, 1893, 1894, and 1895, after you changed the management— showing what the percentage of cost of management was on the amount received?—l might say here that I do not think it would be very fair to Mr. Hanna to put down all the economies effected afterwards as being brought about by his successor and not by himself, because Mr. Hanna himself recommended several of the economies which afterwards took place. For instance, there was one very highly-paid man in the south whose services were dispensed with, and Mr. Hanna recommended that in his time.
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15. At all events, I think it would be as well to have an estimate of the cost of management compared with the receipts in connection with the estates ? —The prices would affect that very much, of course. Perhaps it would be better to have the cost of management. 16. We should want the cost of management compared with the gross receipts, and the net profits?— There was a net loss sometimes. 17. You are aware that by the legislation the Realisation Board was to lay a balancesheet before Parliament each session? —I am not a member of the Realisation Board, but I know that that is so. 18. Have you prepared such a balance-sheet?—We have nothing to do with the Realisation Board. 19. But pending the Board taking possession, you were acting as agents for the Board, were you not ?—Pending the establishment of the Board, yes. 20. Well, from that legislation it is very clear that there must be a balance-sheet, and that it must be laid before Parliament ?—The Board should have done that. 21. When did the Board take possession ? —lt took possession or assumed control about 31st March. 22. This is the year, 31st March, 1895, and 31st March, 1896. That is the time you, as agents, were conducting the business for the Realisation Board ?—But the Board had the accounts for the 31st March, and could have prepared a balance-sheet if they had liked. The Estates Company had not these things in their hands when Parliament met. 23. Will you make inquiries, because inquiries have been made by us, and we find you are wrong, and that everything is still in the hands of the Estates Company as attorneys ?—That is not so. The Estates Company have not got the Board's matters under control since the 31st March. 24. How could the Realisation Board certify to estates which they did not have under their control from 31st March, 1895, to 31st March, 1896? —Mr. Cooper points out to me that the clause says it is the Board's duty, and there is no duty on our part. 25. Will you prepare a balance-sheet showing the working of the Estates Company for 1895 and 189.6 for this Committee ?—Do I understand from that, the Estates Company apart from the Assets Board altogether ? 26. Yes ? —I think the balance-sheet for the Estates Company for 1896 is in as Exhibit No. 30, printed on 15th August. The profit and loss account is printed with Exhibits 17a, 17b and 17c The profit and loss statement No. 3 gives the -account of the working of the year, and the other statement gives the assets at the different dates. That gives a list of the profits. Exhibit No, 10 is the balance-sheet. The fullest information is given in the balance-sheets of both periods. 27. Was this balance-sheet of the year from 1895 to 1896 ? —No. 10 is the profit and loss account, which has to be read with it. That is exhibit No. 30. 28. Have we got one up to 1895? —That was given before the Select Committee of last year. In the Estate Company's books, no writing-down has ever taken place. Mr. Foster says he knows of no writing-down. But writing-down has taken place in that £1,850,000 Estates Company's shares, and in the bank's books these have been written down. He states the book-value here, because no writing-down has taken place in the Estates Company. We could not do it until the yearly meeting, and as we were going to wind up the Estates Company altogether, we did not think it was worth while to do it. We wrote down as far as the bank is concerned. I mention that in case the Committee might be confused by these statements given here. 29. You have seen Messrs. Kember and Smith's report ?—Yes, sir ; I have got it here. 30. A claim has been made, has it not, for advances to stations amounting to £42,000 ?—Yes; the bank claimed that in the adjustment of station accounts. 31. You gave evidence to the Committee last year, did you not? —Yes. 32. Was that in any balance-sheet or paper or in any way submitted to the Committee last year as a liability ?—The working-accounts of the stations were kept by the stations themselves at different branches of the bank, and the overdrafts, or credit balances, as they might be, did not enter into the indebtedness of the Estates Company to the bank, as they were held in the names of the various stations for the year's working. It is quite true that these estate balances were not brought prominently before the Committee of last year, but the matter was brought before the House and an Act was passed, and in section 16 of the Act it says, " A due adjustment of the station accounts, as on the 31st day of March " 33. As on that day ?—Yes. That is the amount due on that day an adjustment was to be made. In some cases they were credit balances. 34. Then, you do not agree with Mr. Butt that he has to start on that day and go further ?— I am not very sure what Mr. Butt has said about it; but I have always understood—in fact, I know—that the solicitor who drafted this Act had that very thing in his mind when drafting that clause, though it afterwards got very much altered in passing through the House, or by the Government draughtsman, so as to render it more vague; but that was the reason why it was put in. 35. Am I to understand that you kept from the Committee that liability of £45,000, and that you put that clause through the solicitor to place that liability on the colony ?—I hope you will not understand anything of that kind. I think this is a matter which escaped the notice of the Committee. We will take, for instance, a station—say, Arowhenua. It may have kept its account at Temuka. That was not brought before the Committee last year, and it was for a year's working ; but when the Act came to be passed Mr. Hosking, the solicitor, was made aware of this matter, and he put this very clause in to meet such a case. I think it was fully talked about in the House, and was not put in in any surreptitious way. I would like to point out here that some of this money had been incurred for putting in turnips, for which the Assets Board would afterwards get entirely the benefit of during the winter season.
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36. I suppose something would be put in for laying down grass?— Grass is a more lasting thing; but you can sell your turnips. They were actual things on the station at the time of the purchase, and not used, which the Assets Board got the credit of. There were credit balances, I believe, on some of those estates. 37. The fact is, at all events, that the £42,492, balance to the loss account owed by the Estates Company to the Bank of New Zealand, was not put before the Committee last year ? —As far as I remember, it did not come before the Committee last year. 38. There was a selling value fixed to the Realisation Board and to the Estates ?—I am speaking altogether from memory. I have no recollection of it coming up last year. I would not like to say it did not come up. There was a certain amount fixed by the Act of £2,731,000, phis the adjustment. 39. Was that £2,731,000 a fixed value, or was that subject to adjustment?—lt was a fixed value, subject only to the adjustments on the station accounts, and of the incomings and outgoings. In clause 19 it says, " Subject nevertheless to such adjustment as may be made as hereinbefore provided." The adjustments provided for due adjustments on the 31st March, and for the incomings and outgoings for the period after that date, and until the Assets Board shall assume control. 40. As an expert, and as a party to the transaction, you say they can go beyond the 31st March to make the adjustment you allude to ? : —Only on those two items. On the one it could not be. The incomings and outgoings are for the period between that date, and the date that control is to be assumed. 41. They would have to go beyond the 31st March to adjust, would they not ? —They would have to take an account of these station accounts. 42. For the purpose of saying what could be put reasonably as assets against the liabilities of £42,000 and strike a balance ?—To ascertain what was due on the station accounts. 43. In other words, you concur in the opinion of the Solicitor-General that there was power to go beyond the 31st March for that purpose ?—No, sir; I am advised that the Solicitor-General has never given .such an opinion. The Solicitor-General merely says he thinks the contention of the special auditors reasonable. He gives no definite opinion. 44. He says: " I think the question stated opposite (above) must be answered in the affirmative " ?—The adjustment we are talking about now does not affect the £2,731,000. 45. It affects the debentures, does it not?—Yes;'it will reduce or increase the amount of the debentures. 46. He was asked if, in making the adjustment as at 31st March, 1895, it did not follow that an adjustment of the accounts forming part of the £2,731,000 must necessarily embrace an adjustment, or alteration if necessary, of the figures themselves, and he answered in the affirmative ?—■ That is a different thing; but we are distinctly advised from every one we have consulted that the Solicitor-General is wrong in that opinion. 47. I am asking your opinion, as an expert, and as one of the attorneys of the Estates Company ?—My own opinion is that, as regards the £2,731,000, the fullest information was before the Committee last year, and they undoubtedly fixed that amount. With regard to the adjustment, I am of opinion that the adjustment of the station accounts meant to take in all expenditure on the stations, and that the amount of £42,000 was such expenditure. 49. I now come to an amount of £54,507, which is entered to debit of capital account. Was that £54,000 before the Committee ? —Yes, sir, that was before the Committee. I should like to point out that in the report of the Joint Committee of last year there is a statement headed, " Combined balance-sheet of Bank of New Zealand Estates Company (Limited), Auckland Agricultural Company (Limited), and Matamata and joint interests." In that statement there is 5h0wn£54,507, and that amount formed part of the £2,731,000. 50. Was not that £54,000 a surplus over Mr. Hean's valuation as against the whole of the estates? —When we got the accounts from London in the early part of 1895—the accounts of the Estates Company—there appeared amongst the assets this amount of £54,507 as an amount paid to the bank by the Estates Company in excess of Mr. Hean's valuation. Ido not know what was in the minds of the gentlemen who had these matters to adjust in 1891, but so far as we know that amount appears without any asset against it in the books of the Estates Company as an asset. That amount was paid to the bank in excess of Mr. Hean's valuation, and we brought it before the Committee of last year, and they included it in the £2,731,000. 51. That formed part of the whole, and the bank was to take a part of the estates —the trading concerns? The Bank of New Zealand, under the recommendations of the Committee, was to take a part of the trading concerns ?—Yes, sir; but it was clearly understood that the bank was to take these trading concerns at an actually written-down value. It was not understood that the bank was to continue in its accounts any sum not represented by actual assets. 52. I am to understand this : that all the good things were to go to the bank, and all the bad things were to go to the colony ?—The bank was not to be left with any deficiency in its books. I take it that the legislation was to clean up the bank in that respect. 53. Then, if there was any deficiency in respect of the trading concerns, the colony was to take that deficiency, or was the bank to take it ?—There certainly was a deficiency in the trading concerns. 54. Who took the deficiency? —The deficiency of the trading concerns was made up by an application from the bank's capital written off and from the call made; but any deficiency not made up by these means was taken over by the colony —by the £2,731,000, and guaranteed by the bank. 55. At all events, this £54,000 belonged to the whole of the estates ?—I do not know, * 24—1. 6.
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56. It did not refer, of course, to the Agricultural Company in Auckland. That was not valued by Mr. Hean at all, was it ?—I have no knowledge of what was done at that time. 57. On looking into the matter as an attorney, have you endeavoured to ascertain?—No; I did not look into these back matters. I could get that information, seeing that it has nothing to do with private accounts. 58. Was not that £54,507 entered to the debit of capital account, and so remained up to the 31st March, 1895 ?—lt was in the capital account in this way, sir, that it formed an asset of the balance-sheet in which the capital appears on the other side as £1,850,000. 59. To what date did it remain as a debit to the capital account ?—lt would remain there until the bank got debentures instead of it. 60. Does it remain in the same position as it was when placed in the balance-sheet, or has anything been done with it ?—The debentures have not been issued yet. The matter is in the same condition as it was. 61. Is it correct to say that up to the month of June, 1895, it so remained, and was then split up and added pro ratd to the book-value of each station ? —I believe the Auditor did that. 62. By whose instructions? —He did not get any instructions from the bank to do that. He does not take instructions. The Act, I think, was his sole instruction in dealing with this matter. 63. But there was no Act in June, 1895, when it was done ; there was no Act in force then ? — I do not know that he did it then. 64. The Estates Company did it ?—I do not know about this. It is a report by the special auditors. 65. I recall your attention to this: " When the Estates Company, acting as agents for the Assets Realisation Board, which had not then been constituted, came to open up the books for the Board, they, finding this sum of £54,507 included in the purchase-price which Parliament had approved, spread it over the whole of the station properties, adding a percentage to each." This is Mr. Butt's rejoinder to Messrs. Kember and Smith's report. I want to know whether that is correct or otherwise ? I want to know whether you did it ? —I did not do it, nor do I know that it was done. But Ido not think it was an unreasonable thing to do, all the same. If the Committee last year reported that this amount should go to the Assets Board, the Assets Board would want to show it on their books. 66. Are you not aware that the values of each stock shall be shown according to the Act ?—But this amount extra was shown. 67. Are you not going behind the Act ?—I know that the list sent into the Committee shows this amount. 68. The list does not show it as a liability on the stations, nor attached to any particular station ; it is simply a lump-sum ? —lt is in the £2,731,000. The schedule does not give any valuations. 69. Was there not a statement submitted as to the value of the stock on each station ? —Yes, and added to it is this amount. 70. To each station ?—No, to the whole. It was not distributed then ; but that did not matter. It could easily be reversed if it was wrong. There is no doubt about this, that that amount was included in the £2,731,000, if it was wrong to spread it over the stations. 71. If the Board was realising the stock on the station, and this amount was spread over the whole of the stations, it would show a greater loss on that stock ?—Yes, but it is a matter of choice whether it should be shown in that way or as a deficit in the books. 72. As it was shown to the Committee ? —Quite so. There is no possible attempt to extort the money from the colony. That cannot be. It is a mere matter of book-keeping which can be remedied by passing other entries. I would like to say that when I referred a short time back to the Auditor doing this, that of my own knowledge I do not know that that is the ease. 73. Touching the half-share in the Matamata Estate, have you any further information to give the Committee in reference to that £81,649 paid in June, 1895, for a half-share in the Matamata Station ?—ln looking over my papers I came across a letter from Messrs. Price, Waterhouse, and Co., of Gresham Street, London, to the bank, and I notice it refers to how the £54,507 arose. This was disclosed to the Banking Committee of 1895. lam sorry I have not brought with me the correspondence relating to the Matamata affair. 74. Now, as to the sheep account. Have all these been entered at current value on the date of entry? Do you know, as an attorney for the estates? —Well, no, they have not. I might go on to say what I believe to be the case with regard to these sheep. In 1892 sheep were pretty low in price. 75. Mr. Hutchison.] How does that arise in our order of reference ? Discussion. The Chairman: Ido not think lam in a position to stop the Premier asking questions as to this matter. Witness : I believe up to 1894 the values of sheep had always been adjusted to the current values. After the adjustment made about June, 1894, the then attorneys passed a minute that future adjustments were to be made on a basis of the previous four years' values. Mr. Hanna, who was manager then, had left the Estates Company, and the accountant who was accountant with him had also left. There was a new manager and a new accountant after March, 1895. These gentlemen apparently did not know of the minute in existence which was passed in 1894, and they proceeded to write down the value of the sheep to what they considered the current value. The attorneys were not made aware that they had written down these sheep like that, but the attorneys were asked to pass a minute to reduce the value of the sheep to these prices. Mr. Johnston, as the chairman of the board of attorneys, and all of us, when we were asked to do this, would not agree to it, Mr. Johnston said that in his opinion the Act of 1895, which allowed the
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bank to maintain the price of the shares at £1,850,000 as an asset for the bank's purposes, did away with the necessity for writing off any values at all in the Estates Company. My own observation at the time was that we had no fund to write off the value of these sheep from, and that, as we would have to go to the Legislature to help us by taking over the deficits which existed, there was no use of adding to them, and that we could give the information then which was necessary. The whole information was given to the Committee as to the numbers and values of the sheep, and at what they stood at in the books, and everything else was clearly given. As I have stated before, the object of the Legislature was to clean up the bank—to take away all the deficits which existed in every shape and form—and the values of the sheep were clearly taken into account when they fixed the amount at £2,731,000. 76. Hon. Mr. Seddon.] Here is the clause in the Act: Clause 16 of the Bank of New Zealand Share Guarantee Act of 1894, " In valuing the shares held by the bank in the Bank of New Zealand Estates Company (Limited), or any items which shall take the place of such shares, or any of them, the directors and auditors shall treat the same as an account in liquidation, and pending the completion of such liquidation such shares or items shall be taken at the par- or book-value thereof." You do not construe that to mean that the legislation permitted you to keep it at book-value ?—Mr. Johnston so construed it. I did not differ or object, because I determined that the whole matter should go before the Legislature that year. We had no fund from which to write this off. We had a big deficit, and what would be the use of writing this down ? We did not know that the values had been written down, and when we were asked without having this knowledge we refused to write them down, and the manager and the accountant of the Estates Company proceeded to write them up again. We did not know that until the special auditors saw the entries and their suspicion was aroused, and they thought that something was being foisted on the country. The manager and accountant wrote them up just as they had written them down, and the special auditors said, " Here is a writing-up." We did not know there had been any writing-up or writing-down. We simply refused to allow the writing-down when our sanction was asked. 77. You say you did not know ; but did your officers get instructions to do it?— When they came for instructions to do it we refused to have them written down. We said we had no fund to write them down from. 78. Will you swear there were no instructions given to write them up?—l will. We did not know they were written down, and therefore could not have given them instructions to write them up. 79. When you found they were written up, will you swear that you did not give them instructions to write them down again ? —We had no knowledge of it until months afterwards, when these two auditors came on the scene. 80. You have just stated that Mr. Johnston, when the matter came up, said they should be kept at par-value ?—When the question of writing them down came before us we did not know then that they had been written down; but when we were asked to write them down we declined to do it. 81. How were they found by the special auditors? Were they not found to be written up to par-value ?—The special auditors found that the values had been written down and then written up again. 82. By whose authority were they written up?— They were not written up by our authority, because we had not given authority to write them down. They asked us for authority to write them down, and we refused; but it is apparent that before asking us to write them down they had been written down, and those in charge of the books thought it well to put them back again. But the whole thing —the value of the sheep and everything else—was before the Committee last year, and Mr. Foster gave evidence upon them. 83. On the 30th June, 1896, Mr. Foster says, in reference to the Stock Adjustment Account, £94,063 : " For balance-sheet of the 31st March, 1895, entries were passed by my instructions which comprised estimated shrinkage of values in stock. On my bringing the matter under the notice of the attorneys, they declined to authorise any alteration, and reversing entries were passed in consequence " ?—He passed the entries ; we never advised him to do so. 84. Then, as a fact, there has been maintained for years, to your knowledge and to the knowledge of your co-attorneys, a fictitious value in the stock of £94,000 ? —No, that is not so. I understand from the £94,000 that these sheep had been written to current values from time to time. We were asked to write them down, but we refused to do that. We were not going to heap up deficits when w-e wanted to come before the Legislature. 85. Does not each manager of a station send in to the Board the value of the sheep on his station each year? —There is a balance-sheet sent from each station, in which the managers show their live-stock, implements, and other things, which are put in, I suppose, at adjusted values. 86. Mr. Montgomery.] Are they, that is the point?— Yes, they are put in at the valuations at the time. 87. Are they for the purpose of the profit and loss account ?—For the purpose of showing what the station has done during the year. 88. It is only for adjusting the debentures that you can keep them at par-value ? —We did not know that there would be debentures then. Why should we not write off the values of the estates as well as the values of the sheep ? If we had done that we should probably have shown a deficit of about a million, and why should we do that ? 89. Hon. Mr. Seddon.] Did you not give the value of the sheep to the Committee last year? And what value did you give ?—-We gave the value at which they appeared when we took over charge. 90. You did not give the market-value for the time being ?—Neither for the stations nor the sheep. We gave the book-values as we found them.
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91. Are you sure?—l am sure. 92. And if I show you a statement showing the values for each station, for the Bank of New Zealand Estates Company at the 29th August, 1895, giving the total value at £343,346? —Plenty of evidence was given here as to the proper values as well as the book-values; but in the list we gave, we give the book-values. Valuations of the estates were also put in, but they did not affect the £2,731,000. 93. Why did the alterations in the valuations take place when you knew, and the Committee was made acquainted with, the real value of the sheep?—l say there was no alteration of valuation as far as we are concerned. We did not make any alteration—that is just what we did not do. We left the valuations where they were. The special auditors naturally took notce of this, because they found the thing was written up. lam told that in these books it shows that the writing-up was by the authority of the attorneys, but Mr. Foster had not our authority to do that. When he came to us and asked for authority to write down the sheep we said " No." 94. This is what the special auditors say : " On the 31st March, 1895, Mr. Foster, the manager of the Estates Company followed the usual custom, and, on the current values being ascertained, passed the necessary journal entries, which were duly entered into the ledgers, disclosing the fact that there was a shrinkage of £66,953 in sheep-values, which sum was written off capital or cost, and a balance-sheet prepared accordingly. When this balance-sheet had been discussed by the attorneys for the directors, they pointed out that under clause 16 of the Bank of New Zealand Share Guarantee Act of 1894 there was no power to write down the par- or book-value of any item, and so directed a journal entry to be made of £83,380, which at once wrote up the loss of £66,953 to a profit of £16,427 —which is neither par- nor book-value. As an example of the practical effect of the writingup of the book-values of the sheep by the insertion of this fraudulent entry, we will cite the case of the Carnarvon Station. On the 31st March, 1895, the books of the Estates Company show that they had 17,019 sheep, valued at £5,668 14s. 6d., the value of these 17,019 sheep was written up to £9,025 2s. 9d.," thus showing an addition of £4,000 to the sheep-value on one station?—lt is not correct to say that we directed the journal entry to be made. Mr. Foster says, "Entries were passed by my instructions which comprise estimated shrinkage of values in stock. On my bringing the matter under the notice of the attorneys they declined to authorise any alterations, and reversing-entries were passed in consequence." We declined to do it. He brought a pro forma value to us, and it is in my mind clearly that we said we had got to go to the Legislature with all this. 95. In other words, "We have to go to the Legislature with a fictitious balance-sheet"?— Not at all. We have got to go to the Legislature with what we found. We did nothing which was fictitious. I said we will go to the Legislature and tell them what we found. We will tell them what number of sheep there are and what they are. valued at. We did not write them up or write them down. Mr. Foster says, " The attorneys declined to authorise any alterations and reversingentries were passed in consequence. " 96. But the auditors say, "There was no power to write down the par- or book-value of any item, and so they directed a journal entry to be made of £83,380, which at once wrote up the loss of £66,953 to a profit of £16,427, which is neither par- nor book-value " ?—I am not answerable for what-they said. 97. Can you tell me what amount the sheep were written up to afterwards ?—I cannot. I have not seen the entries myself in the books. 1 know that we came to the Government with what we found to be the state of the company. 98. If there was no book- or par-value, there is a mistake. You say as you found them you brought them before us ?—So we did. We did not debit these sheep with anything and take the funds for another purpose. There may have been sales and purchases, but when the auditors talk about fraudulent entries I think it unnecessarily warm language. We made no entry, and when they say we directed a journal entry to be passed they say what is untrue. 99. You say you were doing it all under section 16 of the Bank Act of 1894 ?—I will not say that. Mr. Johnston made a remark at the time that the Legislature did not evidently wish that the bank should write down anything in its own books on accounts of the Estates Company. Very well, that being the case, what was the use of writing down the assets? There was no fund to write them down from ; and I knew that the bank could not carry on as it was then. I would have to go to the Government immediately after, and there was no use in merely shifting the figures. 100. Section 16, according to Mr. Johnston's authority, simply relates to the Bank of New Zealand?— The actual value and the number of sheep have gone to the Committee. 101. lam not going off the track. lam coming to section 16 ?—We had no fund to write them off from. 102. But does not that balance-sheet show a false profit and loss account ?—No, it does not. 103. Do you mean that the balance-sheet, prepared with known ascertained losses on sheep, shows the true state of affairs in the company on the 31st March, 1895 ?—lf we were going to take in the profit for the purpose of paying a dividend, or anything of that kind, it would be decidedly wrong; but we were not doing anything of the sort. 104. I will leave out the bank altogether. Did not the balance-sheet of the Estates Company show a false profit and loss account in the face of the manager's values given for each station ?— Show to whom ? 105. To the world ? —The world never saw them. These balance-sheets were not issued—they were not shown to anybody. 106. You were supposed to be a separate company from the Bank of New Zealand, and if the Estates Company was giving the Bank of New Zealand a false profit and loss account, surely it was deceiving the bank ? —No. The bank knew about it, and was authorised to quote the shares at their par-value.
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Friday, 4th September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] There was some information you were still lacking at the last meeting, Mr. Watson, information regarding the cost of floating and redeeming the Estates Company's debentures ?—I have got it, as near as it is possible to get it here : " The debentures were issued on the 28th July, 1890. They were payable on the 31st December, 1910, at £103 per £100, or earlier, on six months' notice, at £105 per £100. We cannot give the date of the debentures. They were issued in amounts of £1,000, £500, and £100, payable to bearer. The minimum issue price to the public was £95, but the bank, by its arrangement with the underwriting syndicate, netted only £87-J--per £100—viz., £1,312,500. We have no knowledge of any expenses incurred in connection with the issue." 2. You mean the knowledge is not available in the colony? —No. We do not know ; that is what I stated. "We were advised at the time, ' The syndicate pays all expenses of floating the company, and the bank is to receive £87 10s. net for the debentures.' We do not know what profit Baron Schroeder received. He was, we believe, one of the Greenwell and Company Syndicate who underwrote the issue, and made their profit on the difference between the £87 10s. which was paid to the bank and the price at which the debentures were taken up by the public, less issue expenses, &c." Ido not think Baron Schroeder would make that profit, because Ido not think he would retain the debentures. They got into other hands subsequently. "The above particulars are obtained from correspondence. We have not access to the accounts through which the entries passed at the time, they being in London. These debentures were called in for payment as follows : £750,000 redeemable on 30th May, 1895; £750,000 redeemable on 24th November, 1895. The premium of 5 per cent, on the redemption of these bonds amounted to £75,000. To make part provision for repayment, a fresh issue of £750,000 debentures was made as follows : Date of issue, 4th July, 1895, rate of interest, 4 per cent. ; redeemable at par on 13th June, 1904 ; issue price, par. Issue expenses (approximate only) : Brokerage, £1,630 ; advertising, £309 ; printing, £59; stamp duty, £2,641; sundries, £39 : total, £4,678. This issue was called in for redemption, in pursuance of .a resolution of debenture-holders, and paid off on 30th June, 1896, at a premium of £3 per cent. The actual capital loss on the Estates Company's debenture operation from first to last may be stated as follows :— £ Discount of 12| per cent, on the first issue of £1,500,000 ... ... 187,500 Five-per-cent. premium on redemption of ditto ... ... .. 75,000 Conversion-expenses on issue of £750,000... ... ... ... 4,678 Premium on £750,000 (4-per-cents) at 3 par cent. ... ... ... 22,500 Stamp duties on transfers of properties to Estates Company in 1890 ... 11,000 Legal costs of transfer of ditto ... ... ... ... ... 4,608 £305,286 In addition to this loss of principal, there was also loss in other directions, e.g. : (1.) Interest at 5| per cent, was an excessive rate. (2.) A separate organization had to be maintained, involving fees to directors, attorneys, and trustees, salaries of officials, office expenses, company registration fee of £500 per annum, &c. Most of these expenses would have been saved had the Estates Company never been formed. (3.) Double interest at the time of the conversion in June, 1895, as the cash paid by the new subscribers (£454,400) was in hand, and bearing 4-per-cent. interest (a rate which could not be earned at the time) before it was required to redeem the s|-per-cent. debentures, paid, off on 24th November, 1895. The Auckland Agricultural Company also had a separate amount of debentures. These were redeemed in May of this year—£27l,B3o. These debentures were issued at different times for different currencies at different rates of interest. That was the amount outstanding. When redeemed in May, we paid a bonus of 1 per cent., which amounted to £2,860 2s. 10d., as some of them were short-dated. The net cost of redeeming the Auckland Agricultural Company's debentures—£27l,B3o —-has been; Bonus of 1 percent, per annum on unexpired currency of debentures, £2,860 2s. lOd.; expenses £766 18s. 7d.; total, £3,627 Is. 5d." I have not yet been able to ascertain the issue-expenses. 3. Hon. Mr. Seddon.] What is the total loss on the transaction ?—-The two sets of debentures ? 4. Yes ?—From what I have ascertained, the actual expenses were £308,913; but there may have been other expenses in London which we have no knowledge of, besides trustees fees, loss of interest, and so on. 5. The Chairman.] There is another statement I think you said would be ready to-day—that is, the proportion of the cost of management to the gross receipts and to the net profits in the Estates Company ? —I went over to the Estates Company's office and asked them to put that in hand yesterday. They have sent me this memorandum: " The returns mentioned in enclosed memo, with regard to cost of management will take a considerable time to prepare, as we shall have to go over a lot of ground to arrive at the results. I will, however, refer the matter to Mr. Foster on his return to-morrow, and see what can be done; but it will be the end of next week before the return could be ready. With regard to the value of sheep at 31st March, 1895, and writings-up and -down, the following are the figures: Mr. Foster's valuation of sheep at 31st March, 1895, £147,984; amount written down, £94,063; amount written up, £83,380." This i 3 from the accountant of the Estates Company. I would explain here that the management expenses would possibly have to include the managers' pay on the different estates all over the colony, and, as these are mixed up with other expenses and charges, it would be very difficult to get it. They ought to have that in every balance-sheet issued on the 31st March.
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6. It seems to me that it is not a very difficult thing to be got. The cost of management of most companies or estates is comeatable very readily ?—This is what the accountant tells me. With regard to the values of the sheep at 31st March, 1895, I think they wrote up by mistake some £11,000 less than they wrote down. I called at the office this morning to verify these entries as I was asked to do yesterday, but I find the entries are mixed up with the stock and implements, and are quite impossible for the purpose of verification in one morning. I doubt very much whether it would not take a week or two to ascertain. 7. Hon. Mr. Seddon.] The evidence discloses that the whole writing-down was against sheep, and nothing against implements?—l have said they wrote them down £94,000, and wrote them up £83,000. Ido not think one was included in one and not in the other. The Chairman.] You say this cannot be ready until next week. If you are not here then as a witness —and I hope you will not be —you will have the statement prepared and forwarded to the Committee ?—Yes, I will get it prepared. 9. Was there not also correspondence asked for relating to the Matamata Estate ?—I was asked for particulars of the purchase of the half-share in the Matamata Estate, the Auckland Freezing Company, and the Auckland Roller Mills. I have got the correspondence, but it contains private names, and, if you will allow me, I will give you the particulars of the transaction omitting the private names. The company owed the bank £285,000 at that time. That company's interests in Matamata, the Auckland Freezing Company, and the Auckland Roller Mills were taken over as part of the debt by the bank in London at £120,000, and practically the bank received cash for £165,000 —or they received that which has since been turned into cash with interest. That made £285,000. And in explaining the transaction they say that they regard the arrangement as fairly satisfactory. Other people had to take deferred shares and debentures for their debts, and the bank by this means got the other half of the property. It already held one half, and got the whole thing squared up. They say they admit it was a higher price than they would have fetched if sold in any other manner, but they say it was a very fair arrangement for the bank owing to their having got cash for the rest. 10. Hon. Mr. J. McKenzie.] In that case the Estates Company was made use of in the interests of the bank ?—No, sir; it was long before they came to the Government. 11. I did not say anything about before they came to the Government ? —The Estates Company was made use of in that way, to take dead properties. 12. Mr. Montgomery.] After their formation ? —Yes. I do not think we could give you anything about private accounts. 13. Hon. Mr. J. McKenzie.] No wonder the Estates Company got into trouble if properties were shunted off on to them like that ? —That is what it was formed for. The Act of 1889 makes it very clear that that was what the Estates Company was formed for. 14. The Chairman.] Is that all you have to produce?—l have now to get the statement prepared of the proportion of cost of management, and the other statement explaining the writing-up of the sheep. 15. Hon. Mr. Seddon.] What do you say is the amount they were written down? —£94,663. 16. Messrs. Smith and Kember say: "On account of the inclusion of the false value of £83,380, the groundwork of this production is on an incorrect basis." You say there is a dispute there? —That was the amount written up. I was told that they made a mistake about that. 17. At any rate, they have stated that the sheep were valued at a fixed value on the 31st March ?—Yes. 18. And then added to the real market-value as assessed by the managers of the stations and the general manager; to that had been added £83,380, which had been distributed over all the stations ? —We would have nothing to do with the writing-down of it. That was our position. 19. Of your own knowledge you cannot say what was written down, or what was written up by Mr. Foster? —I can only give the statement of the accountant which I have got here. I could not verify it, because the amount is mixed up with the implements and other things. 20. You said that when they asked you to have them written down they produced a balancesheet ? —No ; they came with a pro forma statement that we could not make use of. 21. I want this statement which was submitted to the attorneys by the manager, and which they refused to accept, as to the value of the sheep ? —Yes. 22. Messrs. Smith and Kember say this: "A portion of the result arrived at —namely, £42,492 ss. Id., —is composed of such items as growing turnips, sown grass-seed, used implements, and doubtful improvements " ?—Yes ; but the used implements would not be used up altogether. They would be in use as implements on the places. 23. Do you think it is reasonable to put down as assets sown grass-seed?—l do not see how they could arrive at the improvements, seeing that they did not visit the properties at all. I understand it is not disused implements that are referred to, but used implements. If you have a spade and use it once, that is a used implement, but it is as good as new. 24. Do you know how they kept the station accounts in respect to pasture ? Where there was no depreciation, would it state there was no writing-down?—l must say lam not acquainted With that. 25. Which of the attorneys has been looking into the management and examining the stations ? —Mr. Johnston is the chairman of the Board, and would know more about it than any other member. 26. Touching the Matamata Estate, how much did the Loan and Mercantile Agency Company owe the estate at the time the bank took it over ?—I regret that I cannot talk about private names and accounts.
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27. We will say the company. How much was it indebted to the bank at the time of that little arrangement, giving £80,000 odd for the properties which were only valued at £51,000, and you only got half ?—£285,000. 28. Do you admit that the taxing-value of the estates was only £51,000 ?—I have no particulars of that here. 29. It was £53,342 ? —I have no particulars of it here. 30. Are you aware whether you were to pay the whole or only half of the amount due— £81,649? This is what Kember and Smith say :" In the above figures there is included a sum of £81,649 paid by the Estates Company on the 28th June, 1895, for half-share in the Matamata Station. It appears to us somewhat peculiar that the Estates Company should acquire an asset of this nature at this cost, when the property-tax valuation for this interest, plus improvements, sheep, &c, and 10 per cent., only amount to £53,342. According to the taxing-value, you would have to pay £26,500 for that half, but the Board paid £81,649." Have you any explanation to give as to that discrepancy ?—lt is very hard to say. I fancy the stock would make the difference. It is very good country, and highly cultivated. 31. It is the property-tax value, which included stock and everything. If it was land- and income-tax value it would be plus the stock, but it is the property-tax value, and includes everything ?—I really cannot tell you about that. It was long before my time, and I have no personal knowledge of the transaction. 32. I understood you to say that it was in your time that you wrote to the Board and asked for an explanation of this ?—lt was transacted by them while the head-office of the Board was in London. 33. Has it been done before this new company got into trouble ?—Yes. I think this was carried out in 1893. The particulars I have given are from an extract from a letter from the London office, dated the Ist of December, 1893, telling about the transaction. 34. This is all the information you can give to this seemingly strange transaction ? —Yes. 35. Now, in respect to the outgoings of the Estates Company, are you aware that the estimated value of the produce shipped to London was about ninety thousand pounds?— Eighty thousand pounds or ninety thousand pounds, yes. 36. That was not drawn against?—No, I believe not. 37. Was it not an incoming?— Yes, when actually received, it would be an incoming. 38. It was an asset, at all events ? —Yes. 39. And a very certain asset ?—Yes. 40. If you made a calculation as to the outgoings and incomings, when you have the produce in hand, surely you are not going to ignore that altogether, and to charge the whole of your outgoing and leave your products untouched. You must take that produce as unsold as an asset or take it into consideration ? —Or hand it over to the Assets Board to do as they liked with. 41. You are aware that they have claimed debentures on that from the Government? —I am aware of that. 42. And they held the produce and asked the Government to give them debentures for it?—■ No ; they handed the produce over to the Assets Board. 43. But it puts the Government £90,000 to the bad, and the Assets Board £90,000 to the good?— That is so. I understood Mr. Butt took advice about that matter. He got the best advice he could get, which was that he could not take into account amounts for this produce not received. There was another question which arose also in his mind. The Assets Board would only have 3Jper cent, interest to pay on their debentures. They w 7 ould require funds to bring the next year's produce to market, and if they had no funds to carry on with they would have to come to the bank for overdrafts, and they could not get the bank to lend them money so cheap as 3J- per cent; so it might suit the Assets Board to retain that amount of money for use in the practical working of the stations until next season, until the money for the produce could be got. 44. What was to prevent them drawing against this £90,000 ? Is it not the general custom to draw against produce? —I do not think the Estates Company did that. They were not in the habit of doing it. 45. They have always been in such a flourishing condition that they did not want to draw against produce—money to them was of no object ?—I do not know that there is any gain to be made in drawing against produce. If a person is hard up and has to give some security to obtain money he has to hypothecate his bills of lading and draw through his bankers. But Ido not know that it pays to do this better than to remit the money by wire. 46. If drawn against, the money would then have been considered by the Auditor as an incoming?—l think not. He could only include money actually received. That could not be said to be money actually received, because there might be deficiencies, and the Auditor could not square up that account. 47. If he had drawn £80,000 for produce, that could not be taken as an incoming; that is your opinion ? —I do not know that it could be put in that way. The Auditor had no right to draw at all. 48. Would there not be less liability to that amount? —The Auditor had nothing to do with it. 49. But the Auditor would find it was so. He might have put a contingent liability on it in respect to the produce if overdrawn against. He must take into consideration money actually received and placed to credit ?—I do not think so. Ido not think he could put a draft to credit against which reimbursements might take place. But the Auditor did not go into that question. 50. It seems to me that the colony would have to issue debentures for that £90,000, and to that extent an increase was added to the liability of the colony ? —That is so. 51. If the produce had been realised upon, the colony would not have been required to give them debentures for that amount ?—That is so ; but the Assets Board would have had the produce in the event of the debentures not being issued, or the amount of it,
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52. That is so. From the Assets Board's point of view, the certificate given by Mr. Butt was in their favour ?—Yes. And the Assets Realisation Board have always the option of redeeming the debentures, and, by redeeming the debentures, bringing it back to the original amount again. 53. That would have been a matter for the Board to do; and, if it did not do it, the Government would have to pay ?—Provided the Board were not able to do it, the Government would have to pay it. 54. I find here, " Cash received on account of land sales, properties, and interest, £34,476 19s. 4d." That is not taken into consideration either ? —I cannot speak as to this amount at all; Mr. Butt would know all about this. 55. At all events, if cash has been received on account of land sales, properties, and interest, surely that ought to be an incoming? Should that be an incoming or otherwise? —I do not know that it should. It formed part of the capital account; and, while the Estates Company acted as trustees for the Assets Board with regard to it, I do not know that it would be called an incoming or an outgoing. It is part of the capital account, which the Board can do as it likes with. 56. That is your view; our officers disagree with that.—l think that is a reasonable view to take. This is the first time I have considered this matter. 57. If you were disposing of the principal, against which debentures were to be issued?— The Assets Board would, and they have got the money to do it with. They have the option to do it. 58. But have they not prejudiced the colony ?—Yes; but the Estates Company was only acting as agents for the Assets Board. 59. Have you not been advised that they had full control?— Yes. 60. And the responsibility of this rested with those who had the responsibility before the settingup of the Beard?— They had full control for carrying on for the Board, but I do not know that they had power to meddle with the capital account. 61. Had they power to sell properties ? —Yes ; this was part of the £2,731,000 which the Legislature said debentures should be issued for ; consequently, it is a moot question whether the Estates Company had power to deduct that amount. 62. At all events, they have not done that. There is £90,000 for produce, and £34,476 19s. 4d. for cash received on account of land sales, properties, and interest, making a total of £124,476 19s. 4d., which the colony had to issue debentures for ? —Yes ; and with that money the Assets Board can redeem debentures. 63. But in the meantime the debentures have been issued, and the colony will be committed to that ?— That will be so. 64. Here is £10,157 due by the Assets Board under the adjustment. There is a difference, according to Messrs. Kember and Smith, of this amount, and they only advise the issuing of debentures up to £2,603,976 7s. 3d. ?—Yes. 65. Under the Act the colony was committed to £2,731,000 ? — Plus adjustment on station account. 66. By Mr. Butt's certificate the colony committed itself to £2,800,000 ?—Yes. 67.. There is a difference between the two of practically £200,000 ?—Yes. 68. When were the estates handed over to the Realisation Board ? —The Ist April last, I think. 69. Was any attempt made to obtain possession of the estates prior to the passing of the Act ? The Act was passed last October. The Assets Realisation Board was to take over the estates as soon after that as practicable, and, as a fact, they were not taken over until the 31st March last. Will you explain to the Committee what prevented the taking-over of the estates by the Realisation Board ? —I think the members of the Assets Realisation Board have practically had control of the estates since the end of last year. What prevented them taking the estates over was the difficulty of getting the accounts ready, I think. 70. Was an attempt made by the Board to get possession of the estates as from the Ist January last ?—Yes ; and I think that practically they have been doing the work connected with the estates since then. 71. Were there any legal difficulties in the way, and were you advised in respect of those difficulties ? —Yes; we took advice about it. 72. That is a matter which requires to be explained : How it was that, when the Legislature said the estates were to be taken over as soon as practicable, it was some five months before they were taken over, and the Committee and the colony have a right to know what stood in the way?— We acted according to the advice of Mr. Edwards in the matter, and I am not quite clear about the details. 73. Had you any balance-sheets prepared so as to enable the estates to be taken over by the Ist January?—l really cannot say from memory. 74. Although you are an attorney, and one of those practically responsible for this business, you cannot tell us that ?—I cannot tell from memory. Many balance-sheets are passing through my hands in the course of a week, and it is impossible to recall matters about every one of them. 75. Possibly Mr. Johnston, the chairman, would be able to give us some information about this? —I think it would be as well to let him know, so that he may refresh his memory before coming here. 76. I will ask you to tell him to make a note of the time when the attorneys were prepared and ready to hand over the estates to the Assets Realisation Board ?—Yes. 77. These are matters which require clearing up ?—I may have a sort of hazy recollection, but that is not enough to swear on. 78. No ;I do not want you to do that. You have given us a statement showing what freeholds were sold during the year by the attorney ? —I believe Mr. Foster put that in. 79. Are you aware by how much the outgoings last year exceeded the incomings of the estates ? .—I have no figures before me, sir.
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80. You cannot say ? You had charge of the Estates Company up the 31st March ?—The Assets Board was kept entirely free from the Estates Company. I think they made £58,000, if I remember rightly. 81. As a fact, do not outgoings exceed incomings by £33,089 ?—I have not got the certificate before me. 82. Have you visited the stations at all? —No. 83. Have the stations been visited ?—Yes. 84. By whom ?—Mr. Johnston and Mr. Booth went round them about a year and a half ago. 85. Did they report to the Board when they came back, and was the report dealt with by the Board ?—They did not report formally, but they saw what led to alterations being made with regard to the estates, and their management in various cases. 86. Now, coming to the question of management: Who is the general manager for the Estates Company, and who acted in that capacity during the time the assets were under the control of the Estates Company ? —I said yesterday that there was no general manager, but the colonial manager was Mr. Hanna until 1895—about March—when Mr. Foster took up the colonial management. 87. At the time Mr. Foster was manager, was he also manager or managing director for any other companies ?—Yes; an arrangement was made by which he was allowed to remain a director of the Wellington Meat Export Company. 88. Was there anything else in respect to that—any arrangements with regard to his salary ?— It entered into his salary to a certain extent. The Estates Company got him cheaper by allowing him to retain that position than they otherwise would. 89. Did the company pay part of his salary ?—The outside company ? 90. Yes?— Yes. 91. Did the positions, in your opinion, clash in any way ?—No ; we did not find them to clash. 92. Were not the Estates Company customers of the Wellington Meat Export Company to a very large extent ?—They had transactions with them, but on the ordinary business basis. 93. But do you not think that, being a director of one company and manager of another, with business transactions between the two, his position would be somewhat unique ?—Oh, no. - 94. And would he be favouring you by giving the patronage to the particular company of which he was a director ? Is that the particular way ?—I do not think he would do that. It would be where he could get a better price. 95. I am not attacking Mr. Foster's integrity: But do you not think it unique to have transactions with companies, of one of which he was manager and of the other a director? The Board did not interfere with the buying or selling, as a Board ?—No ; but I do not think he could interfere with the estates management in that way. 96. Have you any objection now to put before the Committee the transactions between the Wellington Meat Company and the Estates Company during the year ? Is there any objection to that ?—I should think there would be. 97. Why ?—I do not think the Wellington Meat Export Company would like to have their business exposed like that, or that any other company would. 98. Is there anything to be exposed, if they sold to you, say, £4,000 or £5,000 of stock?— It would be what they sold to us, and no one would care about exposing their business in that way. 99. Or what they buy from you ?—lt would be the other way. As a matter of fact, it is the Assets Board who have to do with that. The Estates Company have to do with that no longer. 100. I know they have not now, but I am alluding to the time when you were attorneys. As a fact, was Mr. Booth not also chairman of directors of the Wellington Meat Company ? You had the chairman of directors and the manager of the Estates Company connected with the Wellington Meat Export Company, and I ask you whether under those circumstances you do not consider the position unique ?—Yes; but I do not think there were any important transactions. 101. Did not the Estates Company dispose of sheep ?—-Yes, to whoever would give the highest price for them. 102. Were there any transactions of that kind?—l have not had time to look into the minutice of tho work in connection with the stations at all. 103. You say that a director of the bank was chairman of the Wellington Meat Company, and also an attorney of the Estates Company?— Yes. 104. And the manager of the Estates Company was also a director of the Wellington Meat Company ? —Yes. I do not think it ever happened under the Estates Company that that took place. The Estates Company gave over control to the Assets Board in 1895, and Mr. Foster was then newly appointed. Nothing occurred between the Estates Company and the Wellington Meat Company since that. It was all with the Assets Board. 105. But the Assets Board was not formed until November. Was it not the attorneys of the Estates Company who were managing the estates for the Assets Board ? —Yes; they were managers. 106. Mr. Foster is manager for the Assets Realisation Board ?—Yes. 107. He is also under engagement with the Estates Company's attorneys?— Yes, for certain purposes. 108. He is also doing business for the Bank of New Zealand? —Yes. 109. Well, were the dual positions advantageous or otherwise? Are there not times when such interests may clash ?—I hardly think so, except it might be in point of using his time for one or the other. 110. Do you not think there is a false position at the present time ? At one time he may be making out accounts as a seller, and, at the same time, be looking alter the interests of the buyer. * 25—1. 6.
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The Auditor is in a somewhat similar position. The Auditor has to do business for the bank, and is the Government Auditor. Until the adjustment is complete, there may be a possibility of the positions clashing ?—There are special auditors for the Estates Company, and an Auditor for the Assets Board. 111. With regard to Mr. Foster, do you think the positions clash or otherwise?—l do not think it could be avoided. It was said generally in the legislation that the Estates Company should take control until the Assets Realisation Board assumed control. I do not see how we could have two managers carrying on the separate things. 112. The Estates Company will shortly become a thing of the past?— Yes. 113. With that Mr. Foster's engagement as manager for the Estates Company would cease?— Yes ; but he will be retained by the bank to look after the same things he was looking after in the Estates Company. 114. Trading concerns in the bank?-—Yes. 115. What are the terms of his engagement ?—I think the usual three months. 116. What is the salary ?—I am not quite sure about that; £200 or £300, I think. 117. It is no use asking you about the station manager's report? —No; I am not acquainted with the minutiae of that. 118. There is the Agricultural Company : Do you know anything about the Agricultural Company and what led to its formation ?—I could get full particulars of that; but it was many years ago, and I have not got them here. 118 a. Could you get them as you have the other one ?—Yes. 119. There have been adjustments and reports issued in connection with the debentures included in the formation of the company?— Different debentures were issued from time to time at different currencies and rates of interest. 120. I would like to have the percentage of cost of management on the total income—the same as lam asking for in connection with the Estates Company—as a separate concern. The present position, and value of the property that belong to it?— They are all now in the Assets Board. 121. I want them separate ?—I have no access to Assets Board's matter. I would have to get the consent of the Board for that. I have really got nothing to do with these estates. Perhaps it would be better to ask Mr. Foster or Mr. Cuff to produce that. 122. Have the whole of the agricultural properties gone away to the Assets Board?— Yes. 123. Mr. Montgomery.] With reference to the adjustment account: First, with regard to the sum of £54,507, which it is suggested is improperly included, that was included in the £2,731,000 last year?— Yes. 124. Therefore, it formed part of the book-value of those estates ?—No, it did not form part of the book-value of the estates at that time. It appeared on the balance-sheet as an amount in excess of Mr. Hean's valuation. It lay in the London books in that form, and it came out here in that form early in 1895, and was rendered to us by the Committee of last year in that form. 125. The Committee last year were made aware that debentures would be issued for an amount which included this £54,507 ?—Yes. 126. Can you, therefore, understand why it should be excluded?—l understand why the special auditors consider it should be excluded. 127. No; but do you yourself consider it should be excluded?— No. 128. Coming to the sheep again : You have noticed the very strong language used by the special auditors, Messrs. Smith and Kember?—Yes, with some regret, I do. 129. I think they say " fraudulent entries " ?—They use those words. 130. And " false entries " and " false profit and loss account," &c. ? —Yes. 131. In your opinion, is there any reason to suppose there is any fraud at all ?—No. 132. With regard to sheep: do you think the auditors have made a mistake and are misunderstanding the transaction ?—With regard to the figures, I am not in a position to say. I cannot discover from the books of the company whether the auditors made a mistake in the figures or not. With regard to the broad view of the transaction, I think they have made a mistake, because I think the Committee last year were fully aware of the numbers and values of the sheep, and agreed to include them at the higher values in the £2,731,000. 133. And you considered that you could not legally write them down in the books?—l will not go so far as to say we could not legally write them down, but I will say that we did not consider it advisable to write them down, and that we gave full information regarding the matter to the Committee of last year. 134. You know that Messrs. Kember and Smith referred to a transaction of £66,953 in sheep? —Yes, I see they did that. 135. Will you tell me how they arrived at that ?—I cannot tell you that. 136. I will suggest it to you: Is not that sum the debtor balance of the sheep in the Profit and Loss Account, after writing off £94,063 ?—I cannot say that. lam not familiar with the accounts. My information from the office is that the sheep were written down £94,000 and written up £83,000. 137. Had they written the sheep up to the full amount written down, would not the amount be £10,000 more ?—Certainly. 138. Do you therefore consider that, from a debenture-issue point of view, the Realisation Board asked for too little debentures on this account ?—Yes, I consider, from an Assets Realisation point of view, the Assets Board benefited to the extent of £11,000 by the writing-up and writingdown. 139. Benefited?— Yes, because they were written down by £94,000, and written up by only £83,000, and therefore they would benefit by issuing less debentures to the Estates Company, They would issue less by £11,000 on account of this writing-up and writing-down.
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140. In other words, the Government would guarantee less ?—Yes, owing to the writing-up and writing-down. 141. Owing to the mistake in writing up the value?— Yes. 142. I ask you to discover whether the writings-back were not omitted in the Auckland Agricultural Company's Estate, the Retreat Estate, and the Awatere Estate. Can you give any reason for this ?—The accountant told me it had been done by mistake, that it had not been written up sufficiently to meet the former writing-down. 143. Just a word about Matamata : This transaction concerning Matamata took place before the legislation of last year ?—Before the legislation of 1894. 144. And the estate as it stood at book-values did not purport to be actual values ?—That placed before the Committee last year did not purport to be actual values. 145. Most of the assets were in the same position ? —They were. 146. If inquiries were made into the other estates, would not the accountants also find that they were not the actual values ?—They would find that. No doubt valuators would find that these estates and stock were some £850,000 over valued. .147. Would the way in which the past attorneys of the Estates Company who purchased the properties arrived at the prices possibly enter into the adjustment ?—That is just according to how the auditors have been advised. The Solicitor-General, I understand, has said the special auditors' contention was reasonable; but all our legal advice goes to show that it should not enter into it. 148. If they entered into this Matamata transaction, I presume there is no reason why they should not enter into every other question where lands have been bought by the bank ?—I do not think there would be the same reason for entering into other ones, because the Matamata transaction was a very recent date, and presumably the auditors might have thought, being of such a recent date, it was foisted on to the Estates Company for the purpose of getting it off in this way. But it was not really for the purpose of getting it off on the Assets Board, because the Assets Board was not in contemplation; but the auditors, presumably, thought so. 149. Leaving that and touching the dead estates mentioned this morning: Can you tell me what properties have come under the control of the Estates Company since its formation ? We have had an instance in the Matamata?—l cannot tell you. 150. Do you know of others ? —I cannot say that I do. I think it is very likely, as power was in the deed of settlement for the Estates Company to acquire such properties. 151. Will you ascertain the numbers and values of the properties which have been placed by the bank under the control of the Estates Company since its formation, and what is the value of such properties now ?—I will inquire into that matter. 152. The effect of placing dead assets in the Estates Company would be to show a misleading balance-sheet in the bank, would it not ?—That would depend upon the values placed upon them. 153. Take Matamata Estate : Supposing they had got cash for other estates, they would have made some very heavy bad debts, which would have appeared in the bank's books, would they not ? —Yes. It would have to be borne in mind that the Estates Company owned other shares of the properties acquired at that time. Matamata was not acquired by itself at the time. 154. If Matamata had not taken the form it did it might have made bad debts in the bank for that year, and might have affected the Profit and Loss Account materially ?—I do not think that. 155. Have you not told us the Estates Company was a burying-ground for dead estates? —It was originally started for that purpose, no doubt, as a Globo Assets Account. 156. Was that kept up after its formation ?—I do not think so to any great extent. 157. But whenever it was it would be to the benefit of the Profit and Loss Account in the bank, and to the detriment of the Estates Company, would it not ?—Not necessarily. I have no knowledge of any estates being transferred like that; but, suppose they were, I can fully imagine that the Estates Company with its experts in management could manage these things, and the bank could not, and it would be a natural thing for them to turn over that branch of the Estates Company. 158. At their book-value ? —Yes. 159. And therefore the difference between the book-value and the actual value would not appear as a debit to the bank? —If that were done it would not. 160. And would affect the Profit and Loss Account ?—Not necessarily, if the book-value was not too much. 161. But if it was too much, as happened in pretty well every case we know of in connection with the Estates Company, it would affect the Profit and Loss Account ?—lt would. 162. And it would be an easy method of paying dividends to shove off these estates on the Estates Company ?—I do not think it was done. And while lam on this subject I may say that it was contemplated that this purchase of Matamata, and the shares of the Roller Mills and Freezing Company, should be transferred over to the Estates Company from the beginning. 163. How do you know that ?—Because I know from the correspondence which clearly advises it was purchased for the Estates Company, and that is why it was transferred after we took office, and because it was arranged with the Estates Company that this purchase should take place. This is in an extract from a letter from the London general manager, dated Ist December, 1893 : " Nothing definite appears yet to have been decided upon. The proposals made to the bank, and advised in the president's telegrams to the Estates Company and the general manager of the 6th ultimo, were not of a nature that we could recommend acceptance of "; and then he goes on to say, " That the Estates Company should purchase the interest of Matamata, the Auckland Freezing Works, and the Roller Mills at £160,000 is quite out of the question." 164. But even at the amount they did purchase it, it was far above the actual value ?—I do not know that it was. There were three properties. They were shares, and it would have been very awkward to have gone on holding half the shares and half the management in these things.
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165. Can you ascertain about that ?—I cannot ascertain that. How can you tell what the values were three or four years ago ? 166. The property-tax value ? —The property-tax value is not always reliable. What I wanted to point out was this, that this bargain was made with the Estates Company from the beginning. It would not have suited the Estates Company to have half and the bank to have half, and to work under two different Boards; and we only carried out the arrangement that was made in 1893. The Home Board made the bargain on account of the Estates Company, which was an offshoot, and belonged entirely to the bank. 167. Now, as to the Consols: You said that the Colonial Bank had some claim to Government assistance under the circumstances, or words to that effect ?—When I was asked if I thought they had, I said I thought they had. 168. Was the Colonial Bank in any different position to any other bank —say, the National Bank, or the Bank of Australasia ? —Yes; it has come to the rescue of the Government at a time when they found a difficulty in obtaining money. 169. That was the only ground. It was not on account of the legislation ?—They were certainlyplaced at a disadvantage by the legislation. 170. So were all the other banks, were they not ?—I do not think the other banks competed at all points so keenly with the Bank of New Zealand as the Colonial Bank did. There is no point where any of the other banks were stronger than the Bank of New Zealand ; but the Colonial Bank was stronger at points. 171. As to this deposit of £150,000 with the Colonial Bank : That made the colony interested in its stability to that amount of £150,000 Consols ? —I do not know anything about that. 172. You do not know anything about it ? —I was not in the Colonial Bank when that was done. I have seen and read about it. 173. But you do not know anything about it ? I am asking you whether you know about it ? —I know a lot about private transactions which I am not going to answer here. 174. The Chairman.] The question asked is, Do you know about it ?—I know something about it, but Ido not know fully about it. I did not conduct the transaction. 175. Mr. Montgomery.] You only know by reports ? —By reports and otherwise. 176. Do you know anything yourself about it ? —I have seen and read about it. 177. Have you any doubt that a sum of £150,000 was advanced to the Colonial Bank by the Bank of New Zealand? —There was no £150,000 advanced to the Colonial Bank by the Bank of New Zealand. 178. It was on deposit? —I do not know anything about this transaction Mr. Montgomery is referring to. He talks about a deposit by the Bank of New Zealand. Ido not know anything about it. 179. The Bank of New Zealand purchased one hundred and fifty thousand pounds' worth of Consols ? —That is part of the business of the Government. I cannot disclose that. 180. You do not know ? —I do not say Ido not know. I decline to disclose private business. 181. Is this a confidential matter? —It is private business. 182. You decline to disclose anything in connection with the transaction ?—I decline to answer the question, as it relates to the private business of the bank. 183. Do you not know that the transaction I have alluded to made the colony interested in the stability of the Colonial Bank ?—I decline to answer anything about a transaction in connection with the private business of the bank. 184. Do you think it is advisable that the colony should be interested, directly or indirectly, in maintaining the position of any banks ? —I think it would be very much against the interests of the colony if any bank trouble arose here. I may say that the colony passed legislation to guarantee the note-issue of all banks. 185. There were four inspectors, were there not, in the Bank of New Zealand?—Do you meaD there were, or are ? 186. There were, at the time of the appointment of Mr. Litchfield and Mr. Buller, whose terms were made three years. Why were not their terms made three months ?—Messrs. Buller and Litchfield were given that appointment on account—as the letters I put in show—of their working very hard for the five or six weeks when the arrangements for the purchase of the Colonial Bank were going on. The other inspectors were not so employed. 187. Was there no other motive ?—That was the only motive. It was recorded in that letter what the motive was. 188. You said there were no communications from the inspectors on this subject to the bank?—l do not think I said that. 189. Were there communications asking for it ?—No; not that I know of. 190. You do not know ? —No. 191. Were there any verbal communications?—-Not that I know of. 192. This just suggested itself to the directors on account of their hard work?— Yes. 193. Was there any other reason?— There was no other reason in my mind, but I passed it. I do not know what was in the minds of the other directors. 194. That you knew of?— That was the reason given at the time at the board. I may suspect other reasons, but I will not state them here. lam not going to state what I suspect. 195. You did suspect other reasons? —I decline to state suspicions. 196. On what grounds?—On grounds best known to myself. 197. The Chairman.] I must ask the witness to reply to the questions?— Suspicions are not evidence. I do not think I should be asked to state my private thoughts it that way. I will not give them. I will leave it to other men to work on suspicion, I will not do it. Mr. Montgomery : You are under cross-examination.
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Mr. Cooper: Do I understand that the Committee is cross-examining the witness ? If so, it is the first time I ever knew Judges to cross-examine witnesses. Discussion ensued. The Chairman : I think the witness should answer the question put by Mr. Montgomery. 198. Mr. Montgomery.] Do you know of other reasons ?—The only reasons that I know of were the reasons given in that minute for that action. They are given quite clearly, and in that minute are embodied the reasons of the directors why the inspectors got that agreement. That was all that was in my mind in passing it as President. They gave them no more salary. It was only a question of retaining them in the bank. It was a question of three years' instead of three months' engagement. It was a special thing for them. 199. Have the directors any object in retaining them in the service of the bank?— The object was to retain them, as a reward for their services. 200. Were the directors not somewhat afraid of these inspectors, owing to the way in which they had gone into Colonial Bank affairs? —I cannot tell what was in the minds of the directors. 201. You can tell what was in your mind ? —Yes; I was not afraid of that. 202. Had their intimate knowledge of the affairs of the Colonial Bank anything to do with your making their appointments permanent in the bank of New Zealand ?—No, I do not think so. 203. That did not have anything to do with this extension of time, and was not taken into account by the directors. Is that true ? —I do not know; it might be so. The directors might think they were more valuable on that account; and it is possible that some director, because they wished more surpluses to be put into the " B " accounts than what the Colonial Bank men thought was necessary, might have suspected that they might be objects of enmity on that account, and they asked for three years' instead of three months' engagement. However, if such a suspicion did lurk in the minds of directors, it was at once dispelled by the three years being granted. When I saw Mr. Seddon on the point, he told me to " fry my own fish," or something like that, and I told him at the time I did not see why these men should not get it, and it was given to them. But I cannot say whether there was any suspicion in the minds of the directors at all, and I do not say that I had any suspicion. Ido not go so far as that; but, at any rate, there was no objection on my part. I have to be very careful in giving evidence here, because if I make statements they are fastened down and given to the country, and a suspicion of mind would be a very wrong thing to state. 204. Was it a case of the officials securing themselves all round, commencing with the President ?—Well, the colony was good enough to secure to me my position. 205. That was previously ?-—Yes, previously. 206. Was it a case of the officials securing themselves all round ?—-No ; as far as I know, these officials did not ask for that. They might have approached a director. I may say the suggestion did not come from me. 207. Will you say they did not ask for it? —So far as I know they did not ask for it. 208. Did you tell the Premier they asked for it?—No, I did not. I told him there was a notion among the board that they should get it. 209. Who brought it up first —who suggested it ? —I think Mr. Martin Kennedy spoke to me about it. 210. Did Mr. Booth approve of it ?—Yes. 211. Was the board unanimous?—lt was passed unanimously. 212. Passing on from that, Mr. Seddon said you were not a happy family. As a matter of fact, have there been many quarrels among the directors ?—No. 213. And you, as a matter of fact, have worked very well together ?—Yes, very well together. I think that that occasion of Mr. Booth dissenting from Mr. Mackenzie's appointment was the only one case where dissent has been recorded since we have sat together. 214. Am I right in stating that the management of the bank has not been injuriously affected by occasional dissents ?—No, it has not. I fancy occasional dissents occur on every board. 215. Have there been more dissents on this board than on other boards of which you have had experience ?—No, I do not think so.
Saturday, sth September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. Mr. Montgomery.] Do the Assets Board or the Assets Company sell sheep to the Wellington Meat Company, Mr. Watson ? —I saw Mr. Foster this morning, and he told me the Estates Company had never sold any sheep to the Wellington Meat Company. 2. Hon. Mr. Seddon.] Does the Wellington Meat Company freeze for the Estates Company or Assets Board?—l do not know anything about the Assets Board. I have asked the same question of Mr. Foster, and he refused to reply. 3. Although you are an attorney of the Estates Company, you cannot tell us what was done during last year ?—Yes ; Mr. Foster tells me he has never sold any sheep to the Wellington Meat Company. 4. But has the company been freezing for the Estates Company?—l do not know that. I asked him about the purchasing of sheep, and he said " No." 5. The Chairman.] Have you any arrears of documents to bring forward this morning?— Yes, sir. I was asked a question about the Auckland Agricultural Company, and I find that we can give very little information concerning the circumstances which led to the formation of the Auckland Agricultural Company. The company was registered on the 21st June, 1881. It was formed for the purpose of taking over certain estates and the live and dead stock appertaining to those estates. The nominal capital of the Auckland Agricultural Company was £800,000 in 80,000 shares of £10
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each. The whole of the shares were allotted, with £4 paid up per share, giving a paid-up capital of £320,000. The first debenture-issue was £350,000, but we have no particulars of the terms on which it was made. Subsequently, to provide for these first-issued debentures as they matured, a conversion issue was made of £300,000 debentures, and the holders of the first issue had the option of exchanging for debentures of the later issue at par. The whole of the debentures were, in terms of a resolution of the debenture-holders, repaid on 15th May, 1896, with a bonus of 1 per cent, per annum on the unexpired currency of the debentures, which matured at varying dates, extending up to January, 1902. The total amount of debentures outstanding on the 15th May was £271,830. The bonus on the unexpired currency of these debentures amounted to £2,860 2s. 10d., and the expenses in connection with the redemption to £766 18s. 7d. The total cost of redemption was therefore £3,627 Is. sd. There have been no properties taken over from the bank by the Auckland Agricultural Company, I was also asked with regard to properties taken over by the Estates Company since its formation. The only properties taken over were the bank's interests in the Matamata Estate, the Auckland Roller Mills, and the Auckland Freezing Company, acquired from a company in terms of the bank's settlement with that company. For these interests the Estates Company paid the bank the book-value of £120,000. I was asked when were the Estates Company's attorneys prepared and ready to hand over the properties to the Assets Realisation Board. These are Mr. Foster's answers. I applied to him this morning 6. Hon. Mr. Seddon.] I asked you yesterday whether there was any difficulty in handing them over to the Assets Realisation Board?— The difficulties were that it was quite impossible to make up the books of the Estates Company to any one date. The books of the Estates Company cannot be made up to-day as of this date, because there are transactions taking place all over the country, and it takes three weeks or a month to get a knowledge of them. There were difficulties, and I believe they were not altogether smoothed over until the 31st March this year. I was asked for the statement submitted by Mr. Foster to the attorneys about the writing-down of the sheep—the proformd balance-sheet, or whatever it was—at the time the attorneys refused to write down the sheep. I applied to Mr. Foster to get this, and he tells me there was none ; and he says that he can explain the whole of the circumstances to the Committee. I also applied for the percentage of the cost of management and total income of the Auckland Agricultural Company as a separate concern. lam informed that they have no knowledge, as the accounts were kept in London. I applied to Mr. Foster, as he is in charge. 7. Can you not cable to get it ? —The Auckland Agricultural Company is not now in existence. I do not know whether the liquidator could give us that information. 8. You know we are largely interested?— The Assets Board is. 9. The Chairman.] The information you say is in London. Would you cable to get it ?—This will be very expensive, and I should like to know whether the Assets Board would pay for it. I was asked as to the present position and value of the properties of the Auckland Agricultural Company. The Assets Board declined to permit information being given on this point. 10. These are all matters which we might get better from Mr. Foster?— Yes, sir. 11. Is there anything else you had to get for the Committee ? —I was also asked to get a statement about the writing-down of the sheep. 12. -But that is also a matter which Mr. Foster knows a great deal more about than you, is it not? —Yes, sir. 13. Mr. G. Hutchison.] You told us about a special arrangement with two inspectors of the Bank of New Zealand—Messrs. Litchfield and Buller—for security of tenure. Will you mention the names of the other inspectors of the bank? —Mr. Dignan is inspector in the Auckland district, and Mr. Parfitt is the inspector for Australia. 14. Have you a Mr. Murray an inspector?— No. Mr. Murray was inspector, but he is now manager at Auckland. 15. Has the board of directors consented to Mr. Murray acting on the advisory board of the German Mining Syndicate ?—Sir, I consider that private business of the bank. 16. No, surely. 17. The Chairman.] What is your question ? 18. Mr. G. Hutchison.] My question is whether the board of directors has consented to Mr. Murray acting as a member of the council of advice or advisory board of the German Mining Syndicate —the Anglo-Continental Mining Syndicate. 18a. The Chairman.] Ido not see any harm in that question? —-I cannot give all the particulars. 19. Mr. G. Hutchison.] Has the board of directors consented ? You are President of the bank, and it is a question of fact? —The board have not refused to allow Mr. Murray. 20. Have they consented? —Mr. Murray is a gentleman who is very well up in mining matters 21. The Chairman.] I must ask you to answer the question. You are not asked whether Mr. Murray is well up in mining matters ; you are simply asked whether the board consented ?— They have consented, owing to the special circumstances of the case. 22. Mr. G. Hutchison.] When did the Board give its consent—how many months ago?—l 'suppose about six months. 23. And he is now, as far as you know, a member of that board or council of advice?— I think he is. 24. Has he informed you what his remuneration is for that service ?—No ; I do not think so. 25. Has it made any difference in his salary from the bank ? —No. 26 You have not inquired of him what renumeration he gets for his services on this board or council of advice ? —I do not think so. 27. You can ascertain what his remuneration is from this board or council of advice ? —I do not know that I will.
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28. But you can ?—I could if I tried, but Ido not feel inclined to do so. 29. But I, as a member of this Committee, am going to ask you to ascertain the information for the Committee ?—Surely that is not my business—to do anything like that. 30. It is for the Committee to say. The Committee can, of course, decline to allow the question to be put—but I put it ?—Surely it is not within the four corners of my duty to the bank to do that. 31. I ask you to ascertain what remuneration this officer, whose salary, you say, is not affected by the appointment, is receiving as a member of the council or board of advice ? 32. The Chairman.] I do not think, under the circumstances, that there is anything wrong about the question ?—I am here to answer questions, and will do so to the best of my ability ; but am I to be instructed by the Committee to do things outside my office that are abhorrent to me ? Hon. Mr. Seddon : I rise to a point of order. The Committee has no right to ask the witness to get such information. Discussion ensued. 33. The Chairman.] I have ruled that this question may be put ?—I must decline to answer that, as it will interfere with the gentleman's private affairs. 34. Mr. G. Hutchison.] My question refers to an officer of the bank, who is paid a salary to give his time to the bank, and yet he is allowed to give services to another institution?—l decline to inquire into officers' private affairs. Mr. G. Hutchison : This is not a matter of privilege ; it is a matter of a witness declining to do what the Chairman indicates is proper to be done. Discussion ensued. Mr. Cooper : The witness has answered the question. He has answered the question by saying that he declines to get the information. The Chairman: The question has been asked, and the witness said he does not know of his own knowledge. He was then asked if he would ascertain, and he declined to do so. I think Mr. Hutchison must accept that answer. 35. Mr. G. Hutchison.] With reference to the balance-sheets you reviewed here, is it not a fact beyond any doubt that bills payable represent liabilities?— Yes, I should say so. 36. And that it is proper to place on a balance-sheet as an asset bills receivable ?—lf not parted with, yes. 37. Bills held are properly represented as an asset? —Yes. 38. Bills under discount carry a liability, do they not?— They carry a contingent liability. 39. You have referred to various balance-sheets, among others to ?—I did not refer to them. They were put into my hands. 40. You referred to documents placed before you?— Yes. 41. Do you undertake to say that, from the balance-sheets you reviewed, any of the companies referred to had bills under discount that are not shown as liabilities ?—No ; I stated exactly what I saw in the balance-sheets before me. 42. Do you wish it to be understood that in the cases where bills under discount were not shown as liabilities that there were bills under discount ?—I stated what was merely in the balancesheets—neither more nor less. 43. Your answers implied—or are understood to have implied—that there were bills under discount not shown?—l did not imply that. 44. That was a mistake?— Yes. 45. You referred to one balance-sheet, among others—the National Mortgage Agency Company of New Zealand (Limited)? —Yes. 46. Have you that before you now ?—I have one here before me; Ido not know whether it is the same balance-sheet or not. 47. What is the date ? —3oth September, 1895, for the colonies, and 31st December, 1895, for London. 48. You see on the debtor side, " Bills payable, £42,850 "?—Yes. 49. And on the other side, " Bills receivable, £9,307 " ?—Yes. 50. That carries out, does it not, the proper mode of treating bills ?—I do not think that bills payable are bills under discount. 51. That is so. But this balance-sheet treats them properly, as it represents the bills held by the company?—l should think so. 52. If this company had no bills under discount, of course you would not expect to see an entry of them?— No. 53. Do you suggest that a company of this sort would have bills under discount ?—They might have. 54. But do you suggest it ?—No; I cannot see from the balance-sheet. 55. Do you suggest that Messrs. Turquand, Youngs, Bishop, and Clark would audit as correct a balance-sheet which did not show bills under discount as a liability if there were any ?—I do not know their mind. 56. You would not, would you?—lf I were an auditor I should insist upon bills under discount not being put in the liability column, because I think that would be incorrect; but that they should be put at the foot of the balance-sheet as a contingent liability. 57. Would you consider that a balance-sheet should be drawn up in that form?— Yes. 58. You were asked to consider a balance-sheet of the Ward Association when looking at those before you. Have you the balance-sheet of the Ward Association ? —I do not think so; I Was not asked to consider it. I never had it before me here. 59. Look at this one. You were asked as to a sum of £6,830. I am asking you to assume that that balance-sheet before you [pamphlet containing balance-sheet handed to witness] is a correct one?— That is not issued by the company. This is a pamphlet extracted from a newspaper.
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60. I am asking you to look at the balance-sheet in print in the same way as you looked at the other balance-sheets handed to you that were previously assumed to be correct. You were asked if the others were correct? —I cannot assume, myself. I will assume that you are assuming. 61. You see an item of £6,830 there as " Bills receivable " ?—Yes. 62. Assuming, again, that this amount was arrived at by deducting "bills receivable" from " bills payable," would that be a proper entry in the balance-sheet ?—I am asked a most misleading question, because bills payable have nothing whatever to do with bills under discount. If I make an answer like that I shall be misleading the Committee very much. Bills payable have nothing to do with bills receivable. 63. Assuming that this amount of £6,830 is arrived at by deducting from the amount of bills receivable another amount representing bills payable, would that entry be a proper one?—l do not know anything about it. I cannot answer the question. 64. I admit the thing is wrong, but I am asking you to assume a case?—l will not assume a thing for myself. 65. It would be wrong to assume such a thing ?—Yes, I think so. 66. Have you ever known it to be done—bills payable being deducted from bills receivable ?— No ; I do not think it was done in this instance. 67. Now, the Premier read to you from a book an extract from the judgment of Mr. Justice Williams on the Ward balance-sheet. He commenced with the words : " Any person with elementary knowledge of accounts must see that this process is an illegitimate one." Do you remember that ? —No; my evidence is there. 68. I suggest that was the place where he started to read, and if you like to look you can read it there yourself ?—I would like to refer to my evidence. 69. I ask you now to listen to this passage, which immediately precedes the one that Mr. Seddon read to you Hon. Mr. J. McKenzie : Mr. Chairman, is this book before the Committee? The Chairman : lam afraid I cannot rule in reference to it as being out of order. Mr. Seddon and other members of the Committee have referred to this pamphlet. ■ 71. Mr. G. Hutchison.] This is the passage I refer to: "The attention of the Court was first directed to the balance-sheet of the association for the year ended the 29th June, 1895. That balance-sheet is framed somewhat curiously. Among the assets there is one item of £6,830, bills receivable. There is no entry of bills under discount among the liabilities. This latter entry had, however, appeared in former balance-sheets. Mr. Ward explains this by saying that the system of dealing with bills under discount, and bills receivable was changed." He says: "As I understand it, in the usual way, bills under discount are looked upon as bills sold, and are deducted from bills receivable." That) corresponds with the entry to which I drew your attention? —Yes. 1 now resume the passage from the judgment, and the quotation of what Mr. Ward, in effect, said: " That is the ordinary thing to do, and ought to have been done from the start." He goes on to say : "It is quite usual for bills discounted to be regarded as sold, and instead of the total amount appearing, the difference between bills discounted and bills receivable to be shown." Now, the Judge continues : " The sum of £6,830 appearing among the assets of the Association was, therefore, arrived at by deducting from an undisclosed amount of bills receivable an undisclosed amount of bills under discount." Then the judgment proceeds, as Mr. Seddon read: " Any person with an elementary knowledge of accounts must see that this course is an illegitimate one." Do you agree, or disagree with that ?—I do not disagree with it entirely. It is the custom with important companies not to deduct from the bills payable the bills receivable, because that would be an absurd thing to do. Bills payable are bills accepted by a company and payable to other persons, and it would be a curious thing if the company could discount these bills held by other persons. With regard to what I have been asked about bills receivable and bills discounted, I may say that many banks discount them in that way. I know some London banks do it. I have seen it done. They rediscount their bills in the London market and deduct them from their liabilities. I believe that attached to the Company's Act of 1882 in this colony, there is a schedule which sets forth how a balance-sheet should be made up, and it does not show that bills dicounted should be placed among the liabilities of a company in the column of liabilities, but it shows they may be put in at the foot of the balance-sheet as a contingent liability. But lam aware that that that has not been attended to by many companies, and that lawyers have passed balance-sheets where that has not been done. 72. Will you mention any other company than the Ward Association?—l decline to mention private business. 73. You decline to mention one other company in which this was done ?—I think I might suggest to the Committee that if they subpoena Mr. Rhind, inspector of the Bank of New South Wales, he will indorse what I say. 74. Hon. Mr. Seddon.] He will corroborate your evidence in this respect ?—I believe he will. 75. Mr. G. Hutchison.] You refuse to mention any one company, besides the Ward Association, in which this practice obtains ? Hon. Mr. Seddon : He said he knew there were companies that did it, but he declined to give their names. Discussion ensued. 76. Mr. G. Hutchison (to witness).] My statement to you is as follows : You have refused to mention the name of any one company in which this practice obtains, apart from the Ward Association. You declined to answer. Now, will you mention the name of any bank which does not show in its liabilities bills rediscounted ?—I have not any particular bank before me just now. No doubt I could place balance-sheets of banks before the Committee, but I should have to ascertain that they had bills discounted at the present time, to be able to put in such a statement as that. I say that in my experience I have often seen that.
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77. Can you mention any bank which has recently—within the last ten years—treated bills rediscounted as you have indicated ?—I refuse to do anything invidious in that way. lam not going to put myself into the position of offending any bank. I should like to point out the position my answering that question would place me in. If I answered that question with regard to any company doing business with the Bank of New Zealand, where I have personal knowledge of bills discounted, the company would immediately take it as an exposure of their affairs. It would be said that I could only get that knowledge from my position in that bank. 78. Do you suggest that there is any other company than the Ward Association, which has done business with the Bank of New Zealand during your term of Presidency, which treats its bills in the same manner as the Ward Association did ? Hon. Mr. Seddon : We have no evidence that the Ward Association has done this. Discussion ensued. 79. Mr. G. Hutchison.] I ask this further question : Is it a fact that any company, other than the J. G. Ward Association, which is doing business with the Bank of New Zealand or has done business with it during your Presidency, has followed such a practice as seems to have been followed in the J. G. Ward Association? Discussion ensued. The Chairman : The member is now basing an assumption on a newspaper report, which it has already been ruled could not be admitted. Ido not think we have a right to assume as correct the unverified statements appearing in newspapers or printed pamphlets. 80. Mr. G. Hutchison.] Has any company now doing business with the Bank of New Zealand, or which has done business with the bank during your Presidency, prepared a balance-sheet in the way to which your attention has been directed?—l decline to answer that question.
Tuesday, Bth September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. ' 1." The' Chairman.] Have you any papers to hand in this morning, Mr. Watson, or anything that has been prepared upon which you were asked to give any information ?—No, sir. 2. Mr. G. Hutchison.] You stated on the 24th August, in your evidence, that the J. G. Ward Company followed the practice adopted by some of the best companies in the colony as regards bills discounted? —I do not think so, because I did not have the balance-sheet before me at the time. 3. And you cannot speak as to the nature of the balance-sheets of the J. G. Ward Company ?— No. 4. With reference to the application of the liquidators to the Supreme Court, you stated on the same day—the 24th August—that the refusal of the Court to grant the application was against the interests of the shareholders of the bank. Do you remember saying that ?—1 should like to see my evidence. I cannot recollect everything I said. 5. But a witness generally remembers what he says ?—But if he is here for over sixteen days running, and can do that, he is a very clever witness. 6.. Can you not recollect what you stated ?—I cannot recollect what I did not say. I never said that, I am perfectly certain. 7. You did not say of the application of the liquidators of the Supreme Court that the refusal of the Court was against the interests of the shareholders, and that the interests of the shareholders had thereby suffered ? —Yes, I did say that; but you mentioned it in connection with a special account. 8. No; Ido not want to associate the two things. Do you say now that you did not state in evidence that, in consequence of the application of the liquidators to the Supreme Court being refused, the interests of the shareholders of the bank suffered?—l do not remember saying that either. 9. Do you remember saying anything to that effect ?—I remember saying that if a certain offer had been accepted it would have been better in the interests of the shareholders. I do not remember saying anything about particular matters. 10. What " offer "do you refer to ?—I decline to state anything about private business. 11. But you have told the Committee that a certain offer had been rejected, and the shareholders' interests had consequently suffered. What offer did you refer to ?—That is private business. 12. And you decline to answer?— Yes. 13. Do you not know the offer which was before the Court ?—lt is private business. 14. But you know an offer was before the Court ? —You are going into private accounts, and I regret having to say I cannot answer anything about it. 15. Ido not know that it was private business. You know there were proceedings in the Supreme Court at Dunedin ?—I was not there. 16. But you know that there were proceedings, just as you know a great many other things you have given evidence upon ? —I regret to say I cannot go into private matters of the bank. 17. I am asking whether you know of the proceedings in the Supreme Court at Dunedin in the same way as you would know of any other public occurrence ?—To which proceedings do you allude? 18. The proceedings I allude to were by the liquidators of the Colonial Bank, of which you are a shareholder. Who applied to the Court to sanction the sale of the J. G. Ward Association and of Mr. J. G. Ward's private debts to Messrs. Lee-Smith and James Reid?—That relating to private business, I can give no evidence upon it here. 19. I am asking you if you know the fact ? —Yes ; but I must refuse to give evidence as it would be going into private matters. - -■-..- -20. Do you remember that you stated that the liquidators application was refused ?—I do' not think so. •26—1. 6
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21. What is your answer ?—I do not think I did. 22. Do you not know that the application was refused ?—That is private business. 23. You have already stated it here?—l do not think so. 24. If you have stated it here you have done wrong ?—No; I will not say that. I say an offer was made which, if accepted, would have been better for the interests of the shareholders of the Colonial Bank. I did not say anything about what the offer was. 25. You say that an offer was made, the rejection of which was against the interests of the shareholders, and you will not tell us what the offer was ?—I have already answered two or three times that it is private business. 26. That is the reason ?—Yes. 27. You remember instancing an error made by Mr. Justice Williams referring to the " D" list as bad or worthless. Will you look at question 172 of your evidence ? You say there, " One thing Mr. Justice Williams said—if not then, at some other time—was that the ' D ' list was worthless "? —Yes. 28. Very well. When do you say or suggest Mr. Justice Williams said that ?—I think that was at another time. 29. Did you in your evidence, when you had it for correction, put in the words, " If not then, at some other time " ?—I do not think so. I cannot tell without looking it up. 30. When do you now say Mr. Williams referred to the " D " list as being worthless?—lt was in some of these proceedings about the Colonial Bank. 31. Can you refer to any one time ?—He did make that remark, but I have not got it before me now. 32. I have a copy of the judgment here in regard to the application of the liquidators; you can look at it. Do you suggest that was the time ?—I merely stated that Mr. Justice Williams did make the remark then or at some other time. 33. You cannot say when the time was ?—I have not the particulars here, but he did say so. 34. Did not your reference to either " then " or " some other time " refer to the judgment he delivered on the occasion to which I have referred?—l adhere to what I said here, that either then or at some 'other time Mr. Justice Williams did make this assertion. That is as far as I am prepared to go, not having the particulars before me. 35. You are not prepared to qualify that by saying that you may have been mistaken ?—No, I am not, because I remember thinking at the time that it was a mistake on his part, and that he had not been properly informed. 36. I cannot find anything with regard to the "D" list in this judgment?—l am not responsible for that. 37. You were asked (question 171), " In respect of this practice, Mr. Justice Williams says here, ' The practice is obviously a dishonest one.' That is the opinion he expressed in this decision " ? And you answer, "Yes." Is the decision referred to there the decision on the application of the liquidators of the Colonial Bank?— That is private business. 38. I want you to elucidate this answer of yours ? —I am prepared to repeat what I said then, but not to go further. 39. I ask what " decision " you refer to when you dissented from a certain proposition put to you by the Premier with regard to Mr. Justice Williams' judgment ? Hon. Mr. Seddon: I rise to a point of order. The honourable member has no right to put into the mouth of the witness what I stated. Witness : I should think that the word " Yes " given there was to show that I understood what Mr. Seddon was referring to. The Chairman : I understand the witness is simply stating what he understood Mr. Seddon to mean in respect of this practice. The witness merely acquiesces in a statement made by Mr. Seddon. Witness : Mr. Seddon did not try to lead me into private business at that time, and I must refuse to be led into it now. 40. Mr. G. Hutchison.] I ask the witness what the " decision " is that the witness referred to? Discussion ensued. 41. Mr. G. Hutchison (to witness).] I ask if the " decision " you referred to here was not the decision of Mr. Justice Williams on the application of the liquidators of the Colonial Bank ? That is a plain question ?—I decline to answer anything about the private business of the Bank of New Zealand. 42. I am going to ask you to listen to this extract from the judgment of Mr. Justice Williams referred to, and to ask you whether you still—as you did in your answer to Mr. Seddon—dissent from it or not. This is what Mr. Justice Williams says in the decision on the application of the liquidators of the Colonial Bank : " What, under ordinary circumstances, would happen, would be that the association would go into liquidation, and that Mr. Ward would become bankrupt. That the career of the association should be brought to an end and its proceedings investigated, and that those who were responsible for its management should no longer be permitted to roam at large through the business world, is a result so obviously desirable in the interests of commercial morality that it ought, if possible, to be attained. Now, it is with the avowed intention of preventing this result that the purchasers, under the present agreement, have come forward. Mr. W—— [counsel] states that is not like an ordinary business transaction, where the purchasers expect to make a profit; but they were buying out of friendship for Mr. Ward, in the hope of being able to put the association upon its feet again—that is to say, that a veil will be deliberately drawn so as to hide the past as far as possible; that Mr. Ward's bankruptcy will be purposely prevented; and that things generally will be made pleasant." Application refused. Do you assent to that proposition? —I must decline to say anything about it.
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43. As a shareholder of the Colonial Bank, have you followed the meetings of the bank since the purchase by the Bank of New Zealand ? —Am I obliged to answer about my private affairs, sir? lam asked to talk about my own private investments here. As a shareholder of the Colonial Bank I am asked a question. The Chairman : Yes; I think that question can be put. 44. Mr. G. Hutchison.] lam not asking about your private affairs at all. I ask if you, being a shareholder, have followed the proceedings of the Colonial Bank since it was purchased by the Bank of New Zealand—the public proceedings, such as meetings of shareholders ? —I have read with regard to them in the public papers. 45. Do you remember reading of a meeting of the shareholders of the Colonial Bank held on the 22nd January of this year ?—I have no recollection of that particular meeting. 46. Was the Hon. G. McLean chairman of directors of the Colonial Bank ?—He was. 47. Do you remember his making this statement to the shareholders at the meeting of the 22nd January last: "Suppose I had come and said, with a poor mouth, 'The capital must be written down.' Then, I venture to say, the probability is that the doors of the bank would not have been open for three days. And where would the shareholders have been then ? Instead of receiving a good amount for your shares, the probability is you would all have been paying calls." Do you remember that?—l do not remember those very words. 48. But something to that effect ?—I think that is highly probable, but Ido not recollect the very words. 49. Do you concur in that view of his, that it was proper for him not to disclose the real position of the bank, but to allow it to go on and be bought up by another bank, so that the shareholders should receive something for their shares instead of having to pay calls ?—-I concur that Mr. McLean's view was a correct one, because if a call had been made the present value of the shares would in all probability—as they did in the case of the National Bank—immediately drop to less than the value of the call, so that the 10s. the shareholders got, or anything they might have to get, would disappear. That would be only what followed when the National Bank made a call under similar circumstances. - 50. Hon. Mr. Seddon.] The National Bank affair was some years ago ? —Not more than four years ago—perhaps not more than three. 51. Mr. G. Hutchison.] What about his statement that if he had informed the shareholders that if the capital were written down the bank would not have been able to keep its doors open for three days ?—lt would have hurt the property of the shareholders very much. 52. You concur that that would probably have been the result ?—lt might have been. 53. You knew before you left the Colonial Bank that the Colonial Bank was urging the Government to let it have a share of the remittances to London, and even a share of the public account ? —Yes, I am aware of that. 54. And do you know that the Government in 1892 agreed to give the Colonial Bank a share of the remittances to London?—-I do not remember the year, but I know that in Mr. Ballance's time they did so. 55. That would be in 1892 or 1893 ?—Possibly about that time. 56. Was the arrangement this : that the Bank of New Zealand should retain two-thirds and the Colonial Bank should have one-third ?—I believe that was so. 57. Do you know what in 1895 was the proportion of remittances given to the two banks, or what was given to the Colonial Bank?—l think the division was two-thirds to the Bank of New Zealand and one-third to the Colonial Bank, which was carried out. 58. Was it not exceeded in any one case? —It might have been exceeded in one month with the sanction of the other bank, but I should not like to say it was; but that would be as far as any departure from the rule would go. 59. In whose favour would the excess be ? —lt might have been in favour of both banks at different times. 60. Can you give an instance of that having been done?— No. 61. Can you say what was the proportion of remittances the Colonial Bank got in the September quarter of last year?— No. 62. Can you find out ?—I regret to say I cannot do that. 63. Why ; is it private business?— Yes ; it relates to the Government Account. 64. Of course, you looked into the affairs of the Colonial Bank before purchasing it ?—Yes. 65. And can you say that the Colonial Bank had not £100,000 of remittances during the September quarter of last year?—l do not know. 66. Payable in London in February of this year ? —I cannot say. 67. Is it that you cannot, or that you decline ? —I cannot. 68. Can you ascertain ?—No. 69. You will not ?—I decline. 70. The Chairman.] You decline on the ground that it has reference to the private interests of the bank ? That is your answer ? —Yes. 71. Mr. G. Hutchison.] In buying the business of the Colonial Bank, you have stated that you took all the landed properties and bank premises at book-values as shown in the balance-sheet of the 31st August last ?—Yes. 72. Did you look to the statement made by the Colonial Bank in their quarterly returns about that time as to the value of the premises? Did it occur to you to do that ?—I am not aware that there were any quarterly returns in which statements regarding the value of premises were made. 73. The landed property: You know all the banks have to publish returns of that every quarter ? —I do not know. 74. You do not know what the Colonial Bank represented as the value of its landed property in the returns required to be made under the Bankers Act ?—The return to Government ?
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75. Yes; the gazetted return? —I did not look into that return of the Colonial Bank. It was no business of mine. That is not published by the banks, but by the Government. 76. Not as testing the amounts appearing in the balance-sheets ? —lf a wrong return was made Ido not know how it could be tested by that return. We had the books on which the return was made.' I do not see how it could be tested by the return. 77. Would you be surprised to know that in the June quarter last year the landed property of the Colonial Bank is given at £106,762 ? —Probably that is quite correct. 78. And the balance-sheet gives it as £125,000 ? —Probably that is correct. 79. Which would be more correct ? —I think both would be correct. 80. There is a difference of nearly £20,000? —I might, perhaps, explain to the Committee here that the returns are based on an average, and not the exact sum at any one date. They refer to landed property, and the leasehold property might be put in another place. I think it is probable that the returns of the Bank of New Zealand and other banks are kept in exactly the same way. 81. There is one matter which was held over from Mr. Booth, and, as he may not be recalled, Mr. Watson might supply it. It is the draft agreement prepared as to the purchase in October last year. Mr. Booth said they were probably in the hands of Mr. Button, and he said he would see about getting them. I would ask this witness to inquire if the draft agreement can be produced ? —I have no control over the drafts in the solicitor's office. 82. You gave the draft to the solicitor to write out, and have a right to get it, I suppose ? Now, look at the index of the bank returns in Vol. I. of the Gazette, 1895, the March quarter: Are there any columns there other than that of "Landed Property" where the leaseholds might occur? —I think they occur in the column " Securities not included under other heads." 83. Would you call leaseholds "securities," as distinguished from "landed property"?—l think so. 84. It does not say " freehold, property," it is " landed property " ?—Yes; I think the bank is in the habit of doing that. 85. Of putting leaseholds in the column "Other Securities"?— They are in the habit of so distinguishing them. 86. But are they in the habit of putting leasehold properties in a column other than that of landed properties ? Do you know of any bank that does that in its quarterly returns ? —I think the Colonial Bank did. 87. What amount do you find there in the landed properties for the March quarter of 1895.— £104,578 19s, 6d. 88. Will you turn to June in the next volume? What is the amount there?—£lo3,B49. 89. And in September, the next quarter? The agreement of purchase was in October? — £105,162. 90. You suggest that there is some property under another head ? —Yes. 91. Can you say what part of the list (Exhibit 22) you handed in consists of leasehold property ?—The list " Land Property and Bank Premises," I think it is called. 92. Are any of those leaseholds ?—I know without referring to the list several of the leaseholds in these properties. This list includes the whole thing. 93. Will you mark or indicate where the leaseholds are? —Auckland, £6,624, is a leasehold ; Invercargill, £5,204, and Oamaru, £4,854, are leaseholds. 94. These you have mentioned are leaseholds ?—Yes. I should like to say I am not quite certain whether these are leaseholds or not in this return, but I know that some portion of the £125,000 is in this column; but whether they are leasehold, or how the sum is divided, I am not sure without reference. We have these now in our possession so that we are just able to speak about them as well as anybody, but, at the same time, I think the leaseholds are separate from the freeholds; I know the three I have mentioned are leaseholds. 95. The question is whether they are included under the head "Landed property," or are included in some other column ?—My impression is that they are included in that other column. I am satisfied of it. 96. You will see by Mr. Booth's evidence that he undertook to see Mr. Button and procure the draft agreements?—l will see Mr. Button at your request. 97. lam now going to ask you as to the Auckland Agricultural Company. You stated that it did not take over any properties from the bank ?—No, it did not take any over from the bank that I know of. 98. Did it relieve the bank from some accounts in connection with those properties ?—Probably, but it is long ago. 99. What year was it ?—lBBl. 100. Were the shares held by the bank?— Yes, they must have been. 101. Can you tell me now for how many years the Bank of New Zealand has continued to declare dividends, and with what intermission, if any ? Take from the year 1888—has it not declared dividends every year, with one exception ? There was only one year during that period when it passed without declaring a dividend, was there not ? —I think, speaking from memory, there was one year, about the time of Judge Gillies' committee, and it has not declared dividends for the last two years. 102. It declared a dividend a few months before the Guarantee Act, did it not?— But that was on the working of the previous year. 103. But the dividend was declared in the same year—in March, 1894—as the Guarantee Act was passed?— September, 1893, was the last dividend for the half-year ending that period. 104. The period for which the dividend originated was that ending with September, 1893, but declared in 1894?— Yes. 105. And from that date back there was no intermission from 1880?— Probably.
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106. Can you tell us the amount the Bank of New Zealand since 1888 has distributed in dividends ? —Yes; I will find that out. 107. And you will inquire also as to the draft agreement?— Yes. 108. Mr. Maslin.] I believe you have refused to answer questions during the course of this inquiry, as not coming within the order of reference ? You have done that on your own motion ?— On one or two occasions I have been advised by my counsel to do so. 109. So that with the assistance of your counsel you understood the scope of the order of reference ?—Yes. 110. Can you tell me under what part of the order of reference you bring into the inquiry the balance-sheets of private companies doing business in New Zealand?—l have not refused to answer questions on that matter at any time. 111. Under what portion of the order of reference do you bring in those private balancesheets ?—I must leave that to the Chairman. He allowed that question to be put to me, and I saw no reason for objecting to it. 112. You cannot point out any part of the order of reference under which the inquiry into private balance-sheets would come ?—I do not think it is for me to consider the order of reference with regard to that. 113. But you have on several occasions, when advised by your counsel, refused to answer questions because they were outside the order of reference ?—Yes, relating to private business. 114. Do you not think it is inquiring into private business in connection with companies where no writings-off have been shown, and w-hich are outside the Bank of New Zealand, outside the order of reference ?—I could not express an opinion. My counsel will no doubt be at your service. Mr. Cooper : I submit that I am entitled to object to this line of cross-examination. Mr. Watson ought not to be asked to construe the order of reference. That is for the Chairman and the Committee to construe. Mr. Maslin : There has been an inquiry into matters outside the order of reference. The Chairman: I do not think this question has anything to do with matters Mr. Maslin is entitled to ask Mr. Watson questions upon. ' 115. Mr. Maslin.] You referred to the Canterbury Co-operative Association as not showing bills under discount in their balance-sheet ?—I only referred to the balance-sheets put into my hands by the Committee. 116. Do you not know that up to 1893 they did not have any bills under discount ? The Chairman : I may say I have been told by a director of the Canterbury Farmers' Association that he believed the chairman of the association was perfectly satisfied with the explanation subsequently given to that question by Mr. Watson. Mr. Maslin : That refers to the association of which Mr. Ensor is chairman. My question refers to the South Canterbury Association, of which Mr. John Talbot is chairman. Witness : Well, sir, that must be private business, and I must decline to go into it. 117. Mr. Maslin.] Was it not private business when you expressed an opinion that a company, not doing business with the Bank of New Zealand or the Colonial Bank, did not show bills under discount ? —I was asked to state from the balance-sheets handed to me what I found in the columns of them. With regard to whether they were customers, or had discounts or not, I decline to go into the question at all. 118. Can you explain, Mr. Watson, how it is that on some matters you are so reticent and on others you are so voluble? —I do not think I should be insulted here. The Chairman : No; I do not think that comes within the scope of our inquiry at all, and I must rule that it is not in order. 119. Mr. Maslin.] As a matter of fact, do you know anything whatever or have you had anything to do with the business of the Canterbury Co-operative Association?—l decline to say whether I do or not. 120. I think when a witness has already made a statement of a damaging character in respect of a trading association, he should be ready to give the fullest information possible at his command.—lt has been stated by the questioner that I made a statement of a damaging character relating to a certain association. I stated distinctly here, on more than one occasion, that what I did was merely to read out what was in the debit side of the published balance-sheets placed in my hands. If that is of a damaging character, all that I can say is that it was promulgated by the directors themselves, and not by me. 121. Do you not notice in the balance-sheet of 1894 the line " Bank overdrafts and bills discounted"? —What I stated in my evidence was this : " In the Canterbury Farmers' Co-operative Association there is no liability for bills discounted. I notice that in the first three balance-sheets put into my hand of the Canterbury Farmers' Co-operative Association there is no liability set down for bills discounted, but in the fourth—for 1894 —it appears for the first time in ' Bank overdrafts and bills discounted.' " These balance-sheets were put into my hand, and I was asked to state what appeared in them. I used very distinct English, and I did not leave it to be inferred that there were discounts which were not shown, or anything of that kind. I never stated that, and was careful not to do so. 122. It would be probable, you think, from their putting bills discounted in the balance-sheet of 1894, that there were no bills under discount prior to that date?—l do not know anything about that. 123. You do not know that in this year thsy began an auction business?—l decline to answer questions about private companies and individuals which, it might be said, I got information about through my position in the bank. 124. Can you tell the Committee how many persons were connected with the Oriental Bank who were subsequently employed by the Colonial Bank?—No, I could not tell that, because I know there are a great number of officers in all the banks that were connected with the Oriental Bank. I cannot tell them all.
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125. Were there a dozen?—l should not think so in the Colonial Bank. Some may have come from the branches of the Oriental Bank in Australia. 126. How many of those persons do you think are now employed in the Bank of New Zealand? —Well, I found some of those officers in the Bank of New Zealand when I came to it. I could not tell you how many there are. 127. Is there not a score? —I should not think so —not nearly so many. 128. Referring to the manager of the Auckland branch of the Bank of New Zealand being allowed to take up a position outside the bank's business, do you not think it would be likely to prejudice the business of the bank, especially in connection with mining syndicates ? —No. 129. Do you think companies doing a similar class of business to that with which Mr. Murray is associated, would be likely to keep their accounts with the Bank of New Zealand ?—I do not think gold-mines compete like millers and other manufacturers. There is always a good market for gold. 130. But would you expect other companies working on similar lines to keep their accounts in that bank, of which the manager was a director of a rival institution ?—I do not think there is rivalry at all. Ido not think there is anything in that at all. 131. Mr. Guinness.] Do you see the annual reports furnished by the Government Auditor before they are sent to the Government ? —Yes. 132. Have any of those reports been in any way altered since they were originally drawn up, and before their submission to the Government ?—After being completed ? 133. Yes?— No. 134. Do they contain any reference to or particulars of private accounts ?—No. 135. There is nothing in those reports which are furnished by the Government Auditor to the Government which would enable the Government to ascertain anything in regard to private accounts? —No. 136. Hon. Major Steward.] I have one or two questions to ask about Exhibit 47, handed in on the 31st August. It is showing the number of officers who have retired from the Bank of New Zealand since September, 1895. That return is signed by R. W. Gibbs, accountant? —Yes. -137. Was it originally prepared by him ? —Yes. 138. Is the return now in the form it was originally prepared ?—-Yes, I think so. 139. You made no alteration?—No, I made no alteration. I gave the return, which was furnished by him. 140. It is simply a numerical return ?—Yes, I think so. 141. There was no return giving the names originally?— No. 142. You did not send a return back giving the names?—Oh, yes; there might have been that. I did not want to give the names. 143. There was a return prepared giving the names ?—I think the two returns were prepared. I think the returns giving the details and the abstract were handed to me, and I handed the abstract to the Committee. . 144. Did you not think it prudent to give that to the Committee ? —No. 145. Why ?—On account of private matters. No officer has been retired since the first half of 1895 that I know of, except for misconduct, and it would not do very well to brand these people by giving their names. 146. That I admit. I think there were five for misconduct, seven were pensioned, and the principal number, probably thirty, left to better their position ? —Yes. 147. Were there no officers who left the bank because they dissented from the management of the bank ?—I do not think so. 148. It has not come to your knowledge they protested against the management, and left the bank in consequence ?—No, I do not think I ever heard of that. 149. Hon. Mr. J. McKenzie] Owing to the fact that you have been so long in the colony, you have a good knowledge of New Zealand ? —I have been all over it, in connection with business, about ten times probably. 150. You have got a general knowledge of each district, I suppose?— Yes, I think I have. 151. Have you any favourite spots in which to advance money in the colony?—-We prefer to advance it were the land is good. 152. Do you know the Wanganui District?— Yes. 153. The land is very good there, is it not ? —-Very good. 154. Have the two banks you have been connected with been making advances there?— Just a little. 155. Do you know the property known as " The Rogue's Castle " ?—That is private business; I cannot answer that. 156. If I ask any other questions in regard to that property, would you decline to answer?— Yes, I must decline to answer. 157. The other day I asked you some question with regard to the manner in which the " B " list accounts were being treated by the Bank of New Zealand : Has there been any change in the management of the " B " list since then ?—No. I hope I did not lead the Committee to think that the Bank of New Zealand could make any change. They are carrying out their part of the agreement. 158. You admitted that there were some of these accounts leaving the bank through the way in which they were being managed ?—" B " accounts ? 159. Yes? —I do not think I said that. 160. I asked you the question, Whether there were not some of the accounts handed over to you from the Colonial Bank but have since then left your bank, and which have been taken up by other banks? You admitted that that was so, and that they were good accounts too, and you admitted that it was through the drastic manner in which they had been dealt with ?—I said there
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was one account, as far as I recollect, where the party had got offended by the bank making inquiries as to his standing and his property. 161. Since you gave that evidence before the Committee, have you not lost some more accounts in the South—in the goldfields districts ?—I am not quite in a position to say. We may have, but nothing occurs to me at the time. 162. I suppose if I told you I had private information to that effect you would deny it ? —No, I would not deny it. 163. What would you suggest to put a stop to the bank losing these accounts ?—I do not think the bank is likely to lose any good accounts outside the "B" list, and with regard to the "B" list, I think the Bank of New Zealand are doing their duty. I think any harshness which the customers in the "B " list feel will come from the way in which the accounts are being dealt with by the liquidation. 164. Is it not a fact that in the gold-mining districts the policy of the bank, independant of what you bought, is driving away custom from you?— Well, some people want more than they should get, and it is owing a great deal to that policy in the past that the bank has lost a good deal of money ; and I am afraid that the customers themselves can hardly be judges of what they should get from the bank. 165. From your experience in the Bank of New Zealand, where did they lose most of their money—in the goldfields districts or the agricultural districts?— Well, in the pastoral districts, I should say. 166. Has not the Waikato been a good sink for money?— Yes, about the worst, I suppose. 167. Hon. Mr. Seddon.] Mr. Hutchison put aquestion to you, Was the colony interested in keeping up the banks doing business in the colony ? and I think you gave an answer in the negative. I will put the question in a converse way, Would it not be for the interests of the colony to keep up the whole of the banks at the time you alluded to—at the time of the crisis, when we came to the rescue of the bank ?—To the best of my recollection I did not give a negative to the question. I said that was shown by the passing of the Note-issue Act. That answer must be wrong if it is in my evidence. I know the Premier stated in open Parliament that he would not suffer any of the banks to go down at that time, and therefore it is within my knowledge that it was considered in the interests of the colony to prevent them going down. 168. Do you know that the colony determined to try and strengthen and maintain the whole of the banks?— Yes, I believe it did. 169. Are you aware that the colony came to the rescue of the Bank of New Zealand in 1893 by passing legislation permitting it to increase its capital ?—-I am not clear on that point. 170. Section 3 of the Act I refer to is as follows : " Notwithstanding anything contained in any Act of the General Assembly of New Zealand relating to the banks, or contained in the charter of a bank, the shareholders or proprietors thereof may from time to time, by extraordinary resolution, authorise its capital to be increased to such an amount, and upon such terms, and either with or without special privileges, preferences, and priorities, to the holders of shares in such increased capital as they may from time to time deem expedient, and the same may be increased accordingly. Any extraordinary resolution as aforesaid may provide that the holders of shares in such increased capital shall be entitled to such privileges, preferences, and priorities in relation to any capital which at the time of the passing of the extraordinary resolution has been subscribed," and so forth?— Yes, I remember that. 171. Was not that legislation passed by Parliament in 1893 to enable the Bank of New Zealand to strengthen its position ? Look at section 4 ?—I believe that to have been the primary object. 172. Who requested that legislation? Was it passed at the. request of the Bank of New Zealand ?—I do not know. I was not in the Bank of New Zealand then. 173. Could you not ascertain ? —Yes, I could ascertain. 174. Was any attempt made by the Bank of New Zealand to raise the capital, and what was the result ?—I do not know of any attempt being made. 175. Was it before or after that legislation that Messrs. Horton and Johnston went Home? —It was before then. 176. Was it not on representations made by them of difficulties in raising the capital that that legislation was introduced after they returned and reported to the bank the position ?—That I do not know, but I think it would be possible, on account of the Australian crisis which occurred a few months previously to this. I think that Messrs. Johnston and Horton went Home about 1890. 177. No ; they went Home in 1893?— I can ascertain. 178. Have you searched again to see whether there are no reports or balance-sheets which Messrs. Horton and Johnston had, showing the position of the bank at the beginning of 1893 ?—I did not think I was asked to search for that before. Hon. Mr. Seddon: I think so. 179. Mr. Tanner.] I asked for that, and you said you had no information whatever?—l have no knowledge. Ido not remember being asked to produce it. 180. Hon. Mr. Seddon.] Do you not think that gentlemen like those, going to London with the express object of raising capital, would put the position of the bank before the London directors? Is it possible that they would go Home without being armed with balance-sheets and other documents in connection with the bank ? Is it not feasible that they would as business men, looking at the matter from a reasonable standpoint ?—I have no knowledge of their going Home in 1893. I know they went Home three years previously, and at that time they had all the records they could possibly get from the bank, because I think Mr. Butt went Home with them. If they went Home in 1893 I think they would be furnished with such particulars. 181. At all events, you will endeavour to ascertain ? —Yes.
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182. Coming to the balance-sheets : You have seen the correspondence which passed between Mr. Murray and the Government ?—Yes. 183. You see the passage in which Mr. Murray informs the Government that it is impossible to give the information asked for owing to the difficulty of getting the balance-sheet showing the London business?— Yes. 184. Has anything occurred since you gave your evidence in respect to this matter that would place that statement at variance with the position at the time ? —No, sir, I know of nothing. Mr. Murray stated in June that he could not then get the London balance-sheet. Mr. Heywood on the sth July asks for a balance-sheet of the position of the Bank of New Zealand, as on the 30th June, to be furnished with the least possible delay. He says, " The information should contain the several amounts of the ledger balances representing the bank's business within the colony and Australia on the date above named, and the London balances, separately stated, as on the date of the latest advices received. These balances should show the whole of the liabilities and assets of the bank under the heads set out in the usual quarterly statements furnished to the Government." Well, sir, the head office was in London then, and the London people were not in the habit of sending returns out to the colony although they got the accounts from the colony. On the sth July, Mr. Murray replies : "I shall forward copy of your letter to the bank at Auckland, with request that they will forthwith furnish the information required. As the head office is in London, and London accounts are not, so far as I am aware, sent to the colony, it may be that that part of the return will have to be sent for." Mr. Murray did, no doubt, cause the return to be sent for, because lam aware that in the other Committee they have now got it—an account of the 25th June of the London business. I believe the way they got it was this: Mr. Butt was called upon to give evidence, and in his evidence he stated that, to the best of his knowledge, there was no such statement of account here, but on going to the bank he mentioned the matter to the chief accountant, who was not chief accountant in 1894. That gentleman said he knew nothing of it; but after Mr. Butt went away, the accountant looked through the files of correspondence received from London and found this balance-sheet, which had evidently come to the colony, but had been omitted to be sent to the Government. I could furnish this Committee with a copy of that balance-sheet if they require it. I may say that that brings the figures, when added to those of the colony, pretty well up to what they were in October, when I took office. 185. The Chairman.] Will you forward a copy of that to the Committee? —Yes, sir; it was only found on Saturday last. 186. Hon. Mr. Seddon.] Well, now, you sent to the Government the balance-sheet as on the 25th June on the 2nd August ? You will see by Mr. Murray's letter (No. 15) ?—Yes ; that was for the colony only. 186 a. Was that balance-sheet from London here at that time ?—lt could hardly be. The sth July is when the Secretary to the Treasury wrote to Mr. Murray requesting to have that balance-sheet. 186b. If you will look before that, you will find that in the interview—in the second letter— he promised the Government to get that, and that was on the 29th June. He would cable for it ? -—I do not think it was so. 187. At all events, you will make inquiries ? —Yes. 188. Coming to this question of the balance-sheets not showing bills under discount: I again ask you this question, If any companies doing business in New Zealand had bills under discount, and did not disclose them as liabilities in the balance-sheet, would that be a falsification of the account and dishonest?—l do not think it would amount to that. 189. Then, if it has been stated by any one authority that the non-showing of bills under discount under the head of liabilities was dishonest and falsification of accounts, do you still say that whoever it was making that statement he was in error ?—Whoever would say that would go too far altogether, because it was the habit of many companies to deduct the bills discounted from the liabilities. 190. What has been the practice that has obtained hitherto in the colony, Mr. Watson, of your own knowledge, in respect of companies—the general practice and custom ? Mr. G. Hutchison: I would inquire whether this is in the order of reference ? Discussion ensued. The Chairman : Will Mr. Seddon repeat the question ? 191. Hon. Mr. Seddon.] I asked you, Mr. Watson, of your own knowledge, in respect to companies doing business in New Zealand, has it been the practice not to place bills under discount under the head of liabilities ? The Chairman : I rule that the question may be put. , Witness : As I said before, some do and some do not put it in their balance-sheets. I may say that in my own banking experience in the colony, both in the Colonial Bank and in the Bank of New Zealand, the banks receive the balance-sheets of various companies doing business both with them and with other banks out of courtesy. Although they may not do business with them, they have sent their balance-sheets. With regard to the bank's own customers, I suppose the Bank of New Zealand possesses thousands of balance-sheets of business people all over the colony, and I do not think I would be wrong in saying that the majority of them deduct their bills discounted from the liabilities. The Bank of New Zealand does not look upon that as a dishonest act, or an attempt to falsify on the part of those customers at all. Ido not think the Bank of New Zealand has ever looked upon any balance-sheet not showing bills discounted under the head of liabilities as an attempt to falsify or deal dishonestly in that way. 192.. You are.aware that the Act of 1882 supports that position, does it not?— The Act of 1882 is.an adaptation to the colony of the English Companies Act of 1882, and in that Act there is a schedule, or in an amendment of that Act there is a schedule, of how companies' balance-sheets should be drawn up. It does not show there that bills discounted should be put in the liability column or added in amongst the liabilities of the company, but that contingent liabilities should be
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stated in a footnote. That is how I think balance-sheets should be made up, but I think very few people know that, and lawyers of different companies have evidently passed the balance-sheets of the companies without advising them that they should be altered. 193. At all events, by custom, and even by legislation that we have been obliged to pass, it has not been customary to put down, nor is in accordance with the schedule of the Companies Act, to put down bills under discount as liabilities ?—lt might have been done in some cases, but it has not been the universal practice. 194. In the form of balance-sheet attached to this Act of 1882, amongst the liabilities, there is not a word about bills under discount, nor is there in the balance-sheet anywhere ; but in the contingent liabilities at the foot it says : " Claims against the company not acknowledged as debts," and " Money for which the company is contingently liable." I question whether many people would think their bills would come under those remarks, because they would not consider good bills would be claims against them, and " moneys for which the company is contingently liable " is somewhat vague. It clearly shows here that bills payable should be put in. But that is very different. But I, myself, to be very correct, would put bills discounted under that latter part in the footnote, " Moneys for which the companies are contingently liable." Still, if they were not put there I should not say the persons neglecting to do so would be guilty of falsification or dishonesty. 195. Then, if any officer of your bank had this balance-sheet submitted to him for review, you would not blame him for not having taken exception to it, because bills under discount had been omitted from the liabilities?—No, sir; but for the purpose of lending money to any individual or company making a balance-sheet, we should expect the officer to know about the bills under discount much more than what can be set out in any balance-sheet; but, so far from blaming an officer for a balance-sheet of that kind, the board has had many of these balance-sheets in its hands and has never blamed the customers for falsification or dishonesty, and no member of the board has accused any one of falsification or dishonesty in connection with advances, because bills under discount were not shown as a liability. 196. Now, coming to a question asked by Mr. Hutchison as to the remittances on Government business : You say an arrangement was made by which the Colonial Bank was to receive one-third of the remittances ? —Yes. 197. That arrangement was made, you believe, in 1892, when Mr. Ballance was Prime Minister?— Certainly, when Mr. Ballance was Prime Minister. 198. You stated, in answer to Mr. Hutchison, also, that there may have been periods at which the remittances given to the Colonial Bank would be more than one-third, or at that particular period may have been over two-thirds, or with the sanction of the Bank of New Zealand it might have been over two-thirds ?—That might be so by an arrangement between the banks, probably. Something of that kind might have occurred. 199. There might be one month when one bank might not want to get the remittances, and it might the next, and this was a matter of arrangement ?—Yes ; drafts are frequently sold by one bank to another to prevent shipments of coin. 200. Do you think any special favour was shown by the Government to the Colonial Bank ?—■ I think I was asked by Mr. Hutchison whether there was anything special to complain of. I may say, no". Ido not know of any instance where the Colonial Bank was unduly favoured. 201. Touching the question of the Colonial Bank's properties : Have you not stated here that you agreed to purchase the Colonial Bank's properties at book-value?— Yes. 202. In the quarterly returns which are given to the Government, do they give the properties at book-value or at the depreciated value ?—At book-value. I believe they were worth the bookvalue to the bank as a going concern, but it is a different thing when they are offered for sale. 203. At the first glance the Gazette notice gives the bank properties at £103,000 and £105,000. It would appear to be strange at the first glance ?—I do not think so. Any one looking below the surface would see that the same thing was done elsewhere. I think the same thing would appear as to the Bank of New Zealand properties. They are not put in as one list of properties. The Committee will know that the properties of the Bank of New Zealand are put down at £300,000 or £400,000, and they will not find them in one column any more than they will in the case of the Colonial Bank. It is quite a usual thing to people who know about it. On the 30th September, 1895, the landed property in the Bank of New Zealand is returned at £102,155 17s. 9d. In that balance-sheet, in 1895, it is put down at £419,000. The difference is in that column I pointed out, " Securities not included in other heads." 204. There is a discrepancy, taking the Gazette notice and the balance-sheet itself, of £317,000? —I believe they treated it differently. I believe they put the lands different from the premises, for the purpose, probably, of the land-tax. At the 31st March it was £102,202, whereas in the balance-sheet of the same date it is £400,000. The same thing has been done with the Colonial Bank. That was nothing else than the bank premises. 205. You gave, at all events, the leasehold properties up to within £3,000 of the £125,000? — It was £21,000 of difference. 206. You gave £18,000 in leaseholds of that ?—About that. 207. At all events, the leasehold properties would make within a couple of thousands or so of £125,000?— Yes. 208. The Chairman.] You gave us nearly £16,000 out of the £19,000 ?—Yes. 209. Hon. Mr. Seddon.] You gave evidence with respect to the staff of the Bank of New Zealand holding positions outside the bank. 210. Are there regulations with regard to members of the staff holding positions, say, as members of jockey clubs or school committees, &c. I want to know whether there are any regulations which prevent members of the staff of the bank taking positions as members of local authorities or of private companies, on school committees, or anything else ?—Yes, there are. There is a regulation preventing them taking up any such position without the sanction of the General Manager, which •27— T. 6.
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means the sanction of the board; but as a matter of fact, we never refuse to allow' them to take up any position which we consider would not be detrimental to the interests of the bank. 211. Then, in respect to Mr. Murray and his position on the advisory counsel of the AngloContmental Goldmining Company, the board considered that, and came to the conclusion that it would not be detrimental to the interests of the bank to allow him to take that position ?—Yes, they considered it would not be detrimental to the bank. 212. Will you look at that, Mr. Watson, and see if you recognise it [document put into witness's hands] ? —I cannot say that I recognise the figures. I think it is a list of the sheep on the different properties. 213. Will you look at the book-value given for the sheep ? What is the book-value given there ?—Sheep and cattle, total amount £315,256. 214. Just look at the total, exclusive of the three properties?— The first is for the North Island, £145,545 ; the Auckland Agricultural Company, £69,811. 215. Do you recognise that as a document supplied to the Committee last year by the Estates Company by yourself?—l am sorry I cannot recognise it, but I think it is correct. 216. The Chairman.] If you cannot recognise the document you cannot give evidence upon it ?—I could examine it. 217. What does it purport to be?—A list of live-stock handed over to the Assets Board. 218. Will you examine it and, if correct, hand it in to the Committee?— Yes. 219. Hon. Mr. Seddon.] As to the position of the bank and its business now: Is there any material alteration, or is the business going on satisfactorily ? At one time you stated that injury had arisen to the bank owing to this inquiry. Has that continued, or do you think that confidence is now restored?—lt continues and will continue while the inquiry drags along in this way. And I may say, further, that it is calculated to curb the zeal of the officers. They cannot possibly go about their business in so zealous a way as the officers of the other banks do while this inquiry is going on, and the affairs of the bank are discussed pro and con. in every corner. 220. Do you not think the answer to that is that you should not get the bank into such a position again, for then there will be no necessity for an inquiry ?—I think we have been able to get the bank into a better position than it was.
Wednesday, 9th September, 1896. Examination of William Watson, President of the Bank of New Zealand, continued. 1. The Chairman.] We had completed your evidence yesterday, Mr. Watson, except as regards the handing in of certain documents. I will ask you now to hand in all the papers you have ready?— Firstly, I was asked for a statement explaining the apparent discrepancy between the Colonial Bank landed property per Government quarterly statement at 30th September, 1895— £105,162 —and amount per Colonial Bank balance-sheet at 31st August, 1895—£125,399. The amount per Government quarterly statement shows book-value of freehold property only, and buildings thereon. The amount per balance-sheet at 31st August, 1895, properly includes under the same heading the value of the leaseholds also. These in the Government quarterly statement are shown under " Securities not included under other heads." I was next asked for the amount of dividends paid by the Bank of New Zealand since the Estates Company's formation. I hand in a statement to that effect, signed by the accountant. I was next asked whether "The Bankers and Bankers Act Amendment Act, 1893," was passed at the request of the Bank of New Zealand. From the records in the bank I gather that it was passed at the request of the Bank of New Zealand. I was then asked whether Messrs. Johnston and Horton went Home in 1893, or at any time, to float shares under that Act. They did not do so. The only visit of Messrs. Johnston and Horton to London on account of the bank that we know of was in 1888. I was asked whether Mr. Johnston, when he did go Home, took any balance-sheets. He tells me himself that Mr. Butt took all the particulars or anything that was wanted at that time, so that the Committee will be able to find out from Mr. Butt. 2. Hon. Mr. J. McKenzie.] When did he take these Home ?—ln 1888. I was then asked to produce a copy of the balance-sheet showing the assets and liabilities at the London office at the 25th June, 1894. This is the copy of the balance-sheet. I was asked when it was received in the colony. It was received in the colony on the 15th October, 1894. I also brought this combined balance-sheet, which I gave a copy of to the other Committee [documents handed over]. 3. The Chairman.] Have you any record of that balance-sheet having been communicated to the Government ? —No, I have no record of that. I was next asked to examine a document handed to me yesterday—a list of live-stock—and to ascertain if that was a copy of a document, or the document itself, which was handed by the bank or Estates Company to the Committee last year. The answer I have got is that " We are unable to find any copy of this statement to identify it as one put in by the bank or Estates Company to the Bank of New Zealand Joint Committee in 1895. The statement published in that Committee's report, giving the numbers of cattle, sheep, and horses on the properties, corresponds with this in those particulars, and Mr. Butt has in his possession a copy of that statement, which shows also the book-values. But we can find no statement giving, as this does, the capitation-values of the stock." I was asked for a statement showing the writings-off of private accounts of the Bank of New Zealand, and the Bank of New New Zealand Estates Company, from 1888 to 1896. Prior to the formation of the Estates Company there was created in the inspector's office what was known as the " Consolidated Properties Department," which dealt with the accounts which subsequently became the property of the Estates Company, which company was formed after these accounts had been written down in 1889 and 1890 by some £1,195,000. After the formation of the Estates Company nothing further was written
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off in connection with these estates until the reduction of the share capital in the books at head office took place in 1895 and early in 1896, when, up to July last, a sum of £764,306 was written off in terms of the banking legislation of last year. The above figures do not include any adjustment in connection with the Assets Realisation Board. The following approximate statement will, perhaps, make the foregoing remarks more intelligible. [See exhibit.] The accountant says, with reference to a statement regarding the gross amounts written off private accounts and amounts written off private properties since they came into the bank's hands and were managed by the bank, " A return on these lines cannot be given with a sufficient degree of accuracy to be of any value. The difficulty in preparing such a return will become apparent when it is borne in mind that most writings-off for losses made by a ' private party' would only take place some time after the bank had taken in hand and worked the property. I have no data to enable me to discriminate between the actual loss accruing on private accounts and the loss on such accounts after the estates were managed by the bank. I surmise the bank would in most cases take over a property before it became actually necessary to make definite provision for loss." So that it is impossible to say what was written off private accounts and estates. I should say that you might put it all down to private accounts, because no interest was added half-yearly after the Estates Company was formed, so that the whole loss might be put down to customers of the bank. 4. Is there still another statement you undertook to procure? There was one you said would not be ready until the end of this week?— Yes ; but Mr. Foster, I told you, afterwards said he would have to get the sanction of the Assets Board, and I understood that the Committee will probably call Mr. Foster himself about that. 5. Hon. Mr. J. McKenzie.] What was the amount considered short last year in handing the estates over to the Assets Board ?—I think about £850,000. Thomas George Macarthy, Director of the Bank of New Zealand, sworn and examined. 6. Hon. Mr. Seddon.] When were you made a director ? —I think about September, 1894. 7. In what position did you find the Bank of New Zealand when first you made inquiries, after becoming a director ?—I made it a condition with Mr. Murray, when he requested me to join the board of the bank, that I should not be a member of a committee or commission of inquiry. I accepted Mr. Murray's assurance that the bank was out of trouble after it got assistance from the colony. 8. You now find yourself a witness to an inquiry, and consider there has been a breach of faith?—l would not say there was a breach of faith. Mr. Murray was possibly over-sanguine. 9. Since the inquiry are you of opinion, from matters that must have been placed before you, that some one has been over-sanguine ? —That certainly was the case. 10. You are one of the directors who signed a letter to the Government asking it to come to the rescue of the bank in August, 1895?— I was a party to the communication. I forget now whether I signed it or not. 11. Was it possible, do you think, for the bank to have carried on without the colony coming to its rescue the second time in 1895 ?—I think not. 12. Seeing that the colony had given the guarantee of two millions, which two millions had been raised by the bank, what was the difficulty in the way of its carrying on, or the necessity for its obtaining further assistance ?—I consider that the most serious difficulty was the connection between the bank and the Estates Company. 13. Will you explain that in detail to the Committee from your standpoint ?—From my standpoint it would be this : A very large portion of the bank's capital was employed in supporting and maintaining the Estates Company. 14. And was that capital reproductive or otherwise? —Only reproductive to a very small extent. 15. What have been the writings-off in the Bank of New Zealand since you have been a director? —One amount is £376,900. That is under the authority of the statute, but other amounts have been appropriated, some of which are still available. I distinguish between appropriations and writings-off. 16. Will you explain the distinction to the Committee ?—We take, for instance, during last year a large sum from credit of profit and loss, which sum was appropriated to another account to be available for writings-off when absolutely required. 17. You refer, then, to the £200,000 that has been appropriated ?—That is an appropriation to a contingent account, and that is in a similar position. 18. In days gone by, you would have called that appropriation a secret reserve fund for specific purposes? —I would hardly call it that. It would be known under another name. 19. But you found there was a secret reserve fund?—l know by the accounts that there was a secret reserve fund. 20. You have given us the writings-off by statute. What have been the writings-off in the Estates Company ?—That is a difficult matter for me to give evidence on. I know £764,306 was —if I may use the expression—appropriated last year. I have heard of large amounts appropriated years ago. There are some memoranda in the office, supplied by the officers, to that effect; but I could not pledge myself to the amounts. 21. You said you have had information supplied by the officers of the bank. Have you, in each and every case, found the information supplied by the officers reliable ? —Well, I could not say that, because I have not tested a great deal of it. For instance, if I obtained a list from the officers, going back to 1888, I would have to go through the accounts myself—perhaps a work for weeks. 22. I will not ask you about ancient history, or the dark and black pages of that history; I will take it from the time you have been a director of the Bank of New Zealand ?—Since I have been a director, the information supplied to me by officers I have found to be generally reliable.
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23. 1 will put that to the test. Did you receive information —reports and statements—from your officers stating that, in addition to the writings-off, £200,000 set apart to meet contingent liabilities would be sufficient? Did you not inform the Committee last year that that would be sufficient to meet liabilities ?—We considered that we were taking £200,000 for that, and it would be sufficient —and more even than our officers recommended. 24. Plas that been proved to be sufficient ?—lt would require time to prove that. 25. Have you not taken £54,000 in addition to that £200,000? —Yes ; but that leaves us a large balance yet. 26. You have heard the evidence of Mr. Booth and Mr. Watson, and they say it will take all the balance of the £200,000 ? —I would not like to part with any of it. It is possible that none of it will be required, but that is a very remote contingency. 27. You heard Mr. Watson state that an extra amount was required in connection with the Australian business, and that, of the £54,000, £50,000 had been required to meet liabilities in connection, with that business?— Well, up to £50,000; Ido not think quite £50,000. 28. He gave you information about the Australian business, and found that it would require £50,000 more?— Some of the information I acquired for myself. I went over to Australia and made inquiries myself. 29. What did you find when in Australia ?—I found some old properties which were overvalued, and some large accounts, which it is still prudent to hold a large reserve against for possible losses. 30. Have you found, in reference to some of these old accounts, that they had been paying interest on them out of overdraft—increasing the overdraft for the purpose of paying interest on amounts owing to the bank ? —I found that one account was increasing owing to not being able to pay interest. On some, interest was being paid. 31. Is that a desirable condition for an account to be in? —We are face to face with set circumstances. 32. What are the set circumstances? —The properties are there. Some time back they were worth quite double what they are now, and there is evidence of improvement, and with improvement it is possible the bank may come out without loss; but to stop them now would involve very serious loss. 33. Do you attribute any fault in connection with this to the officers in charge of the bank, or simply to circumstances beyond their control, and for which they should not be held responsible ?— One or two of the largest I would not attribute to the fault of the officers. They were taken at a time when any bank in Australia would have been glad to take them. The position is owing to the depression in Melbourne, and Australia generally. 34. Who are the officers who reported the condition of affairs to the directors here in respect of the Australian business at the time when you were a director ?—We were advised by our officer in Australia. 35. Who was that ? —Mr. Andrews came over and reported to the Board shortly after I joined. 36. Was he in charge of the Australian business prior to that time ? —Yes. 37: If you, who are comparatively strange and new to banking business, can go over to Australia and find this state of things, do you not think some one is to blame for the position in which you found them ?— Mr. Andrews called our attention to the probable serious loss that was being made on these properties, and that they would require careful handling. 38. Was any explanation given as to how the accounts were allowed to drift into that position without the bank authorities being made acquainted with it ? —I do not know that the bank authorities were not made acquainted. Mr. Andrews gave information to the directors shortly after I became a director. He came over here and did so. 39. Will you try and ascertain for the Committee whether or not reports have been made prior to that time as to the condition of the bank in Australia? —Prior to my joining the directorate ? 40. Yes ?—Yes. Although I am new to banking, I may say that I am not new to dealing with properties, and I was in business in Melbourne many years ago. 41. As an outsider, you think you would be in a better position to gauge the accounts and bank properties than even the bank officers?—l think so. I would have the benefit of their experience and my own, supplemented by opinions from outside, from different sources than those from which they derived their information. 42. Do you think the business in Australia is now going on in a satisfactory manner, and with due safety to the colony ?—lt is conducted on very strict lines at present—different from those in New Zealand. 43. One of the directors has stated here that you had come to a conclusion to close your business in Australia. Was that statement correct or otherwise ?—That is incorrect. We have decided to limit or confine our business within well-defined lines, but not to close it. 44. Then, the director giving such evidence was under a misapprehension?—He was not absolutely correct. 45. Do you not think that in a responsible position such as you hold that it behoves directors to be very careful in giving evidence in respect to such matters as closing the whole of the Australian business ?—lt is a matter of opinion. Possibly he may have spoken without due consideration, or hastily. 46. You are aware that the evidence tendered was communicated to Australia, and might have prejudiced, if it did not prejudice, the position of the bank over there?—l saw the newspaper reports of it, and I also saw that it had been commented on in Australia; but I gathered from the director that he was not correctly reported. 47. Who is in charge in Australia now?— Mr. Parfitt,
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48. What branch is he in charge of? —Melbourne, Sydney, and Adelaide. 49. Have you any inspector over there, or do any of the inspectors from here go over to Australia periodically to see how matters are going on?— Mr. Parfitt is over there, and not many months ago the Government Auditor, Mr. Butt, was over there ; and, no doubt, periodically an inspector will be sent from here. 50. Can you tell the Committee how long it was since an inspector went over prior to Mr. Butt in March last. Had any one been there with the exception of Mr. Andrews from the time you were appointed director and the time that Mr. Butt went over?— Yes; Mr. Andrews was only over there a portion of the time. The Sydney manager, who was next in command, assumed command probably after Mr. Andrews left for Wellington. Mr. Andrews again went through the business on his way back from England. 51. Do you think that is sufficient supervision for three large business branches in Australia, to have an inspection once in three months ? If that was your own business would you consider it sufficient ?—Looking at the fact that we have a report every week, and that there are men of the highest character and ability there, I would not say inspection every three months was not sufficient. 52. At any rate, very heavy losses were made under the old system ?—That was under the old supervision We are far stricter now. There is no such authority vested in managers there, now, such as I have heard of long since. 53. Tell us what you mean by such authority?— Men in such a position that they had almost unlimited authority. I have not seen documents to prove that that was so, and it is simply what I have heard. 54. For instance, men like Mr. Holt, who, according to the evidence, managed to go away with £129,000 ?—He would not get the same liberty nowadays. 55. Is it possible for one auditor—take Mr. Butt's position—to do the auditing for the whole of the colony, Fiji, and Australia?—l think it would be better that he should have an assistant, or, possibly, a coadjutor. At the same time we might do with an inspector less. 56.. I understand from you that Mr. Parfitt is in charge of the Sydney branch, and at the same time acts as inspector for the Melbourne and Adelaide branches ?—Yes, that is his position. 57. At what date was it discovered, in respect to the Australian business, that £59,000 more was wanted than was estimated when you were before the Committee last year, for writings-off and ascertained losses ? —I am unable to say the date. Before the balance-sheet was made up we considered that some accounts were not, sufficiently provided for. 58. Was it before or after Mr. Butt, the Auditor, had made his visit there ?—lt would be after he had made his visit there. 59. Was it not owing to that visit, and his report of the position in which he found things, that you found it necessary to make provision for the ascertained losses ?—Had he not visited there, some of these accounts would have been dealt with in the manner he recommended. During the time I was there, I noticed some matters and called the attention of the directors to them; and they turned out to be worse than they were originally supposed to be, and Mr. Butt confirmed my views in respect to them. 60. I will now leave the bank business in Australia, and confine myself to examining you in respect of trading concerns. You have some trading concerns over in Australia, have you not ?— The bank is largely interested in one or two. 61. You had a railway of your own ?—Yes, a railway. 62. A coal-mine or two? —Yes, a coal-mine. 63. A sawmill or two ?—I cannot call to mind a sawmill. There was a large milling property there, but that has been sold. 64. I do not wish to prejudice the position of the bank with its properties; but, taking the business as a whole, have the Australian trading concerns been profitable ?—I do not know the history of them prior to joining the directorate, but my opinion is that the bank should not possess Australian properties at all; but the bank has to dispose of them. 65. You have had some sporting characters over there. There are racecourse properties in which the bank is interested?— That was not a bad property. 66. At all events, what is the policy of the bank in respect of these properties ? Are you realising them ?—We are doing our utmost to get rid of them. 67. Have you succeeded in disposing of any of these properties during the year, or since you have been a director ?—Yes ; the mills you spoke of in Adelaide have been disposed of, and some other properties are under negotiation now. 68. Do you anticipate that the losses will be greater or less than were estimated by you in making up your calculations ?—I think it is quite possible the whole of the contingency fund will be required ; still, it will take a long time before that is determined. 69. It has been alleged here that you are doing business at non-paying prices in Australia. I suppose you have seen the question that has been asked, in which it has been stated that you are discounting there at rates 2 per cent, and 3 per cent, lower than the rates obtaining in New Zealand. Is that statement correct or otherwise ? —I would say that we are not doing business at 2 per cent, and 3 per cent, lower, but business is being done at a lower rate than here; and it is absolutely necessary that it should be done at a lower rate, as the bank has to keep large reserves of coin there, and these reserves have to be utilised, and can only be utilised at Australian rates. 70. Your answer is this : that the Australian rates are somewhat lower than they are in New Zealand ?—Yes. 71. And that in discounting at prices obtaining there, those are not lower that those of the Australian banks, but on a par with what has been charged by the Australian banks ?—-I would not like to say what are the Australian banks' rates, as the competition is so keen ; but so far as our discount business is concerned our instructions are that nothing but the very best is to be dealt
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with. Ido not think there is any fixed rate amongst the banks in Australia ;it is principally open competition. 72. At all events, in that respect the business is satisfactory ?—So far as the discount business is concerned, and the use of the coin that is required to be kept there. 73. Now, in respect of the Fiji business : When were the Fiji accounts last audited, and who is in charge of that branch ?—I do not at the moment know who is in charge of the Fiji branch. Our Wellington manager was in charge there. The Fiji manager was here a short time ago, but I cannot call his name to mind just now. - 74. What supervision is there, and when was the last visit of the auditor to Fiji?—l am unable to tell you from memory. 75. Is it three, six, nine, or twelve months ? Has there been any audit since you have been a director?— There has been a change of manager, and one manager would not take charge from another until he had gone through the accounts. 76. But has there been any audit since you have been a director? —I have no recollection of an auditor being sent there. 77. Has not any inspector been sent there?—l do not recollect whether any inspector has been sent there. 78. What business are you doing there ? Are you not carrying on a very large business there? —No, I do not think it is a large business. It is a comparatively small business. 79. Is it equal to Adelaide ? —lt is more than Adelaide. 80. Would you think it right for the bank or the colony to leave the Adelaide branch for over twelve months without audit or inspection ?—Under the circumstances, no ; because there is always a man within six hundred miles of Adelaide who could get there in a couple of days. 81. At any rate, so far as your knowledge goes, there has been no audit or inspection of the Fiji business? —Except by the changes in management. 82. Now that your attention has been called to it, do you not think it desirable that there should be an audit and inspection as soon as possible ? As a good business man, you would not leave a business of your own and be simply dependent on the returns coming to you for twelve months, as with that business there ?—No; I do not say there has not been an inspection for twelve months, and I know there has been a change of managers, and that a manager does not take over accounts until he finds that they are correct. 83. He has got to take them as he finds them ? —But he would not take them if they were wrong, and we would be acquainted with them at once. 84. I suppose you are doing an overdraft and general banking business there ?—lt is a general banking business, but on very strict lines. 85. Have you any writings-off, or any information respecting the necessity for writings-off, in respect of Fiji ?—No ; I have no recollection of any writings-off in connection with the Fiji business. 86. You have not ascertained whether it is necessary or not ? —I do not know whether it is necessary at present. 87. Do you think it possible to do a large business in Fiji, and that it should be in an exceptional position to that of any bank in the known world by having no writings-off or losses ?— It may have been cleaned up with the Estates Company. 88. You have estates there ? —I do not think the bank has any there. 89. Has not the Estates Company?— Among their properties there are some there. 90. If there had been losses or writings-off they would be taken from the owners' hands and put in the Estates Company ?—Yes, that was done years ago. 91. These things having been done in the past, what is there to warrant us coming to a conclusion that there is no loss at present, or in the immediate past ?—The manager is responsible for the reports he sends in periodically. He states that the business is all sound, and from the details they appear to be sound, and we have reason to conclude there is no necessity for writings-off. 92. It is not unknown for managers giving credits to tell the directors and inspectors that everything is all right ? —I believe that has been the case. I have had no experience of it. 93. If that was proved to be the case you would not be taken by surprise ?—No, but it would be rather a serious matter for the manager nowadays. 94. Is it to the advantage of the bank or otherwise to maintain the Fiji business ?—I would say at present that it is to the advantage of the bank. 95. Then, in your opinion, the Fiji business should be maintained?—l think it should be maintained, as far as I know at present. 96. I have taken you to the Australian and Fiji business. Now, what is your opinion in respect of the business being done and the position of the Bank of New Zealand in the Colony of New Zealand ? —That is a very big order. 97. We have had an answer from Mr. Booth and Mr. Watson to that question?—l would say that since the recent legislation the Bank of New Zealand is placed in a position, practically, to do the whole banking business of the colony if required. I think it was of enormous public consequence the action of the Legislature last year, and there is every appearance of the business being profitable, so long as it is conducted on strict business lines. 98. In your opinion, is the position of the Bank of New Zealand satisfactory?—-I think so. I do not say we shall not have further losses to face, because it is an immense business, and it is difficult to get the exact position of every account. 99. Do you think the earning-power of the bank, under ordinary circumstances, is sufficient to meet what is required in the way of interest-dividends, interest on preferential shares, and also to meet the interest on the shareholders' new capital ?—From our experience of working the combined bank for a portion of the past year, I would say so.
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100. Provided you had not taken the £54,000 which you have deducted from the Profit and Loss Account this year, and placed to writings-off, what would have been the net earnings of the bank? —I think you have the figures. 101. What is the profit given this year from your balance-sheet ? —lt would be upwards of £100,000. 102. What is the amount of interest you have to find?—We have to pay 4 per cent, on £2,000,000, the " A " stock ; we have to pay the Government 3-J- per cent, on £500,000 of preferred stock ; then there is the payment of £50,000 to the Assets Board, in addition to which we have shortly to make provision for the payment of interest to shareholders on their portion of the halfmillion reserved capital paid up. 103. Then your opinion is that the bank is able to earn this interest?—l think so, unless there is some extremely severe competition from the Australian banks. 104. Under ordinary circumstances, that is your opinion ?—Under ordinary circumstances I think we shall be able to do it. 105. You have stated, of course, that the colony is interested to the extent of the guaranteed two millions, the £500,000 preference shares, and £2,700,000 .of debentures for the Estates Company ? —Yes. 106. In your opinion, will the colony be called upon to meet this at the end of the time —or, in other words, will the bank in your opinion be able to meet its liabilities ? —To give an answer, from this point of view, I should want to know what is to be the position of the colony for a few years to come. Assuming that everything remains as at present, I think we shall be able to manage to pay our way. Ido not think the "A " stock will all be paid off at maturity. 107. From the present outlook, do you think there is likely to be any loss to the colony ?—-From the present outlook, and with careful management, I do not think there is likely to be any ultimate loss to the colony. 108. Your evidence, then, agrees with Mr. Booth and Mr. Watson?—l have only seen the reports of their evidence in fragments in the newspapers. 109. I come now to the purchase of the Colonial Bank. You were one of the directors of the Bank of New Zealand who took part in respect of the negotiations for the purchase of the Colonial Bank ?—Yes. 110. How and under what circumstances were the negotiations commenced ?—The first I heard of it was from Mr. Murray. Before leaving here, in September, 1894, he had some conversation with me, and expressed his opinion that it would be essential that we should endeavour to obtain, by purchase or otherwise, either the Colonial Bank or the National Bank. He gave me to understand that he had had some conversation with those in charge of the Colonial Bank, and that he thought amalgamation could be brought about. 111. Did he go into the past history with respect to these negotiations—as to whether this was a conclusion arrived at immediately before he saw you, or whether the matter had received mature consideration ?—I gathered that it was a matter which had received his attention and consideration ; that he had discussed the matter with some one connected with the Colonial Bank, and had knowledge of how it might be brought about, and the conditions under which it might be effected. 112. Can you fix an approximate date for this conversation ?—About the time I joined the bank as a director. I think it would be within a few days after I took office, in September, 1894. 113. Was anything done in 1894, as between the directors of the Bank of New Zealand and the National Bank ?—Between the directors of the Bank of New Zealand and the National Bank ? lam not aware of any communication. 114. If it has been stated in evidence that the manager or general manager of the National Bank had been approached by the president of the Bank of New Zealand, and with the consent of the directors of the Bank of New Zealand, would that be correct ? —I would not say it was incorrect. It would be very probably correct. 115. To your own knowledge, have you heard anything, as a director, in respect of a suggestion of Mr. Murray that the National Bank matter had been gone into ? —I am under the impression that it was Mr. Murray who said that he thought it would not be entertained by the National Bank. 116. You stated just now that Mr. Murray said that you would either have to get the National Bank or the Colonial bank, and now you say that Mr. Murray stated that he did not think it would be possible to get the National Bank ?—Yes ; that was after his first conversation. 117. This is all in 1894?— Yes, about September, 1894. 118. Your impression is that Mr. Murray himself stated that he had approached the National Bank authorities in the colony?—I would not say in the colony. Possibly something was happening at Home at the time. Mr. Murray does not tell you much. Mr. Murray told me that we should get one of the two, and he afterwards told me that nothing could be done with the National Bank. 119. Was this prior to the proposed amalgamation in 1894 —this with respect to the National Bank?—l should say simultaneously. It was the same conversation, probably. 120. You are aware of the fact that proposals had been made and reduced to writing between Mr. Murray and McLean on behalf of the Bank of New Zealand and the Colonial Bank in 1894 ?— Ido not know that anything was reduced to writing between them. Mr. Murray gave me some details, but I have no recollection of him saying that he had written them out. 121. You have not seen a letter, then, signed by Mr. Murray, of the 11th September, 1894 [printed document handed to witness] ?—No ; I may say that that is new to me. 122. Well, did the directors commence negotiations in 1894 for amalgamation or purchase of the Colonial Bank ; and, if so, will you state their nature ?—I say we did not commence negotiations, but we discussed the feasibility and conditions under which amalgamation or purchase might be brought about, amongst ourselves and Mr. Watson, the President; but, of course, everything was stopped by a clause in one of the statutes —the Bank Amendment Act.
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123. Were any steps taken at that time to ascertain the position of the Colonial Bank ?— No ; no steps were taken. 124. At that time ? —That was for the future. 125. Then, if a statement has been made that there was an agreement between the two banks at that time, other than that mentioned by Mr. Murray and Mr. McLean, that statement, so far as the directors are concerned, would be incorrect?— Yes; there was no agreement signed, and nothing was concluded. There was nothing but discussion and consideration. 126. Was there any arrangement made with your knowledge, consent, and concurrence, in respect to the terms for taking over any of the officers of the Colonial Bank?— That was mentioned at the time as an item in any agreement we might enter into. It was mentioned by Mr. Murray, because he indicated the lines to us upon which he thought it might be brought about. 127. But it never assumed shape ? —Tt never assumed shape. 128. It never went further than a discussion among yourselves ?—lt was only a discussion amongst ourselves —that is, as far as it went. 129. Were the negotiations opened up or renewed for the purchase or amalgamation of the Colonial Bank in 1895 ?—Yes. 130. Will you state to the Committee who opened the negotiations ?—My earliest recollection of 1895 is of a discussion amongst ourselves. We all were aware of the advantages to be derived to the Bank of New Zealand from a combination betweeen the two banks, and we laid down, as far as I recollect, the conditions under which we thought it might be brought about. I think they were recorded in a memo, or sheet of paper, but they were not carried out. 131. Are you alluding now to what occurred amongst yourselves, or to what occurred when the directors or Colonial Bank authorities were present ?—I am alluding to what occurred amongst ourselves only. 132. And what occurred amongst yourselves was that each considered the views or conditions upon which the amalgamation should take place ?—A number of items were recorded. 133. By recorded, you mean set down by yourselves in your own memos.?—Yes. 134. Were these put into an agreement, or shaped under the form of an agreement, or were they kept separate as each member's own property ?—My recollection is that they were kept as the joint memo., as the conditions on which we should bring about amalgamation or purchase. 135. That was between yourselves, and before you saw any person connected with the Colonial Bank ? —Yes. I saw no person in connection with the Colonial Bank until later. 136. At a subsequent period, after the legislation was passed, you did see the directors ?—My first interview was with Mr. Mackenzie, in company with Mr. Watson. Mr. Mackenzie explained what he considered the real position of the Colonial Bank. I submitted that to the directors. His idea was that their accounts were all sound, or nearly all sound. We decided that they would have to prove that before we could do anything. 137. Then, the commencement of the proceedings was that Mr. Mackenzie had an interview with you? —Rather, I and Mr. Watson had an interview with him. Ido not know what brought us together. I recollect that it was in the Colonial Bank parlour. 138. At all events, you went to the Colonial Bank ?—Yes; I went to the Colonial Bank parlour. 139. And it was not an accident that you dropped in there?—No, I do not think it was an accident, although I cannot call to mind the cause—whether Mr. Watson asked me to go there, or what object I had in view at the time. 140. But you found yourself with Mr. Mackenzie discussing the question of purchasing the bank ?—Yes. 141. Now, at that time did you mention to Mr. Mackenzie what the views of yourself and co-directors were in respect to the purchase, or did you hear all he could give you?—l heard all I could. 142. You did not disclose the position you were taking up?— No. 143. How long after this was it before there was a meeting of the directors of the Colonial Bank and the directors of the Bank of New Zealand?—l cannot call to mind any circumstance which would enable me to define the time. It think it would be ten days or a fortnight afterwards, because the Colonial Bank accounts had been examined into by our officers. 144. As a result of the interview with Mr. Mackenzie the Colonial Bank consented to the Bank of New Zealand officers examining their accounts ?—Yes. 145. Who were the officers of the Bank of New Zealand who examined the accounts of the Colonial Bank ?—I think Mr. Butt, although he was Government Auditor at the time, and he would have the assistance of the bank inspectors, Mr. Buller and Mr. Litchfield—possibly both ; but that was only a cursory examination. 146. Was the result of that examination submitted to the board of directors of the Colonial Bank? —I do not think so. We simply informed them that their accounts would require strict examination. 147. As a result of this cursory examination by Mr. Buller and Mr. Litchfield?—When I said Mr. Buller and Mr. Litchfield, I meant it would be the bank's inspectors, but they would have the benefit of Mr. Butt's experience. 148. Who were present and what took place at the first interview which subsequently took place between the directors of the Bank of New Zealand and the Colonial Bank authorities ?— I think I had several interviews with Mr. Mackenzie before the whole of the directors of the Colonial Bank came to Wellington. Ultimately, they all came here before we came to any bargain. They came here to treat with us in Wellington. 149. After this first interview with Mr. Mackenzie, you had several interviews with him or the directors? —I can recollect meeting him several times myself. Mr. Watson was present sometimes, and sometimes also other directors of the Bank of New Zealand.
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150. Did Mr. Mackenzie inform you at any time that he was duly authorised by the directors of the Colonial Bank to enter into these negotiations ?—I have no doubt that he did, but I cannot call to mind that he did. 151. But when was the formal meeting? Can you remember who was present?— Probably our first formal meeting would be four or five weeks before we came to a final agreement. Our directors would be present, and I think most of the directors of the Colonial Bank.- We met and disagreed. 152. Had the accounts been minutely examined prior to this meeting which you say took place, and at which you disagreed ?—Yes. 153. On whose part did the disagreement take place ?—lt was mutual. Mr. McLean, as spokesman for the Colonial Bank, required everything to be taken over, and a certain amount of money paid, thereby releasing the Colonial Bank from all liability. The position we took up was that we would not take anything but sound business, and anything that was unsound would have to be guaranteed by the Colonial Bank. 154. Then, for a time the negotiations ceased ? —Yes, they were broken off. 155. There must have been further negotiations, as an agreement ultimately was made ?—Yes, there were further meetings between the Bank of New Zealand directors and the Colonial Bank directors, and we disagreed again. 156. What was the cause of disagreement the second time—what was the principal matter in dispute ? —Mr. McLean, as spokesman for the Colonial Bank, thought we had been unduly harsh in dealing with doubtful accounts. We maintained the position that it was strictly just, whilst being on the safe side. He desired us to make him some offer, but we declined to move from the position we originally took up. 157. Had you at this time gone through the books of the Colonial Bank and the whole of their accounts ?—We had gone through every account, and spent weeks in so doing. 158. You said " We." Whom do you refer to ?—I refer to the whole board of directors of the Bank of New Zealand, with the assistance of the inspectors. 159. What inspectors ?—Mr. Litchfield and Mr. Buller, and communications from the staff wherever required from all over the colony. 160. At this time you were in full possession of the minutest details of the Colonial Bank business?— Well, as far as we could obtain them. We had an immense amount of information, and were ourselves mostly able to define what was good business, what was indifferent, and what was bad. 161. Considering the Colonial Bank had been competing with the Bank of New Zealand, you had them in a pretty safe position when you had got at the whole position of the bank's business ? —The Legislature gave us that power. 162. The Legislature did not give you power to overhaul their books and so on ?—At any rate we did that to justify the confidence reposed in us by Parliament. 163. At any rate, you knew their whole business ?—Yes, we knew the whole of their business. 164. It would have been rather awkward if the Colonial Bank had withdrawn from the position then, and you would have had the best part of the bargain?— Yes, that would have been so. 165. At all events, what was the next step ? You ultimately came to an agreement, did you not?— Yes. 166. Did the Colonial Bank agree to your terms? —No. My recollection of the next step is being requested to meet Mr. McLean with Mr. Andrews and Mr. Mackenzie. I spent a day with them, and as the result of our discussions and conversations, I drew up a short memorandum for our board, which was approved; but it was only in pencil. 167. And on that further negotiations ensued ?—Yes, as between the two boards of directors ? —Yes. 168. Will you look at this document [document handed to witness] ?—These are the figures only, not the agreement. I could not tell without further reference whether these are correct. I see Mr. Butt's signature here, and I have no doubt they are correct. 169. You are a party to making the agreement ?—Yes. 170. You had the Colonial Bank balance-sheet, I presume, in the course of these negotiations, as well as the books ? —We had their balance-sheet up to 31st August, 1895. 171. In deciding upon the price to be paid and agreeing to the purchase, did you take as your guide the Colonial Bank balance-sheet ?—lt was a basis on which the agreement was constructed ; but the figures of the balance-sheet had to be established and proved to be correct. 172. You started from the balance-sheet, then?— Yes. 173. Did the amount paid and the figures given here agree with the balance-sheet or the position of the Colonial Bank as disclosed in the balance-sheet ?—They would be the figures forming the balance-sheet, I apprehend; that is, there was a certain amount of advances, a certain amount of gold, and the different items of the balance-sheet. 174. But we have had Mr. Booth and Mr. Watson's evidence, and they say the balance-sheet was discarded and never looked at at all ?—We knew the volume of their business from their balance-sheet. I had the balance-sheet and saw the volume of business from it, and estimated the value of that business. It was one of the items on which we went. 175. Then, your evidence will differ to that extent from Mr. Watson's and Mr. Booth's. They say they never looked at the balance-sheet. They say they looked at the books, and an inspection was made by your officers. You say the balance-sheet was a basis? —-I said the balance-sheet was one of the items, and it was from the balance-sheet that I arrived at the volume of their business. 176. Do you allude to the balance-sheet of the 31st March, 1895, or to past balance-sheets ?— I had the balance-sheet of March, 1895, also of August, 1895, and other balance-sheets. * 28—1. 6.
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177. And from those you came to a conclusion as to the volume of their business ? —Yes ; the amount of paid-up capital, bills payable, and so on; but the character and value of the business was arrived at by inspecting the returns and balance-books. 178. As regards the volume of business, you had to take their balance-sheet as disclosing that part of their business ?— As disclosing the volume of their business; and the figures were guaranteed as being correct at the time of the balance-sheet. 179. As regarded the accounts, you discarded the balance-sheet ?—-That had nothing to do with the value of the accounts. We examined the accounts separately to arrive at the character of the business. 180. But as to the nature of the accounts set down as assets?— The debts due to the bank were assets. 181. For instance, you have good assets under list " A " ? —Yes. 182. Do you know how much they were?—£926,l27. 183. You had assets in list "B " ?—" B " list was £604,695. 184. Did you disagree as to the value of these assets ? —We disagreed with the Colonial Bank directors as to the value of them. That is to say, the "B" list stood at £604,695, and we saw that it was not worth the money, as there were bad debts among them, and some will never be recovered. We loaded them. 185. You loaded them ?—Yes. 186. Do you think the loading or cover you took in respect of " B " and " C " lists was sufficient ? —The "B" list we took at what we thought was sufficient. We were willing to deal with it in two ways: we would take the "B" list with the cover we regarded necessary absolutely, or we would take it with the loading as an umbrella cover. We took it ultimately with an umbrella cover —that is, that a deficiency in one account had to be made up by the surplus, if any, in others. 187. Do you think the umbrella cover is sufficient?— Well, we can get no more. I think it is sufficient at present. 188. Now, you had "B " and "C " lists. What about "C"? You loaded for that?— The " C " list was in a different position from the " B " list. 189. Will you explain the difference to the Committee?—A considerable portion of the "C" list consisted of odds-and-ends of properties, which were not bank business, and there was also business of which we could not absolutely determine the value, and therefore the whole of these were put into the " C " list. 190. You have a " D " list ?—Yes ; but in the original scheme the " D " list was the loading for " B," which system was afterwards altered, and the amount put in separate columns, and the " C " list was divided into two, thus forming " C " and " D." 191. Now, in the working of the accounts in the "B " list, are they working satisfactorily?— Well, I can hardly say satisfactorily. On some there will be a great deal of loss more than we anticipated. 192. To what reason do you attribute that, and what is the cause of their working unsatisfactorily? —Deficiency of assets is one item. The other arises from the procedure of the liquidators. They accept no responsibility; they act as liquidators only. If they think an account can be cleared up to leave them their margin, it seems to me that they ask for it to be done. 193. Is that just to the person or corporation?— Well, they have to consider the shareholder of the Colonial Bank. It may be to the interest of the shareholder; Ido not think it is. 194. Do you think a peremptory order, or sudden liquidation of accounts, is in the best interests of the shareholder? —In some cases I think it would have the opposite effect in an account, especially where careful nursing would bring it all right. 195. But there is none of this careful nursing, and they will not allow you to nurse ?—There are cases where they have told us to liquidate the accounts. 196. Did you understand that that was to be done, or did you understand that you were to have two years in which to decide upon the accounts? —It seems to me that the spirit of the agreement was that we were to have two years, and I think that is the impression on the minds of some of the Colonial Bank directors. My recollection is that Mr. McLean has specifically referred to it in a speech. 197. Is there a doubt now that you have not got two years to decide upon accounts?—l maintain that we have two years, and I am not going to give up that point very readily. 198. Are you in a position to resist the liquidators when they make this peremptory demand to liquidate these accounts, and are you justified, if you think it harsh and unjust, and may cause loss to you and the shareholders of the Colonial Bank, to do this ?—I think we are in a position to ask them to define what steps they consider necessary for the protection or liquidation of any account. 199. You are aware that the colony came to the assistance of the Bank of New Zealand ?—Yes. 200. And that the Legislature did not do this with the object of allowing the bank to adopt harsh measures with their customers. Are you in a position to maintain that position and prevent this unjust treatment ?—Yes, so far as we can, with the consent of our shareholders, but we have no benevolent fund. 201. I mean, on business lines?—On business lines we will not part with accounts if we can keep them; but, at the same time, if there is a loss to be made and there is nothing to cover it, we cannot settle those accounts at the expense of the New Zealand Bank shareholders. 202. You can leave them with the Colonial Bank ?—Yes ; but the liquidators will protect their shareholders. 203. But have customers on account of this course taken their accounts away from the Bank of New Zealand ?—I have no knowledge of that. The action taken may have induced some of the customers to leave. If the liquidators induced another bank to take over a customer at par whose account was in the "B" list, the amount of loading on his account would be placed to general
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credit. It would not go to the Colonial Bank, but it would go to the credit of the umbrella fund, and it might ultimately come out to the liquidators or shareholders of the Colonial Bank. 204. Well, if a foreign bank or any of the other banks would take such an account, why should not the Bank of New Zealand take it ? Are you not in a better position to know that account than a foreign bank? —If the account were at all sound we would take it. I may say, in some cases we have done so, but it might be from our knowledge of the account that we might say " That is not sound, let them have it." 205. What was the amount paid for good-w-ill ?—The amount is stated at £75,000. 206. What is the amount paid for the furniture and stationery?— Six thousand and some odd pounds. I know that we got an allowance of about one-third off the book-value. 207. The amount paid for the premises was £125,399 ?—That would be about the amount. 208. Do you think the good-will of the Colonial Bank was worth £75,000 ? —Yes; to the Bank of New Zealand it was worth more. 209. You gave £75,000, and from the business done and from the working since you are of opinion that you got a very good bargain ?—Yes, I think we made a good bargain, without confining myself to the £75,000. 210. You paid the book-value for the premises of the Colonial Bank?— Yes. 211. These amounts were specifically stated when you made the agreement —£75,000 for goodwill, £125,393 for the bank premises, and £6,250 for the bank furniture and stationery ?—Yes ; they were all items specifically referred to. 212. What was the amount you paid over to the Colonial Bank in cash ?—£133,906. 213. You retained reserves to the extent of £327,305?— A total of £327,305. 214. You are of opinion that that loading or reserve —whatever you like to call it—is sufficient to meet the liabilities : there would be no loss in respect to that ? —We have also a guarantee against loss in the "C " list. I think we will come out without loss. Possibly there might be a little go back to the Colonial Bank, but I do not see evidence of it at present. 215. In respect to the " C " accounts, have there been any writings-off by the Bank of New Zealand ?—We have not written anything off or made any appropriation. -216. During the course of these negotiations, and before the agreement was completed, was the Government or any member thereof made acquainted with the agreement, or with the accounts in the " A," " B," " C," or " D " lists, to your knowledge ?—Not by me, nor by any other director as far as I know. 217. The negotiations were kept strictly confidential as between the directors of the Colonial Bank and yourselves?— Yes ; until we came to the conclusion of the agreement. 218. Was it ever suggested or mooted, the colony being largely interested, that the Government should be made acquainted with the negotiations, or that it should wait until the whole was completed? Did it ever come up for discussion at all?—I cannot say it did during the negotiations. 219. You have had some experience as a business-man, and had large dealings with many public companies in your time ? —Yes. 220. Would it be, in your opinion, dishonest, or a falsification of the accounts of a company, if bills under discount were not set down under " Liabilities " ? 221. Mr. Montgomery : I ask whether this is in the order of reference. Discussion ensued. The Chairman : I think the question is permissible, and may be asked. 222. Hon. Mr. Seddon.] With your experience and commercial knowledge, if a customer of the bank was to give the directors a balance-sheet showing his business, or a corporation did so, and they did not place bills under discount under the head of " Liabilities," would you say that was falsifying the balance-sheet, or that the person or corporation was dishonest ?—I would not say either, but I would say it should be shown under " Contingent liabilities; " and, as that is a matter which has been brought to the front, sufficient attention has not been given to it in commercial transactions and the preparation of balance-sheets. 223. Then, are you aware that it has been the custom and practice of persons and corporations not to put down as liabilities bills under discount?—l rarely see them. 224. And yet you know of your own knowledge there are bills under discount in some of these companies? —I rarely see them as contingent liabilities or in the balance-sheet itself, but I say that they should be shown as contingent liabilities. 225. The fact of it not being the practice previously, if it is stated that it is a falsification of accounts, or dishonest, would you say that statement would be made in error?—l would not say that. We have a great many balance-sheets submitted to us, and we always ask what is there under discount. 226. From your experience as director of the bank, are many of these balance-sheets sent in with the bills under discount put down as liabilities or contingent liabilities ? —Many are so sent into the bank.
Thursday, 10th September, 1896. Examination of Thomas George Macarthy, Director of the Bank of New Zealand, continued. 1. Hon. Mr. Seddon.] Were the whole of the directors of the Bank of New Zealand unanimous in deciding to purchase the Colonial Bank on the terms stated in the agreement ?—At the close of the negotiations we were ; not until then. 2. Then, if it has been stated in evidence that Mr. Booth dissented, there is a mistake somewhere? —When the final determination to purchase was arrived at, Mr. Booth dissented? 3. Yes ?—That is a mistake. I objected all along until then ; but when we came to the crucial point of purchase or no purchase, I think I am justified in saying that we were unanimous.
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4. Was anything else taken into consideration in respect of the purchase than what is set forth in the agreement?— Yes, we were influenced by many considerations. In the first instance, we had reason to anticipate that there would be some trouble with respect to some debentures we held ; also with reference to what I might term a London credit or bill for £5,000. I will not say that they were bad debts, but we were under the impression that there would be some risk, and possibly a law-suit about them; and we thought it advisable to close the matter up, so that there would be no further trouble relating to those items. 5. Up to the time of the agreement, had you considered there was any risk in connection with these matters you have mentioned ?—Some time before the close of the negotiations I think we saw some reason for disquiet. 6. Was that in reference to any statement made by any director of the Colonial Bank pending or during the negotiations ?—There was a statement made by a director of the Colonial Bank on the night we agreed to purchase ; but that was met by the remark that they had shown their teeth, and now they were harmless. It was a bounceable statement. 7. By one who thought you had the best of the bargain?— Possibly it was, as we had the best of the bargain. 8. Well, in your opinion, were the investments you referred to fairly safe investments?— Well, we thought there was some risk at the time we made the investment, but no serious risk. 9. There is a risk in every investment you make in connection with a trading concern? —Yes ; but there were some circumstances in connection with that which made it risky. 10. If it has been stated that the President of the Bank of New Zealand was practically responsible for that investment in respect of the debentures you mentioned, is that correct or otherwise? Was he alone responsible, or were the directors?—l should say some blame attaches to him in respect of that investment, inasmuch as the directors would have decided against it but for some representations made by him, which afterwards were not borne out. I wish to add that it is quite possible at the time that he thought he was quite correct in making the statements he did, but the after-results proved that he was in error. 11. Are you aware whether or not the opinion of counsel has been taken as to this, and that the advice given was that the conditions were complied with ?—I have spoken with reference to what occurred at the board table, not as to counsel's advice. 12. But there was a condition that it was to be referred to counsel for advice, was there not?— There was more than one condition, but by some means the whole of the conditions were not carried out. 13. And it is in that respect that you say the President was to blame?—No, I do not; but I say he w r as to blame for recommending the investment, and for speaking of matters which he said were within his own knowledge. I say that the after-results prove that he was not correct, but he may have thought at the time that he was correct. 14. You would not say there was anything wilfully done to mislead the directors? —No, I would not say that. 15. Do you know anything about the making of arrangements for remittances in connection with any particular transaction ? —I recollect that we attached a condition to the investments I have spoken of that we were to have a share of the remittances in connection with that business. Afterwards we found that the business was not coming to us. It was so reported to us by our officers, and we directed that the remittance business should be applied for. 16. That was a violation of one of the conditions in respect of the investment ?—Yes. 17. Did you then get any of the business?— Yes. 18. Was the £5,000 you mentioned in respect of the bill or draft ?—That was an item of the business. 19. Was that transaction done by the directors from the head office here, or was it a transaction done by the agent of the bank outside the head office and the directors ? —lt was done by a branch manager, under the authority of the head office. 20. Was that draft an ordinary business draft?—lt was on a London house. 21. A good house?—Oh, yes. 22. Was the draft met?—lt was met. I think I must add to that that the matter is not yet finally settled. 23. That is a matter in dispute as between the liquidators of the Colonial Bank and the directors of the Bank of New Zealand ?—lt is a triangular dispute at present—between the Bank of New Zealand, the Colonial Bank, and the liquidators. 24. This is as to the credit, is it not ?—I said the draft itself was paid ; but, still, the support to the draft, and possibly in some way the draft itself, might be brought into review again. 25. At all events, no blame attaches to the President of the Bank of New Zealand in respect to that ?—No further than this : that he made representations to us in respect of the larger amount. He was wrong in respect to that, and, being wrong, my impression is that he ought to have known more at the time ; otherwise no blame is attached to him. 26. In saying that he ought to have known more, you make that assertion because he had been inspector of the Colonial Bank, and therefore ought to have known more ? —Yes. 27. He had been some time out of the Colonial Bank, had he not ? —Only a short time—a few months. 28. I suppose you had not formed that opinion until the inspectors or the directors had overhauled and examined the accounts in respect of the Colonial Bank ? —Certainly it was confirmed then. 29. Now as to the appointment of officers: Mr. Mackenzie was ultimately appointed General Manager, was he not? —Yes. 30. If it has been stated that the President alone supported Mr. Mackenzie for the position of General Manager, would that be correct or otherwise ?—No, that is not correct.
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31. Will you tell the Committee what took place in respect of the appointment of General Manager?— Before our negotiations with the Colonial Bank assumed definite shape, statements were made to us that the accounts and business were in perfect order. It was accepted generally amongst ourselves, then, that we would appoint Mr. Mackenzie General Manager. But when we came to examine into the accounts we found a different state of affairs, and the majority of the directors then decided that they would not appoint Mr. Mackenzie, and I was deputed to call him into the President's room, and, in the presence of Mr. Watson and Mr. McLean, to intimate that the directors had determined at present not to appoint him, and he was not to consider that he was to get the appointment in future. The matter was brought up again, and the minority had to give way, and the appointment was ultimately made. I mention the particular reference to my being deputed to convey this to Mr. Mackenzie because, in reading Mr. Booth's evidence, it seems to me to have escaped his memory altogether. 32. At all events, Mr. Booth is wrong in saying the President alone supported Mr. Mackenzie's appointment as General Manager ? —He is not correct in that. I would put it that, as a director, Mr. Watson was the most pressing to make the appointment. 33. Are you aware that, prior to the time you mention, it had been arranged that Mr. Mackenzie was to be made General Manager? Had it directly or indirectly come under your notice, or had you been informed by any one, that that was the case ? —ln chatting among ourselves, this is the impression created on my mind, and on the minds of the other directors: that if the position of the Colonial Bank was as represented to us, that we would be justified in offering him the appointment. 34. Then your main objection to him was solely on account of the way in which you found the business of the Colonial Bank? —Yes. Owing to the position in which we found the Colonial Bank, we thought it advisable that Mr. Mackenzie and Mr. Watson should not be associated together in the management of the Bank of New Zealand. When I say " we," I am speaking for myself and the other directors who were in the majority. 35. It was a case of "How happy would I be with either, were t'other dear charmer away " ?— My view is, that we should not have both of those gentlemen. 36. You wanted one of them away ? —I would have preferred another man—not any particular man, but perhaps one of the leading officers in the Bank of New Zealand. . 37. You have had some experience and knowledge, now, as to the condition in which you found the affairs of the Bank of New Zealand, have you not?— Yes. 38. The Colonial Bank affairs, according to your view, were bad, but the Bank of New Zealand were much worse. You have admitted that there have been losses of over £4,000,000 ?—I do not know that I have admitted that, but it is so. 39. In connection with the Colonial Bank, there has been a loss of £400,000 ?—I dare say there had been that amount of loss there. 40. And as there has been a loss of £400,000 in the Colonial Bank, you think the general manager of that bank should not be put -into the Bank of New Zealand?—l do not think we should be put into the position of having the two who may have been to blame for that loss. 41. The officers of the Bank of New Zealand, in that case, would be practically responsible for £4,000,000? —I do not say the present officers of the Bank of New Zealand are responsible for any of those losses. 42. Do you say Mr. Mackenzie was responsible for the losses in the Colonial Bank ? —I say he is responsible, as being general manager; but to define the exact responsibility or culpability, I cannot do that. 43. Were not some of the principal officers from 1888 and 1889 still in the bank ? Was not Mr. Andrews there ?—He was only in a subordinate position. 44. Would you consider a general manager to be in a subordinate position ? Mr. Butt was general manager ? — He was general manager some time before I joined the bank, or assistant manager; the general manager was Mr. Holmes, who is in England. 45. Prior to Mr. Holmes coming here, was not Mr. Butt general manager?—l do not think so. I think he was acting general manager. I might further say that what has come within my own knowledge is that the losses made in the Bank of New Zealand were made at headquarters. 46. You have admitted, yourself, that there were losses in Australia : How could they be made at head-quarters ?—The head-quarters management was responsible, and not the management of the branches. 47. This has been stated—that Mr. Murray resigned as manager on the 23rd October, 1889; Mr. Tolhurst retired from the position of general manager, and Mr. Butt took up the duties of the position on the 25th March, 1890. So, you see, Mr. Butt was general manager. Is not the general manager dependant for his information on the inspectors ?—For information with respect to the accounts, yes. 48. If the inspectors do not make him acquainted with the facts as to the risky nature of advances, and condition of accounts,, is it not impossible for him to know how every account stands ?—I could not say that he would know every account intimately. He may be misinformed, or he may draw wrong conclusions. 49. Would you not hold, under these circumstances, that the inspectors were responsible if information had not been supplied to him, or if it was not reliable? —If the inspectors fail to supply information, no doubt blame would be attributable to them, and no doubt the general manager or directors would deal with them if they were neglecting to supply information. 50. You have stated that in the past the branch managers had almost unlimited powers, have you not ? —No ; I said their powers are very different now to what they had in the past, when they had very large powers. 51. Then, next comes the inspector, who inspects the branches; next, the general manager, who depends upon the inspectors to a great extent; and then the directors, who depend upon the
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whole ?—They have the inspectors' reports, and the matters are discussed between the inspectors and the general manager, who confers with the directors, and if the manager is near at hand he is also sometimes called in. 52. Looking at the mess we find the Bank of New Zealand in, with £4,000,000 written off, are we not right in saying that the whole of them were responsible for this disastrous condition of affairs, and are therefore blamable?—lt would be hard for me to say what the reports of the inspectors were. My view is that a material portion of the losses of the Bank of New Zealand were made prior to 1890 —possibly prior to 1888—but they may have been increased since by carrying on, injudiciously, bad properties. Therefore, I say it is not those who are inspectors or managers at present who are to blame. Ido not look upon those men as the most culpable. I think they are only slightly culpable. 53. You think there is a culpability, though slight ? —I think, if I had the whole of the reports before me, I might be able to say that a certain inspector or manager had not furnished the information that he ought to have furnished ; but I could only know that by the light of subsequent events. 54. Have you had the reports of the inspectors to justify you in judging Mr. Mackenzie ?—I have only had Mr. Mackenzie's statements. 55. If you required the reports of the inspector to judge the General Manager, would you not require the same information before you could judge Mr. Mackenzie ? —We had the whole of the Colonial Bank business up to date. 56. Had you the reports of the Colonial Bank inspectors?— No. 57. Had you the reports of the manager of the Colonial Bank ?—Such as were furnished by the books here. 58. Is it solely upon that that you have come to a conclusion ?—I came to the conclusion from what we found the position of the Colonial Bank to be. It was not in the position that we were led to believe it was. Some men may be blamable—possibly the inspectors, the managers, or, perhaps, the directors. 59. The whole or them are responsible ?—I do not say who are responsible ; but possibly some blame would attach to the whole of them. 60. You remember what took place in 1894, and what was placed before the colony when it came to the rescue of the Bank of New Zealand ? —I have a general knowledge of it. 61. As the result of which you became a director?— Yes. 62. Was that information which was supplied correct? Since you have been a director, and after going through the matter carefully, have you come to the conclusion that that information was correct?— That did not go far enough, is my conclusion. 63. Then there is a culpability attaching to the whole of them in putting that matter before the colony, because they did not go far enough?— Some one is to blame for it. 64. Do you think it was done negligently or wilfully?—l am not in a position to judge. It may have emanated from London. 65. Upon whom did the London office rely for information—Mr. Murray ?—I take it that it was Mr. Holmes. Mr. Murray, I understand, was only deputed as agent for the occasion by the London board. 66. What about the auditor—who was the auditor at that time ?—Edwin Waterhouse and George Sneath. 67. What position did Mr. Butt occupy at that time?—l am unable to say of my own knowledge. 68. Did he hold a subordinate position ?—No ; he would have a high position in the Bank of New Zealand in New Zealand. 69. Well, the bank was in a very nice mess ; I suppose you will admit that ?—Yes. 70. And you think there would be responsibility attaching to other high officers as well as the general manager. He was a stranger to the colony, was he not ? —He had been here two or three years. 71. You have been a director two or three years, and can you say you have a knowledge of the ramifications of the bank ?—No. 72. Then, he would have to rely on the high officers of the bank when he came there ? —I think it would follow that he would attach very great importance to their recommendations. 73. Afterwards, we find that there is an all-round mess, with the bank up to its neck in difficulties, and the colony having to come to its rescue to prevent disaster; and you think there is no blame to be attached to anybody in respect of that?— Not at all; but I cannot put my finger on the spot and say where the blame should attach. 74. At any rate, you think that of the officers who brought it into that mess the general manager might be blamed? —No; I mentioned no particular officer, but probably, if we were to make inquiries, we might find that reports were furnished to him which had no solid foundation at the time. But no one has been particularly selected. 75. Did not the President of the bank offer to use his veto in respect of the appointment of the general manager, or threaten to use it ? —No; it is not correct to say that he threatened to use it. 76. Did the directors, in their difficulty as to the appointments, see Mr. Seddon?—Yes. I recollect a chat with you. 77. Did the board of directors interview Mr. Seddon as a whole in respect to this matter ?— Yes. 78. Would it be correct to say that Mr. Seddon declined to interfere on behalf of the Government ?—That would be quite correct. I would add that he confined himself to making a suggestion. 79. There had been an attempt made to give Mr. Mackenzie a permanent appointment, had there not ?—I would hardly say that. The previous general manager had a permanent appoint.
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ment, and from what I heard it is not unusual for a general manager to be confirmed in his appointment for a term—to be engaged for two, or three, or five years. 80. Had it been suggested that Mr. Mackenzie should be engaged for a term ? —I cannot charge my memory whether it was or not. 81. At all events, the result of the interview of the directors with Mr. Seddon was that Mr. Mackenzie was appointed temporarily ?—Yes; the same as other members of the staff, with the exception of two whose positions were confirmed for a term. 82. I suppose at the interview those directors who were for and against Mr. Mackenzie gave their reasons pro and con ? —I cannot say who spoke. Probably those who were against him spoke, and probably the others joined in the discussion. 83. The result, at all events, was that a temporary engagement was made ?—Yes. 84. You have heard Mr. Booth's evidence in respect to this, and in respect of the working of the bank ?—No ; I was not present when he gave that evidence. 85. Well, in respect to Mr. Mackenzie, since he has been General Manager, as to his integrity and fitness :Do you consider him trustworthy and competent, or otherwise ?—I am not prepared to say a word against Mr. Mackenzie for the time he has been acting as General Manager. I was here and heard Mr. Booth speak about his ability, but I do not consider that I have a right to do so, neither do I think I am competent to do so. 86. The evidence given by Mr. Booth was, " My own opinion is that a stronger and more capable man is urgently required as General Manager of the bank." Do you concur with Mr. Booth in that opinion, or otherwise?—l would say, that if I knew a stronger and more capable man I would say so; but lam not now in favour of both Mr. Watson and Mr. Mackenzie occupying their present positions in the bank. 87. But that is not on account of competency or general character?—l am not in a position to speak as to Mr. Mackenzie's competency, because he is the only man in his position that I have met. 88. Have you not had the same opportunity of judging as Mr. Booth ?— I have spent a great deal more time in connection with the bank than Mr. Booth. Mr. Booth may have some reason which is not in my mind. 89. And yet you have had more experience and knowledge of the inner working of the bank than Mr. Booth ? —Yes, I spend more time there. 90. With more experience, and beiug in a position to deal with the details of your position, should you not be better able to judge than Mr. Booth ? —I would say so ; but, still, something may have occurred to induce Mr. Booth to come to that conclusion. 91. But has anything transpired at the board, at which you and Mr. Booth were present, which would militate against Mr. Mackenzie continuing to act as General Manager ?—Nothing occurs to my mind. Ido not think there has been. 92. At the same time, your conclusion is the same as Dr. Fell's—you do not think that Mr. Watson and Mr. Mackenzie should be together—but " the reason why you cannot tell " ?—I do not say why I cannot tell. They have been working together many years in the Colonial Bank, and they were not only mistaken as to the working of the Colonial Bank, but were seriously mistaken. That Ido not look upon as a recommendation for a very much larger and extended position. 93. You think, then, that they ought to be parted ? —Well, my impression is that Mr. Watson, as President, would benefit by another person being there than Mr. Mackenzie. Having been together so long, they practically run in the same groove. 94. On general grounds, you think there should be some change?—On general grounds. I have nothing to say against Mr. Mackenzie, from anything that I have seen in the Bank of New Zealand. 95. If there was another President than Mr. Watson, do you think the objection of Mr. Mackenzie being General Manager would be, to some extent, withdrawn?—-If there was another person there as President, with Mr. Watson's ability, I would not have anything to say against Mr. Mackenzie. 96. It is the fact of their having been together working in the one groove ?—And with the evidence before me that they were mistaken in the position of the Colonial Bank. 97. Their positions in the Colonial Bank were reverse. Mr. Watson held an inferior position to Mr. Mackenzie ?—lt may be. 98. But is not the position of inspector more important than that of general manager ?—I would say that wherever the two were present Mr. Watson prevails. 99. Before I leave this point: At all events, do you think that if the affairs of the Bank of New Zealand were to get into a mess again that you, as a director, could be held to be blameless, or into difficulties such as the Colonial Bank got into ?—I do not think, as long as lam a director of the Bank of New Zealand, that there will be any dividends paid while there is a mass of bad debts to provide for. 100. By that, you plainly state that there is a responsibility upon the directors ?—Undoubtedly, there is a very serious responsibility on directors of banks or companies nowadays. 101. Do you not think, in that case, that some responsibility attaches to the Colonial Bank directors for the position in which you found the Colonial Bank ?—I am unable to say whether there is or not. I cannot say that they are blameless. It is an awkward thing, of course, for a bank to stop paying dividends; but my opinion of a director's duty is that he should see that he is working on defined lines, and not paying dividends not earned by profits. 102. Do you think it is right to have laws passed enabling dividends to be paid which have not been earned? Will you look at subsection of section sof the New Zealand Bank Act Amendment Act? [Statute handed to witness.] —That subsection is evidently intended to confer power on directors of the Bank of New Zealand which are not given under the deed of settlement; but at the
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same time they are incurring serious responsibility in paying dividends not earned. It says here : "The Board may, if it thinks fit, discard the said liquidation account, and may make up such balance-sheets without reference to the state of such liquidation accounts or the said assets, and may pay dividends from profits on current business." 103. When you became a director you became an attorney for the Estates Company, did you not? —No; Mr. Booth and Mr. Johnston are attorneys for the Estates Company. 104. Considering the condition you as a director found the Estates Company and the Bank of New Zealand in, with its close connection, would you consider it honest or dishonest to declare dividends, in the face of the position the Estates Company was in ?—lt is very hard to say by what motives the directors were actuated at that time. Looking at it now, I say they were not justified. Possibly they might have had under consideration the effect it would have had on the colony, and on the banking business generally, if they had discontinued paying dividends. 105. You have stated that tbey should only pay dividends out of profits?— Yes. 106. Were there profits to pay them out of ? —I am not in a position to say, but I think not. 107. That clause in that Act would give power to declare dividends, notwithstanding there were no profits, if the directors thought fit? —It says, " They may pay dividends from profits on current business." 108. But, notwithstanding that they were losing in respect to the Estates Company and making heavy losses on the pure Bank of New Zealand business, they could declare dividends?—l think that is the meaning of that clause. 109. What is your opinion in respect to it? Do you think it was a proper thing to do? Do you think it was commercially moral, or otherwise? —It is rather a difficult thing for me to express an opinion about—the morality of Acts of the Legislature. 110. lam speaking of the morality or immorality of the directors?— According to my present lights, had I been a director then, I would not have been a party to paying dividends. What the motives were by'which the directors were actuated I do not know. 111. From that which you say, you would put the Colonial Bank directors and the directors of the Bank of New Zealand in the one box ?—I have not said that. 112. At'all events, from what you know at the present time as the result of your experience as a director, dividends were paid, and not out of profits?—My impression is that the dividends were not earned by banking business. I have not gone through the accounts, but I simply judge from the balance-sheets. 113. That being the case, there was a responsibility cast upon the directors, particularly in the face of that Act which leaves them to make the declaration of dividends ?—lt places the responsibility upon them. 114. You have suggested that, in your opinion, as to this responsibility, the officers and general manager of the Colonial Bank were to a great extent responsible? —I can hardly think they can escape some of the responsibility. 115. The Colonial Bank will pay something—there is money left to the shareholders ?—I believe they received 10s. per share, and may receive something more, but it is very doubtful. 116. Is there anything for the shareholders of the Bank of New Zealand ? The one case is bad, but the other is much worse ? —The head-quarters of the Bank of New Zealand for a generation past must have been a running sore. 116. Do you think it possible that that sore could be caused without the knowledge of the high officers—the inspectors and the managers?— When you speak of the high officers, of course they must have known something about it; but we know that the head office was responsible for it, which was under the control of the directors. 118. They appear to have been a happy family; at any rate, the world did not know much about it ?—Not until 1887 or 1888. 119. You have not gone into the matter carefully yourself ?—No. 120. Have you any other officer, can you say, from the knowledge of the working of the Bank of New Zealand you now have, who is a strong and capable man, and fitted to take the position of general manager? —Well, I think we have some very good men, but I would not be prepared to pick any one man in particular now. 121. You are practically in the same position now, if you wanted a general manager, as you were at the time Mr. Mackenzie was selected ?■ —We made no selection then, and I am not prepared to make a selection now. 122. I suppose you have gained some knowledge as to the position of the bank and its working under Mr. Holmes's management ?—Not with the working of the bank. Mr. Holmes's ideas, as far as I have been able to gather with reference to the properties and securities, were not adapted to New Zealand. 123. Do you think it is advisable to get an experienced London manager without colonial experience, or would it not be more conducive to the best interests of the bank to get a general manager with an extensive and varied experience ?—I would prefer a colonial manager with an extensive and varied experience; but my idea was to have two, and probably to combine the London experience with the colonial experience. 124; Would you have a manager for each Island ?—No, the two to work together. 125. Will you explain that ? What would be their positions, and what their responsibility, and what part of the bank's business would be attended to?— The whole of the business, in combination with, the President. 126. You think you should have two general managers ?—I would not term them general managers, but assistant or acting general managers. These names have been frequently used byother men. 127. Where would they be located ?—At the head office. I think men should be trained in the bank for such work. There are young men in the bank who would have to look after the
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business of the bank in the future, and the general manager will have to train these to do the work under his supervision. 128. You think the management of the bank, so far as the magnitude is concerned, is understaffed ?—No, because we have too many highly-paid men already, owing to the Colonial Bank being absorbed. My idea is that it would be better to allow Mr. Mackenzie, away sometimes, to look into the business of the bank outside ; and it would be well sometimes for him to simply look on and train two younger men to the work, and when satisfied that one was competent let him go away, and select another to go on in his place. 129. At the present time there is no one sufficiently trained, if one goes away, to take that officer's place?— There are one or two in the employment of the bank who have sufficient ability to fill the position for a time; but in the different matters of business of which Mr. Mackenzie has got the complete thread, there is no one in the employ of the bank who can without consultation with him take up his position. 130. He gets to know the run of the ropes, and the directors have to depend upon him, and if anything happens to him there is no one conversant with the business ? —Not thoroughly conversant with the business in the way I have spoken of. 131. Mr. Booth suggested that there should be another auditor. As far as the auditing at present is concerned, is that altogether satisfactory or is additional strength required?—My opinion is that an assistant auditor or coadjutor to Mr. Butt would be very useful, because while one was travelling the other would be here, and the knowledge he would acquire from the different branches would perhaps present itself in a different aspect to what it does to the inspector. 132. I asked you previously about the Australian and Fiji business, but omitted to ask you about the supervision of the London business. Who is looking after that ?—There is a London board of advice at Home acting under power of attorney. 133. Do they report to you as directors, weekly or monthly ?—We have a transcript of their proceedings furnished every mail, and reports every mail. 134. Who is the inspector there ?—There is no person there called an inspector. 135. What business are you doing in London—a general banking business?—A general banking business. 136 Are advances made ?—Not to the same extent or character as they are here. 137. Is there any liabilily to make bad debts and necessity for writings-off in connection with the London business? —I have not heard of any amount being written off in connection with the London business. 138. Have any inquiries been made by the directors since you have been a director as to whether there is a necessity for writings-off in the London business? —I cannot say whether we have addressed questions to our London manager, but in his reports he would have to refer to it if there was any necessity. 139. Have you relied entirely on the London management as directors, or have you been asking for some information and had the same inspection as you have in the colony ?—We have no inspector in London to go and examine the business there the same as we have here ; but, as I said before, there is a board acting under power of attorney, and auditors, and a London manager ; and for months past there has been one of our directors in England, and, of course, he attends meetings in connection with the business of the bank in London while he is there. 140. How can there be dual directors? Have we not passed a law fixing the number of directors? —Yes; that is here. 142. How can there be London directors?— They are attorneys for the board here. They are working under power of attorney from here. 143. Have you taken legal advice as to constituting another board in London by appointing attorneys? —I cannot say from memory whether advice has been, taken. 144. Will you do so ? —Certainly. 145. I know nothing myself in the Act that would empower the directors to delegate their powers? —They supervise the London business only. There is power to do it. 146. Then, if you have a London board, you could do the same for Fiji and Australia?—lt would not be prudent to do it, hut it could be done. I think the exact term is " board of advice." 147. Is there anything in the deed of settlement to empower the setting up boards of advice?— I do not know that there is. 148. Are you paying this board of advice?—We pay them small fees. 149. At any rate, you, as directors, depend for your business in London on a board of advice ? And on our manager and auditor. 150. It has been stated that officers of the Bank of New Zealand have been retired by the directors to make room for the Colonial Bank officers : Is that correct or otherwise ? —There have been removals, but I am not aware that officers have been dispensed with to make room for Colonial Bank officers. 151. By removals you mean transfers ?—Transfers, yes. 152. But have there not been any officers' services dispensed with for the purpose of enabling the Bank of New Zealand directors to employ Colonial Bank officers?— Not that I know of. 153. It has been stated that such was the case, that officers of the Bank of New Zealand were discharged and their places taken by officers of the Colonial Bank, and that their retirement was effected for that purpose ?—We have removed officers, and their places have been taken by Colonial Bank officers, but I have no recollection of any person being retired or dismissed for the purpose. I should say that is incorrect, or without my knowledge. 154. What is the general tone of the service—are the officers working together harmoniously, or is there any friction existing between the officers engaged in the bank ? What is your general opinion? I do not want specific cases, but is there esprit de corps, or is it a question of "Pull * 29—1. 6.
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baker, pull devil" ?—Before the purchase of the Colonial Bank there was very keen rivalry between the two institutions, and I have no doubt that many officers of the Bank of New Zealand looked upon the absorption of the Colonial Bank officers into our service with some jealousy. There has been a very great saving effected by the amalgamation, but we have not yet felt the full benefit of it. In some cases, perhaps, Colonial Bank officers did not secure the positions they felt they should occupy, and it is very difficult to fit the two services together. For myself, I have been under the impression that the Colonial Bank men were favoured. Some few weeks since we directors had to put down our feet on that matter; but still it is very awkward if you have men receiving high salaries, and cannot appoint them to high positions, even if it is to the detriment of the Bank of New Zealand officers. However, they are working very well now. The fact of having the General Manager and President of the bank there would somewhat dispirit the Bank of New Zealand officers in their outlook for the future. It might be thought the late General Manager and President of the Colonial Bank would have a preference for their own men, and there is sure to be some feeling of that kind. 155. You think there is now a better tone existing, and that they work better together?— Well, the directors intend to look strictly into the matter to see if the Colonial Bank men are unduly favoured. At the same time, it is awkward to have highly-paid men not properly placed in the service. 156. Has there not been a large number of Colonial Bank officers not taken on ? —That is one important part of the matter which caused great discussion. We would only take such Colonial Bank men as we required, and would not take the staff as a whole. 157. Was not an attempt made by the directors of the Colonial Bank to insist that their officers should be taken over ? Was that not one of the conditions they imposed ? —lt was a condition. We opposed it, and we had our way; and it was very important, too. At the same time, we took over the men we thought would be of service to the bank—either for their service to the bank, or because they had influence with the customers, and could enable us to retain business. 158. In respect of taking over the business and working the accounts in the several lists, you say-it was an advantage to you to take over as many men as were suitable to work those lists, and so on ?—We had more taken on as a matter of policy than we required. 159. You are economising as far as you can now, and there have been great savings effected ? —There have been great savings effected. I know that the salary list of the combined bank is £20,000 a year less than the separate salary lists of the two banks, and still we have not reached the full benefit of the amalgamation. 160. I understand, then, in the payment of salaries alone there has been a saving, taking the combined amounts of the banks separately, of £20,000 a year?—lt is a few pounds short of £20,000, but not far short of it. 161. And, in your opinion, further savings can and will be effected?— Will be. 162. Do you think there will be any loss in respect of the purchase of the premises and buildings of the Colonial Bank ? —They will not realise, perhaps, what we gave for them unless there is an advance in the value of property in New Zealand of more than we anticipate. 164. What do you estimate your loss at in respect of the bank premises ? —My idea was that there would be a deficiency of £30,000 or £35,000. It is impossible to say yet. That is an element we had in consideration when making the purchase. 165. It was not done without being recognised—you did not go into the matter blindly ?—I know I had the lists of property before me, and I had the property-tax value, and it is a matter to which I paid considerable attention. 166. I suppose if some one from outside the Bank of New Zealand had come in and took over the Colonial Bank as a going concern, the book-values would have been a good value for the properties ?—Any other bank coining to New Zealand for that purpose I have no doubt would have taken over the properties and buildings at book-valuation, because they would have required the buildings for themselves. 167. A large number of these buildings were not required for your purpose, were they ?—No. Take, for instance, Palmerston North : there are two extensive buildings there, and we have shut one up. 168. And there is therefore a loss ?—Yes ; and it will not bring in the same price for general business purposes as it cost the Colonial Bank as bank premises. 169. At all events, this was all taken into account at the time you made the purchase ?—Yes, it weighed with me. 170. I now come to the position of the bank with respect to this £54,000: Was the Government consulted by the directors before you decided to take that £54,000 out of the Profit and Loss Account as to what you intended to do with it ?—I cannot say. I have no recollection of the Government being advised, possibly they were by the President or Auditor. 171. I suppose if you had not taken that £54,000 out of profit and loss, and placed it with the balance remaining of the £200,000 for contingent losses, you would have been in a position this year to have paid the interest on the capital called up from the shareholders?— No. The first instalment of that was only due in June, if I recollect rightly. 172. There was no interest payable on this money called up until this June, you say?— The first instalment was due in June, but that balance-sheet was made up to 31st March last. 173. If it has been stated that this process enabled you to evade the payment of interest, that would be incorrect, seeing that the 5 per cent, was not due until the 30th June next ?—lt would not be due, and it would not be dealt with until next March. There is no evasion there, certainly not. 174. Now, in respect to the interest payable on the preference shares to the Government, are you of opinion that that will have to be passed by the .shareholders?— Yes, unless Parliament amends the last Banking Act to make that payment independent of the shareholders.
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175. What do you consider the position of the share-list now as compared with 1894 ? Has it depreciated or improved ? —Well, we are particularly strict with every transfer. We cannot lay down, as a rule, that one man shall not transfer unless the transferee is financially as good as the transferor; but we do inquire to see if the position of the transferee is such as to enable him to pay the calls. No transfer is passed without an opinion has been ascertained from our officers as to the position of the transferee, and that is submitted to the board ; and, even then, Mr. Watson has the power of veto. 176. Has that veto ever been used or exercised by Mr. Watson ? —No. We have been very near it once or twice, but it has never been exercised. 177. You have, no doubt, heard complaints that the directors were harshly and unjustly pursuing shareholders for the payment of calls ?—We have to be very hard in the matter, because there are some who would not pay if they could help it. But our duty is to proceed to the last extremity. There are cases which are sometimes very hard. There was a poor old lady, eighty years of age, who had to pay calls. She had a small income and a little property, and offered to hand over her property if we would allow her to keep her small income. In allowing her to do that, we thought we were dealing mercifully with her. But in many cases we have to use pressure, and I think that duty is imposed upon us by the legislation. 178. But where it is a case of throwing good money after bad, you have discretion ? —We are not throwing good money after bad. We only sue where we think we can get the money. 179. But are there not any cases where you have been satisfied that the shareholders are not able to pay ? —We are satisfied in all cases. We do not waste any money. 180. If any such statements have appeared in the Press, or have been otherwise made, you say that is not correct ?—Representations have been made to us, but we have not been convinced of their accuracy. We do not throw money away in pursuit of payment of calls if we are satisfied the shareholders have no means. 181. In carrying on the business of the bank complaints have been made that there are favourite spots, some parts where accommodation is given, and other parts where the necessary accom-. modation is withheld. Is that correct or otherwise ? —I may say that I have had more to do with this part of the business than any other director, and I have seen nothing to justify such a belief. 182. Take Central Otago, for instance: Have you been withdrawing business and losing accounts there ? Do you know of any large account that has recently left the bank ?—We are bound to lose some accounts of importance. We have to be stricter now than in the past; but we will not allow any business to leave us if it is reasonably safe. At the same time, we will not give everybody all that they require. 183. Do you think there is an undue competition with other banks, and that they are prepared to take an account which you think unsafe ?—I know of one considerable account which was taken over which was just on the balance. Referring to Central Otago, I do not know of any large account which the bank has lost. I have heard some words mentioned in reference to one Colonial Bank account which it would be hardly just to say we have lost; but 1 was very adverse to it being taken over without reliable information, and I should be adverse in the same way to-morrow. 184. It has been stated that delays have been made in connection with the making of inquiries which caused one account to be lost Do you know of that ?—No ; but I will ask what account has been lost from that cause. 185. It is stated that in Wellington, and in the Wairarapa particularly, your advances and business are very much more liberal or lavish than in any other part of the colony ?—lt is not correct. 186. Now, as to the advances in the Auckland District: Who is the inspector in that part ?— Mr. Dignan. 187. Is the bank advancing in any way largely in respect to mining properties?—No; it is very conservative, because nearly all the companies there have their capital paid up. There is nothing to advance on. 188. But there are those dealing with scrip and customers who may want money over their properties ?—They have a very strict inspector to deal with in Mr. Dignan. 189. You have no risk to run in respect to that class ?—I have no knowledge of any. 190. I suppose, from your experience on the goldfields, you know there is danger to a bank when a mining boom is on ?—Yes, and I am afraid it will be known in New Zealand by-and-by. 191. You are watching that? —We are watching very carefully that speculators do not get the Bank of New Zealand's money to speculate with. 192. Are some members of your staff connected with any mining business in any way ?—That is a very wide phrase. Some may have shares. I heard a question addressed to Mr. Watson a few days ago in reference to our Auckland manager. He occupies a position in Auckland which we consider in the interests of the bank he should occupy, but it is a special departure from our usual course of business. 193. The matter was referred to the directors ? —The matter was referred to the board and discussed, and the pros and cons, gone into. 194. The matter was discussed, and you believed it was in the interests of the bank itself that he should occupy the position ?—Yes. 195. You do not think that a manager of the bank being on a board of advice there would lead to speculation or advances being given to the bank's customers from that fact ?—One might say that the only company in which it was likely to happen would be the one he was connected with, and we can look after that ourselves to see that no large advance is made without being secured. Mr. Watson, the General Manager, and myself may, in extreme cases, decide an advance at an hour's notice, but it is always dealt with by the board afterwards. 196. A large number of officers have left the bank's service to take up mining positions, owing to the mining boom, have they not ?—Yes, and other positions.
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197. Do you know Mr. Boyd? —Yes. 198. Has he left the bank?— Yes. 199. Where is he now, and what is he doing?—l do not know his exact position, but I believe he is financial manager to Mr. Ziman. 200. Touching the agreement with the bank officers, the President has an agreement with the bank ?—lt is an agreement to pay his salary so long as he occupies the position of President. We do not guarantee the term. 201. The Auditor has an agreement, has he not ?—The same. 202. Mr. Buller and Mr. Litchfield, the inspectors, have also letters fixing their engagement for a period ? —They are different to the other two. We thought that the other two had a right to be independent as to their salaries, and we thought that Mr. Buller and Mr. Litchfield had a right to a term owing to the position they took up in the examination of the Colonial Bank accounts. 203. Were these agreements forced upon you by the President and the Auditor ? Would it be correct, as stated by one of the witnesses here, to say that they were forced upon you ?—I could not use such a word as force. The deeds came on at a particular board meeting. They came in on the same day as other deeds. Our legal adviser gave advice, and we discussed the position. They were presented to us for execution just the same as the other deeds. 204. In respect to the Auditor, do you not consider that his position is somewhat unique ? He was appointed as Government Auditor to conserve the colony's interests, and at the same time he is holding a position in the bank which makes him safe as far as the Government is concerned? — Yes; but at the time he took the position he was within three years or thereabout of the age at which he might secure a pension, and he had a salary from the bank of, I think, £1,500 a year. His relieving us of his salary was a distinct gain to us, and we thought that, under the circumstance, it was reasonable that if his appointment did not last three years he should come back into the bank and serve until his pension-age. 205. No information of these agreements either with the President or Auditor was sent to the Government? —As a director, Ido not know if information was sent to the Government. I was under the impression that it had been arranged previously to my joining the board, but that was only'in'conversation with Mr. Murray. 206. It was Mr. Murray who mentioned the fact that Mr. Butt was to be Government Auditor ? He spoke about the necessity for economizing and reducing salaries, and mentioned that it would be an advantage for Mr. Butt to have the position of Auditor. - 207. The salaries are rather high—£l,7so for Auditor, and £2,250 for President? —Yes; but possibly you cannot replace them with men of the same calibre for less money. In fact, I have heard from outside talk that the position was refused by another gentleman in Wellington—that is, the position of President. Ten per cent, was, however, deducted from both gentlemen during the first year of service. 208. Do you think that, having all the directors and these men of high salary in Wellington, without any knowledge of what is going on in the colony, is an advantage, or otherwise—in other words, would not a wider representation on the board of directors be an advantage to the bank ?— Well, lam not prepared to answer that question absolutely in the affirmative. The more directors you have, the more jealousy you would have. I take it that, in Wellington, Mr. Kennedy and myself, being in the brewing business, there is no other person in the same business to find fault with us on the grounds of having information as to their accounts. But, if you had Christchurch and Dunedin people on the board, there might be jealousy between some of the bank's clients there, and they might say that local competitors would know their business. At the same time, the directors must be very frequently in Wellington, and I know that most of my time is taken up here ; and it is also supposed that we should occasionally be travelling all over the colony. There has been so much parliamentary business since I joined the board that my time has been taken up. I have been in Australia on bank business, but for that I would have visited various parts of New Zealand. 209. Do you think it advisable that the directors should go over the whole colony, or that there should be representation from other parts of the colony ?—Representation from other parts of the colony would be useful, but is has the drawbacks I have mentioned. No doubt, if the directors are only resident in Wellington they will have to travel about, and make themselves acquainted with the bank's business and the districts of the colony generally. 210. If that is not done they will be entirely dependent upon the branch managers?— Yes, on the inspectors and branch managers. In some cases, if a director visited the districts and found that an account was considered safe by the branch manager, he might meet the gentleman and come to some other conclusion. 211. In the same way as you came to a conclusion when in Australia differently to what your officers came to? —Yes, although some of our officers were of the same opinion as myself. 212. Have you any suggestion to make which would strengthen the position of the bank in its conduct and business, and generally conserve the interests of the bank and that of the colony ? You have had some experience in the working of the bank, and might make suggestions for our guidance in the matter ?—I should not like to make suggestions hurriedly. It does not seem to me that I should be asked by the Committee for suggestions of that kind without notice. I have mentioned a suggestion as to the Auditor and as to an assistant manager, or acting manager, to take the General Manager's place. I think, also, that we should have a solicitor in our office—a legal adviser. He would naturally have to be a highly-paid official, but I think it is of importance that we should have such an officer in the bank. With reference to directors and so on, I do not think I should be called upon for an answer now. 213. If you will think the matter over, and give your suggestions to the Committee, they will only be too glad to receive them from you ?—Yes.
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214. From your experience, and from what has transpired prior to and since you became a director of the Bank of New Zealand, do you think Parliament was justified in coming to the assistance of the bank ?—lt would have been a very awkward position to have faced, to have allowed the Bank of New Zealand to break down. Looking at it from my own point of view, and being convinced that serious financial disaster would have swept over the colony, I think the assistance rendered to the Bank of New Zealand was a saving to the colony generally. 215. Your opinion is that, if the colony had acted otherwise, it would have been disastrous to the colony?—lt must have been. I take it that the Colonial Bank would have been compelled to stop if the Bank of New Zealand had stopped, as there would sure to have been a run on it, and perhaps the National Bank. 216. Your answer would be that, in your opinion, the colony was justified in coining to the rescue ? —I think so. 217. You have not had much to do with the working of the Estates Company?—l did not take an active part in the Estates Company. Mr. Kennedy and myself attend to the bank business, Mr. Johnston and Mr. Booth to the Estates Company. We meet in connection with both, and discuss what has been done. 218. Who is looking after the Estates Company for the Assets Board ?—We have now under consideration provisions by which the trading concerns will be more directly under the control, or possibly form part, of the Bank of New Zealand. 219. That is more ticklish and requires more careful watching than the Bank of New Zealand ? —It will require careful attention, and also legal advice as to whether the directors are permitted to carry on trading concerns. I shall have to satisfy myself before directing the trading concerns that I am not making myself responsible to the Bank of New Zealand shareholders. 220. Although Parliament by arrangement allowed these concerns to go back from the Estates Company to the bank, you think there is a doubt ?—I am not satisfied yet that directors are empowered to carry them on. 221. From what you stated with regard to jealousy in respect to directors carrying on businesses of their own, the fact that the bank is carrying on trading concerns will to some extent militate against getting customers carrying on the same business?—l do not think so. I think it is well known that every trading concern that we have is open for sale if we can get a reasonable price for it; but we are not prepared to throw them away. 222. That is all I have to ask you, Mr. Macarthy.—You asked me yesterday for information about the Fiji business. I find that Mr. William Burton is in charge of the bank's business in Fiji. He is manager of the Suva branch, and supervises the business at Levuka. In the service of the Bank of New Zealand he was at one time accountant at Sydney, then assistant manager in Melbourne, and subsequently manager at the Thames. Prior to joining the service of the Bank of New Zealand, he was in the employ of the Colonial Bank, being their manager in Auckland, and subsequently in Dunedin. The accounts of the bank in Fiji were last audited by Mr. J. G. Scott, formerly bank's agent at Palmerston North. Mr. Scott also inspected the branches. Suva was audited and inspected on 20th April, 1896; Levuka was audited and inspected on 23rd March, 1-896. Prior to Mr. Burton assuming charge at Fiji, in October, 1894, the Fiji business had for some years been in charge of Mr. A. B. Somerville, now manager of the bank's Wellington branch. I may say that we have returns every mail of the transactions, which are sent on to the head office. With regard to the total writings-off in connection with accounts there, they are £1,769 since 1891. That is the bank business, not including the Estates Company. With reference to the Australian inspection, Mr. Butt visited Australia in March, 1896. The last previous inspection of the Australian business was made in December, 1895, and January, 1896, by Mr. P. T. J. Parfitt, formerly the bank's manager at Wellington, who went over to Australia about the middle of December, 1895, and made a full inspection. 223. The Chairman.] These are all the papers you have ?—Yes. 224 Mr. Montgomery.] Who asked you to become a director? —Mr. Murray. 225. Did you make inquiries as to the position of the bank ?—Only what was explained to me by Mr. Murray. 226. What did he explain'?— That Parliament having already assisted the bank to the extent of £2,000,000, he apprehended that the finances would be safe and in smooth water, and that all the time that I would be required to give would be a couple of hours or so a week. 227. Did he make any statement with regard to the Assets Company's properties?—He might have said that there would be a gap to be made up; that the depression was not going to last in the colony very long ; and that it would not be a very serious matter. 228. Did he suggest in any way that further writings-off would be required in the bank?— No. 229. Did he tell you what information he had laid before the Government prior to the passing of the legislation ? —No ; the amount had been voted in the Parliament when he spoke to me. 230. Were you then led to believe that the affairs of the bank were quite satisfactory ?—That was the impression I received from what Mr. Murray said to me. 231. Did he say anything about the separation of the Estates Company?—-He did, He also referred to the expediency of acquiring either the Colonial Bank or the National Bank. 232. But as to the separation of the Estates Company? —That was part of the scheme. 233. He told you the scheme before you became a director?— His views. Perhaps lam hardly right in calling it a scheme. 234. Had you a number of conversations with him ?—Before I promised to join, I think I was with him three times. 235. But did you yourself not make inquiries?—-No. I came to the conclusion that the £2,000,000 voted by Parliament would not have been voted unless Government had the information.
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236. You made no inquiries of what the information was ?—No. 237. Were any of the statements made to you by Mr. Murray before you joined, subsequently discovered by you to be misleading ?—I may say that his statement was misleading in respect of the Estates Company, owing to his sanguine ideas of value. 238. But with regard to the bank ?—With regard to the bank, the bad debts could not have been fully provided for in his scheme. 239. You found them out afterwards ?—Yes. 240. Did you come to the conclusion that Mr. Murray had full confidence in the bank, whatever his knowledge may have been at the time when he made these representations to you ?—I thought he was fully conversant with the position of the bank. I had known him a good many years, and the positions he had occupied. 241. Do you still think so ? —No, Ido not think he could have been. I was not aware then that he had been away from the bank some time, and was only acting for the London board. I took it for granted that he knew, as he had always been connected with the bank. 242. When you were appointed, did you read up the old balance-sheets and reports?—l did not. 243. Have you done so since ?—I have seen them, and passed them in review, and paid some little attention to them. As I said yesterday, I informed Mr. Murray I was not going to form one of a committee of inquiry. 244. From your knowledge of the facts, did you come to any conclusion as to the reports of the directors from 1889 to 1894 ?—I have not examined the business of the bank during- those years sufficiently to enable me to form any well-grounded opinions. 245. I will quote one of 1893. At the half-yearly meeting, held in August, the chairman said, with regard to the Estates Company, "We now know that these estates are coming out well; that the liberal expenditure and prudent management which have been exercised are leading to larger profits, while the less desirable properties are being got rid of. Therefore, we may say with confidence that the bank has now emerged from its difficulties, and that we can look forward to a future of steady and substantial progress." Could you say, from your knowledge of the facts, whether'that' statement was misleading or not?— From my conversation with Mr. Booth and Mr. Johnston, and, from what they tell me about the Estates Company, I should think that- was very highly coloured. 246. Did you hear Mr. Watson's evidence with regard to this ?—I have not heard the whole of his evidence here. 247. Mr. Watson says, "I have given a good deal of consideration to this matter, and I have come to the belief myself that these former directors of the Bank of New Zealand acted up to the best of their knowledge and belief at the time." Have you come to that conclusion ?—I have no means of arriving at a conclusion. I have no knowledge of what they had before them. 248. Mr. Watson also says, "I maintain that the directors were justified at that time in making those balance-sheets." Can you form an opinion on that ? —No. 249. What do you consider should be the rule as to the writing-down of properties or debts ? It has been the practice of the bank in the past to keep the book-value in anticipation of a rise. Do you .think it is a proper policy for the bank to keep the book-value in anticipation of a rise they think probable, or that they should write the assets down to actual value year after year ? —The safer policy would be to write them down, but you cannot always do that. There might be a great depression in one year, and that might be more than made up in another. I may mention a particular case. A little while since, I had to deal with a security of the bank. Its book-value was £2,000, and we had an offer of £2,000 for it. Owing to my knowledge of property generally, I went and had a look at it, and said it was worth more money, and stopped the sale. A little while afterwards we got another offer of £2,400. In company with Mr. Booth, I again inspected the property. We decided that £2,400 should not be accepted. A few days later we got an offer for £2,600, which was accepted, and that was a clear gain of. £600. I stopped the sale before, because I was willing to give that amount for it myself. If you write properties down every year, it is a peculiar system, for properties may improve one year and be reduced in value the next. 250. Do you think properties should be written down every year? —I do not think it could be done, and still be able to carry on business. Probably in a time of depression you might show an enormous deficiency and create a scare. 251. This question was put to Mr. Watson : " Do you think properties should be put down in the balance-sheets at their saleable value"?—l do not see how you could ascertain it every year. It is an exceedingly difficult matter to deal with, and you can only deal with cases as they arise. But I take it that the policy of the bank would be, where they have a credit to profit and loss, that they could put aside an amount for probable deficiency ; but where you have such a mass of business to deal with as this Assets Company you could not do it. 252. Coming to the inspectors : Mr. Buller and Mr. Litchfield were given appointments for three years ? —Yes. 263. In answer to Mr. Seddon, you said that this was partly owing to what occurred during the examination of the Colonial Bank accounts ?—Yes. 254. Will you explain that ?—Their views on the value of some of the Colonial Bank accounts or securities attached to them was so materially different to Mr. Watson's that they caused a good deal of friction, and on one particular occasion Mr. Watson lost his temper. We, as directors, came to the conclusion that their position should not be jeopardised, and gave them an agreement for three years. 255. This was to protect them against the possible caprice of Mr. Watson?— Yes; and Mr. Watson afterwards agreed with it. Probably he realised himself that his temper had outrun his judgment at the time.
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256. Did the inspectors apply for it at the time? —It was brought-up at the time by a director. 257. Which director? —Mr. Kennedy; but we all concurred in it, and thought it a proper thing to do. 258. Representations were made to the Government, were they not ?—I heard so; Ido not know of my own knowledge. 259. Then, it was not altogether on account of their zeal and energy in inquiring into these accounts that they were given this three years' appointment ?—lt was owing to their zeal and energy. 260. That they were given the appointments ? —Yes. It was their zeal and energy, and the manner in which they valued Colonial Bank accounts that brought them practically into contact with Mr. Watson. 261. They took up an independent position? —Wholly independent. 262. Can you say whether their suggestions were borne out by the facts afterwards ? —I would say yes, as far as we can judge at present. 263. Did you act on their advice ?—Generally we did. 264. Did not their advice refer to the position of accounts in the different lists—as to which list they should be in ?—No; more as to the value of accounts. We placed them in the list ourselves. 265. If it was not advice relating to actual accounts, can you tell us what it was ?—I do not see how I could without going into the actual accounts. Speaking as a whole, their criticism and advice was most valuable to us in determining the value of the accounts. Of course, we knew perfectly well that there was a deal of jealousy on the staff, and I may say that they treated the accounts severely. 266. Why should they think Mr. Watson would treat them severely ?—He had been inspector of the Colonial Bank for years. 267. It was a case of pitting his knowledge against theirs ? —He thought in some cases that their recommendations were unduly harsh, and that they treated the accounts unfairly. 268. With regard to the amount of cover, for instance?— With regard to the amount of cover. There was'other business that they recommended us not to take at all. 269. Did Mr. Watson take a more lenient view of the accounts? —Mr. Watson's view of thenvalue was more favourable to the Colonial Bank than the view of our inspectors, but we so arranged that any deficiency had to be made up by the Colonial Bank. 270. Was that throughout the negotiations, or with regard to particular accounts only ?—lt was more marked with particular accounts, but generally it was so throughout. 271. Was Mr. Watson anxious for a careful and minute scrutiny of the accounts ?—I think so. In many cases he gave us good advice, and many accounts that came within his own knowledge he put aside for close examination. 272. Should you think in his treatment of the account he appeared to be actuated solely by a desire to protect the Bank of New Zealand? —I would not say he was actuated by any other motive ; but his view was more favourable to the Colonial Bank than our inspectors. We preferred to take the advice of our inspectors. 273. So far as you have been able to ascertain since, who was right ?—Generally our inspectors. 274. Referring to the purchase of the Colonial Bank : Mr. Booth, I think, has told us that you wanted to drive a harder bargain than some of the other directors? —Well, I considered that the gentlemen who had the selling of the Colonial Bank knew exactly what they had to sell. The directors of the Bank of New Zealand were bound, I think, to find out the value of it, and I felt convinced that we would not buy the Colonial Bank very much below its value. For myself, I determined to find out its value, and test it from every different point. 275. You told us the cash paid for the good-will was £75,000 ?—Yes. 276. And that the bank buildings you paid £125,000 for?— Yes. 277. Between the two it would be £200,000 ?—Yes. 278. What was your estimated value of the bank premises ? —W T ell, I reckoned that we should lose £30,000 to £35,000 in disposing of them. 279. That would make their value £90,000 as compared with £25,000 ?—Yes. 280. That would be the amount you expected to realise ?—lt, however, could only be a matter of opinion. 281. So that, if we subtract the probable amount that would be realised on the buildings, £90,000, from the buildings and good-will together, £200,000, leaving £110,000, that would represent the consideration for the purchase ?—Expressed in pounds sterling, that would be so. 282. Am I correct in stating that ? —Yes, I think so. 283. About £110,000 ?—Yes. 284. Do you distinguish in any way what I called the consideration for the purchase from the good-will ? —ln speaking of good-will, you have been referring to cash paid; but in estimating goodwill you would, as a business man, would you not, take into consideration not only the cash paid, but the estimated loss on the purchase?— Certainly; I think we shall lose £35,000 in disposing of the properties. 285. I mean the estimate of what you were giving ? —We knew we were giving £75,000, and were likely to lose £30,000 or £35,000 on the property. 286. That would be £110,000?— Yes. 287. Apart from the debentures, your estimate of what you were paying was £110,000? —Yes, I think we did pay that. 288. Apart from the debenture question, that was the good-will ?—Yes ; I considered that was the good-will. Whatever we lost in property was to go to good-will. 289. Coming to the debenture question : The Colonial Bank guaranteed a certain account as part of the bargain ? —They guaranteed the payment of the debentures.
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290. And this amount of £5,000 credits ?—Yes, to make those good. 291. What do you estimate, as a business-man, was the difference in value between the account when guaranteed and before it was guaranteed ?—I cannot give you an answer to that, because I looked upon it as possibly avoiding an awkward lawsuit. 292. It was worth something to you to get the guarantee ?—lt was offered to us by the Colonial Bank, and I considered it had some value. 293. Can you estimate the value in any way, because it would affect the good-will to that extent ? —No ;it was something to make weight. 294. Who suggested that this account should be guaranteed ?—Mr. McLean, I think it was. We were insisting on the amount being paid. 295. Being paid by the Colonial Bank ?—Yes. 296. Will you tell us what the Colonial Bank had to do with paying an advance made by you ? —You are getting into private accounts. We saw the advantage of getting the whole business cleared up, and we were in a position to lay down conditions. 297. You intended to get cash ?—We determined among ourselves to get this amount cleared up. 298. Mr. Watson stated that these accounts were perfectly good from the first day of the advance ? —That is not my view. 299. He also stated that an offer had been received for them equal to 20s. in the pound : Can you tell us anything with regard to this offer ?—No. 300. You know of no offer?— No. 301. Did the directors authorise the advance of the debentures to be made? —Yes. It is only fair to Mr. Watson that I should mention what it really was. The business came before Mr. Kennedy and myself first, and we approved of it, but directed that nothing was to be done in it until there was a full meeting of the board. In the meantime, we required certain information to be furnished: that was, the balance-sheets, memorandum of articles of association, and list of shareholders with the amount of shares held by each, and the amount of unpaid calls. When the whole of this information came before us, our general manager did not recommend the advance —or our acting general manager at the time, Mr. Andrews—and we considered the margin of safety was too narrow. 302. That is, the board ? —The whole of the directors. Mr. Watson gave us his view, claiming to know more about it than any of us, with his knowledge. On that we gave way. 303. On representations made by him ? —Yes ; but the whole of us considered that the margin was too narrow. 304. Am I right in saying that had it not been for the statements made by Mr. Watson the advance would not have been made ? —Yes. 305. Do you know whether, at the time, an advance on the same security had been refused by other banks?—l am not aware. 306. I think you subsequently told us that Mr. Watson's representations proved to be misleading ? Ido not wish to put words into your mouth ?—lncorrect. He was over-sanguine. 307. Do you attribute blame to Mr. Watson for this matter, or do you merely say he was over-sanguine ?—My view is that he ought to have known better; but, of course, it is only in the light of after events I say that. 308. He might not have had information ?—He might not, but from what has transpired since I think he ought to have known it. 309. You told us that a director of the Colonial Bank had made certain statements just before the amalgamation. Was this Mr. Larnach ?—Yes. 310. I will not press it, but I would be glad if you could tell me what the representations were ?—lt was a chaffing remark. 311. Not important ?—He might have considered it important at the time. As soon as he made the remark I said, " Now we know the position you are in." 312. Was it in reference to the £20,000 draft ?—lt had an indirect bearing on it. 313. Did Mr. Larnach take any part in the negotiations ?—At the conclusion—three or four meetings probably. 314. Was he in favour of the amalgamation or purchase, or not ?—I fancy he was against it: that is, he was against the Colonial Bank selling. 315. Do you know if his objection was to the price or otherwise?— Well, from what he said it would be as to the price—that they were not getting enough. Probably he was influenced by the idea that it would be better for them to carry on their business. 316. Do you think the Colonial Bank could have carried on in the position it was ?—Not in the position it was. My view is that they might have made a call, and then probably through making the call their shares would have been at a discount of more than the amount of the call, the public not knowing the position, and having lost confidence. 317. Do you think there would have been more confidence if the public had known the position—in the shares ? —The market-value of the shares was an index of what the public thought. They were at 14s. or 15s. at that time, of which they have had 10s. back now. 318. Did Mr. Mackenzie, the General Manager, take part in these amalgamation negotiations ? —He was there on behalf of the Colonial Bank. 319. And did you inquire from him concerning the accounts ? —Occasionally he was asked for an explanation when we were going through the lists. We were weeks going through them, and sitting very long days, from ten or eleven in the morning until very late at night. He answered questions, and occasionally volunteered information. 320. Did you find his views of the position somewhat sanguine ?—Yes. Generally he was opposed to our view of the amount of cover required.
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321. Would you go so far as to say his representations were misleading?—l would hardly say that, because that would imply that he was endeavouring to deceive us, and I would not be correct in that. 322. They were not borne out by after events ?—No, not by after events. 323. Did your inquiry into the Colonial Bank business disclose what you considered to be bad management ?—We only know the results of the management. We could not tell what the management was. 324. The results show that certain accounts had depreciated?— They showed that certain accounts of the Colonial Bank, of certain face-values, were found to be of less value, and we only took them at the lower value. 325. Will you go so far as to say your investigations did not disclose mismanagement ?—They did not disclose mismanagement, because we had no opportunity of examining the system of management. We had only the results before us. 326. Would not the results you had before lead you to infer that there had been mismanagement ?—The most that I could say was that there was laxity somewhere, but I am not prepared to say where.
Friday, 11th September, 1896. Examination of Thomas George Macarthy, Director of the Bank of New Zealand, continued. 1. The Chairman.] I think there were one or two matters referred to yesterday which you promised to obtain information upon : Have you got that information ?—I have, sir. I have it in the form of a memorandum : " Under clause 58 of the deed of settlement the board of directors of the bank may appoint local boards of directors at such places as they may think fit. The bank's London board is appointed by the board-in-chief under the terms of this clause. The present London board consists of Mr. R. H. Glyn (chairman), and Messrs. J. A. Ewen and W. T. Holmes. The two latter were appointed by board minute of 17th October, 1894, which fixed the numerical strength of the London board at three members. The third seat was kept vacant; but Mr. R. H. Glyn, who was' elected' a member of the chief board at the shareholders' meeting, held in Wellington on 26th September, 1894, acted upon the London board until September, 1895, when his resignation as a member of the bank's board was put in and accepted, Mr. Glyn being simultaneously appointed chairman of the local board in London. The functions of the London board are purely advisory. There is no power legally vested in them, there having been no legal delegation of powers to the London board by the principal board of the bank in terms of clause 58. The power of attorney under which the business of the bank in London is conducted is in favour of Mr. R. H. Glyn and Mr. C. G. Tegetmeier (the bank's London manager), jointly and severally. This power was executed by the late board in London on 25th September, 1894, immediately prior to their resigning office to enable the new board to be elected in Wellington. It is only those gentlemen who have the legal power to enter into engagements on behalf of the bank." There was another matter about which I was asked to get information, as to the accounts in Central Otago which have left the bank. There are six branches of the Bank of New Zealand in Central Otago— namely, Lawrence, Ophir, Outram, Palmerston, Queenstown, and St. Bathan's. The number of accounts which did not come over to the Bank of New Zealand were two, amounting to £76 Bs. 7d.; accounts closed after coming over were seven, making a total £14,277 —that is, in the six offices in Central Otago. There was an account to which I referred yesterday in which a large advance was required; but we had not sufficient information before us to justify us in granting it, and probably, from pressing inquiries, friction afterwards arose. I much regret that we lost that account; but we have to be strict in such cases. 2. Mr. Montgomery.] You told us that, as part of the agreement for purchase between the Bank of New Zealand and the Colonial Bank, there were certain guarantees for accounts agreed upon. One account was for £20,000, and another for £5,000 ?—Yes. 2a. Were there any other accounts guaranteed? —Not as part of the agreement. Those are the only accounts which occurred to me as having been guaranteed at that time. Of course, the " C " list is guaranteed. 3. Were any other accounts agreed to be guaranteed besides the " C " list and these two we have mentioned ?—No. The particulars of every account had to be established by the Colonial Bank—that is to say, if the Colonial Bank stated that a certain account was so much indebted as shown by the accounts, that had to be established. 4. But there were no other accounts in the same position as the £20,000 and £5,000 which were guaranteed ?—No. 5. Can you tell me why the Colonial Bank should have been under any obligation to guarantee the £5,000? —We made it part of our bargain. 6. But why that account instead of any other accounts which arise from advances made by the Bank of New Zealand ?—Because we were under the impression that there might be some trouble with it. 7. But there were other accounts with which you might have had trouble which the Bank of New Zealand advanced ? —Yes; but they had been working these accounts, and we were without full information respecting them. 8. The £5,000 account ? I thought you said that was part of the bills of exchange ? —The £5,000 was for bills of exchange, but there were securities in support of it which might have been affected by the Colonial Bank. 9. And do you think the Colonial Bank, apart from the agreement for amalgamation, was under any obligation to guarantee this £5,000? —I would not say that they were under an obligation. * 30—1. 6.
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10. Were they under any obligation with regard to guaranteeing the £20,000 ? —For our purpose, I claimed that they were —that is, in making the business safe at the cheapest possible price. 11. The £5,000 was not in the same position? —I did not consider it so. 12. Passing on to the appointment of Mr. Mackenzie: We have been told by Mr. Booth, and I think by yourself, that the directors were adverse to this appointment at the beginning, at the time it was proposed to appoint him ?—At the time we decided to make the purchase, or immediately prior to that, a majority of the directors were adverse to his appointment. 13. Was any director in favour of it except the President ?—Yes. 14. But the majority were averse? —The majority were averse. 15. The majority subsequently acquiesced ?—The majority subsequently became the minority, There was a change of opinion at the time the appointment was made, but Mr. Booth and myself dissented. 16. You did not have your dissent recorded?—No ; Mr, Booth's was recorded, and I may say that that is the only dissent recorded on our books. I thought it right it should be recorded, inasmuch as Mr. Booth required it, and I thought that he was within his rights in doing so; but I did not ask that my dissent should be recorded. 17. Why not?—l thought I had pressed my objections as far as it was proper to do so, and that it was then my duty to work with the majority. 18. Which director changed his opinion ? We have been told that you and Mr. Booth were against it, and that the President and other members of the board were in favour of it. I will not press the question if you do not think it should be answered ; but it is part of our inquiry to ascertain about the appointment of Mr. Mackenzie ? —I do not think there is very much in it. I have no doubt if the gentleman were here he would tell you plainly. 19. I will not press it if you decline to answer.—l will thank you not to press it. 20. Have you been associated with the General Manager as a director since he has been appointed ?—Yes. 21. Will you say, from your own knowledge of him, whether you have confidence in him as General Manager of the Bank of New Zealand ? —From what I have seen of him during the time he has occupied the position of General Manager, I cannot say that I have any fault to find with him. 22. I ask if you have confidence in him ?—I will put it in another way, and say that I have a want of confidence in Mr. Watson and Mr. Mackenzie being together in the positions they occupy ; not that I think there is any dishonesty or want of ability on the part of either, but still I think it would be more in the interests of the bank, and probably of the colony, if they were not together. 23. Will you answer my question, whether you have confidence in Mr. Mackenzie as General Manager, apart from Mr. Watson? —I have no fault to find with him during the time he has been General Manager, and during the time I have been working with him. 24. It is one thing to have no fault to find, and another thing to feel confidence in him ?—1 cannot get away from the view I gave yesterday in reference to the Colonial Bank business, because I think that some one is to blame for that, although I do not know who. 2-5. Then you could not go so far as to say you do place confidence in the General Manager ?— I have endeavoured to define my objections, or the ground of my want of confidence and its extent; but, as a gentleman, and as far as I can judge of Mr. Mackenzie's ability, I have no fault to find with him. 26. You have told us that when Mr. Watson and Mr. Mackenzie are together, Mr. Watson is the dominant spirit ?—I think so ; of course, that is only my opinion. 27. Have you ever found Mr. Mackenzie acting independently of Mr. Watson?—l cannot say I ever found him acting independently or in opposition to Mr. Watson. Occasionally he does advance his opinion on matters. Still, I have come to the conclusion that Mr. Watson is the stronger man of the two, the more dominant, and generally his opinion prevails. 28. Passing on to Mr. Watson, you have been, of course, intimately connected with him in banking business. Has he inspired you with confidence in his ability and integrity as President of the bank ?—Yes, I have a very high opinion of Mr.. Watson's, ability and integrity; but in any matter relating to the Colonial Bank I always weigh over again his opinions, because, from my long experience of him, I think he is a man of very strong convictions, and probably has strong likes and dislikes. 29. And you are prepared to say that you have confidence in him as President ?—Generally; but when it comes to a question of the relations between the Colonial Bank and the Bank of New Zealand I watch Mr. Watson's actions closely, not from any idea that he would be dishonest, but because I think the influence of old associations might prevail with him. 30. I am speaking now rather as regards the time subsequent to the purchase, and the future, and I will put the question again. With regard to what you understand —not what happened last year, but what is likely to happen—have you now confidence in the President as a man who is likely to make a first-class President of an important institution like the Bank of New Zealand, looking ahead ?—I have already said that I look upon Mr. Watson as a very able and energetic man, one who is always willing to work night and day in the interest of the bank, and that knowledge gives me hope for the future. 31. You have great hope for the future?— Certainly; I do not know of any person at the present time who would make a better President. 32. You are satisfied that he would make a good President, and you have confidence in that?— I feel an asurance that he will. No one can be perfect. As I mentioned before, Mr. Watson is a man of very strong convictions and sometimes of warm temper; but we all have our faults.
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33. When you mention about the strong convictions, is that with regard to the policy of the bank that you refer?—No, generally the bank business. For instance, Mr. Watson may say, "I think that man is most fitted for that position, and I think so because I know him and know his worth." But we might say there are other men who have greater claims to the position, and he does not readily give up his views as to the man's claims. 34. He sticks to his opinions?—He sticks to them until he is shown to be wrong. 35. Just a moment on the balance-sheet of the Bank of New Zealand for 1896 : You have that before you?— Yes. 36. You have approved of this balance-sheet ? —Yes. 37. The Colonial Bank landed property and premises are put down at their book-value? —Yes. 38. Why did you not put them down at the value you estimated them ?—They must appear in the bank's account at the price they cost, unless we were commencing to write them down; but that we are not permitted to do. We have to pay £50,000 a year to the Assets Board. 39. Can you tell me where it says you are not permitted to write down ? Where is there any clause to that effect ?—ln the Act of 1895 there are provisions made as to the disposal of the profits. 40. Does that not only refer to the Estates Company shares ? —I am under the impression that we have to pay £50,000 to the Assets Board, and, after making provision for bad and doubtful debts, and payment of dividend on share capital, the balance, if any, would have to go to the Assets Board. 41. That is the point lam trying to make clear. Can you show me any provision which says that the book-value shall be kept in the accounts for any purpose in respect to the Assets Board?— There is a provision for the disposal of the profits. 42. I am asking whether the bank is bound by any law to keep the book-value of anything in the balance-sheet except in respect to the shares of the Estates Company ?—Not in those words. There is a provision as to what we are to do with our profits. 43. You have first to make them ? —But if you take them to write down the properties you have no profits for the Assets Board. 44. But there is not any special provision. Why are they put down at a fictitious value, because the' book-value, in other words, is a fictitious value ?—lt is the book-value; and as we have to pay £50,000 to the Assets Board, that is making provision for depreciation, because so much had to be put away. 45. In putting this amount down in the balance-sheet which you do not have, can you say that you do not do that in order to show a profit, because it is nearly what your answer came to ?—I think differently. If we had valued them at a higher price because they were worth more, or probably because we thought that they would be worth more, it might be said that we valued them at a higher rate for the purpose of showing a profit, but we valued them at actual cost. 46. It is an asset, and assets have to be valued at their actual worth, have they not ?—We consider the actual worth to be the actual cost for the purpose of this balance-sheet. 47. But you have told us that you do not consider the actual cost was the actual worth?—We might have made it out on a different system i We might have said that the good-will was more than £75,000, but the figures are put there openly. 48. Why did you not add in the excess amount paid for the bank buildings, and put that in the good-will ?—lt is not a determined amount; it has to be ascertained. It might ttrfh out that there is no loss. 49. Do you propose to keep the bank buildings at book-cost?—l proposed that a fund should be set apart to write them down; but after the matter was considered, we, influenced by statutory obligation, thought that this was the most direct course. 50. Had the directors proposed to write these down ?—When the amount of profit was explained to us, Mr. Watson asked us to consider the best mode of applying the amount, and to make a pro forma balance-sheet for ourselves. I made one, and when the matter came to be discussed by the board, it was considered that the course adopted, especially for this year, was the most direct and most open course. I think everything is stated plainly. 51. This information was not given : What is the relation of the book-value to the probable value ? —We cannot state that. My view is that there is a difference of £30,000 or £35,000. The opinion of others is different. The land-tax value is different. 52. Who returned the value for land-tax purposes? —Different people all over the colony; the valuers. 53. Have they been valued since you took them over ? —No. 54. Have you kept to the old valuation? —We have had the values copied from the books. The tax values would not be correct, because there has been an expenditure on some of the buildings since the valuations were made. 55. As a matter of fact, the realisations you have made on Colonial Bank properties and premises show a loss in every case but one ?—I think so. 56. A considerable loss ? —There will be a considerable loss. I think we shall lose the amount I have stated. 57. Do you not think it advisable that you should have had some valuation made of these buildings before you put the amount down as assets?—l fail to see that we would have gained anything by that. 58. You would have gained an exactness in the balance-sheet?— That is only a matter of opinion. 59. All valuations are a matter of opinion, for that matter, are they not?— Yes. 60. And yet they appear in the balance-sheet. You have to take the opinion of an expert?— The opinion of experts is nearly the value stated there. 61. That is the land-tax value? —Yes. And if we took the property-tax values, going further back, the figures would be fully sustained.
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62. Passing to these "A," " B," and "C" lists: It has been suggested during the course of this inquiry that the bank should make arrangements to take over all the accounts in the "B" list. Do you think that is practicable?—l may say that the Colonial Bank liquidators can, at any time, say to us, " Keep the 'B' list. We have done with it." They had and have the option of doing so. 63. Have you not two years in which to decide about the "B" list?— That is a matter of contention; I claim that we have. Other opinions have been advanced, but the liquidators can relieve themselves of the whole of these accounts. 64. They can call upon you to liquidate them ? —They are doing so in some cases. 65. My point is this : Whether it would be practicable or desirable for the bank to take over all the accounts with the cover ?—I think it is practicable, and say it is desirable, to take over all the accounts in the "B" list with the cover provided; and I have no doubt the Bank of New Zealand would do so, because we can get no more than the amount of cover provided. 66. Would the Colonial Bank be prepared to give you that cover and chances?— Probably they would require some consideration, because they contend that we have been unduly severe in loading the accounts. 67. Have there been any negotiations on the subject?— Not covering the whole of the lists. 68. Would it do harm to discover them at the present stage ? —There have been no negotiations about the list. 69. About particular accounts ? —Yes, particular accounts. 70. Can you tell me the proportion of particular accounts ?—lt is not a large amount; I can get it. 71. Is it 10 or 20 per cent. ?—I think it might reach 20 per cent. 72. And how far have the accounts been liquidated? —Those we have taken over, we have taken into the bank's ordinary business. 73. But a number have been liquidated, have they not?— Yes, some of them have been cleared up. 74. What proportion ?—I would rather not say. I can get it from the officer in charge. 75. You can get the amount taken over, and the amount closed and realised, as it is termed in section 12 ? —I think the Colonial Bank liquidators would like to have that question reopened about the "B " accounts. But we have no power ; they must go to Parliament. 76. Do you think it desirable that legislation should be brought in on the subject ? —Well, owing to the discretion of the liquidators being limited, I think serious injury may result to some of the persons whose accounts are in the " B " list. 77. How is the discretion of the liquidators limited?—l think it is their duty to realise on the accounts and have the cover released. 78. Do you think Parliament should make an exception from the ordinary course in bankruptcy in the Colonial Bank case ?—I think, owing to the peculiar circumstances of the case, the liquidators or some other persons should have more discretion than the liquidators have at present, because with more time given many of the accounts may work out well. 79. This would, I presume, apply to all liquidations of bankruptcies ?—There are very special circumstances attaching to this bank business. I think I am justified in referring to a particular account or two. The liquidators say they want an account liquidated, and my impression is that if time were given to work it out it would come out clear ; but, if liquidated, it would be a case of great hardship to the persons concerned. At the same time, the Bank of New Zealand must not take any risk in supporting accounts for the benefit of the Colonial Bank shareholders. 80. You do not say you should be given further powers, but merely the liquidators, before an account comes into your hands ? —Yes, for liquidation only. 81. Speaking of the hardship which has been commented upon by yourself and others, is it not a fact that no one who is in a solvent position need retain his account there ?—But business people do not like shifting their accounts from one bank to another. 82. But the cases of hardship do not refer to any one in a solvent position?— Yes; a man may be in a solvent position and still, if called upon to clear up his account at once, the results might be disastrous to him. 83. But still, if solvent, would not other banks be prepared to take over the account for him ? —I am afraid the margin would be too narrow, and the other banks would not have the same interest in nursing accounts as the Bank of New Zealand. 84. Should not some of the accounts in the " B " list have been closed and realised long ago when in the Colonial Bank?—l could not tell you that. 85. Should some of the accounts, from your knowledge of them now, be in the " D " list?— No, I would not say that, because the " D " list consists of dead accounts —properties which had been acquired by the Colonial Bank, insurance policies, and so on. 86. You consider the cover you provided for in the agreement is sufficient?— For the " B " list, yes. 87. For the "B " and " C " list together?— Yes, because any deficiency in the " C " list has to be made up the Colonial Bank liquidators. 88. We understood, from your evidence yesterday, that Mr. Watson considered the cover more than sufficient ? —I think that was his view generally. 89. Would the cover proposed by the President have been sufficient?— That was not defined. He has not said it was a certain sum ; but, when dealing with some particular accounts, he maintained that we were harsh, and were exacting more than was required. 90. Now, as to the "C " list: Do you object to give us the number of accounts in the "C " list ?—I cannot give the number. There were more than one or two, but I cannot give you the numbers.
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91. At what stage of the negotiations was the present " C " list evolved as a separate list ?— Two or three days before the final agreement was arrived at. 92. Before that the " C " accounts had been in the " B " list ? —No, some were in " C." 93. Was the " C" list then of the same character as now, or different?—lt was more comprehensive. It contained more accounts, and accounts of a different character. 94. Can you specify the character?— Originally the "C" list included dead accounts, not banking business. 95. But before you separated " C " and " D " what was the general character of the " C " list? —It contained a number of live accounts, but we could not get full information about them. 96. It differed from the "B " list ? You knew the state of the accounts in the "B " list, but did not know the state of the accounts in the " C " list?—We put some of the live accounts in it, but the remainder of the " C " list was made up of dead business; but those now forming " D " were originally in the "C " list. Originally there were but three lists. 97. Why could you not get the information ? —We had not sufficient time, for one reason. 98. Was the Colonial Bank willing to afford all information you required ?—We did not take all the Colonial Bank told us as absolutely true. We instituted our own inquiries. 99. Did they seem to be willing to facilitate inquiry into the live accounts in the " C " list ?— We had not time. If the matter had been left over another week or ten days we would probably have made a different arrangement, and had more knowledge of the value of the " C " list and what was supporting the accounts. 100. From your knowledge of the " C " list account acquired subsequently, could you say whether they could have been taken over, or that it was desirable to take them over ?—I would not hazard an opinion, because an interval of months makes a great deal of difference in the state of an account. 101. Passing on to another matter: The Bank of New Zealand invested £150,000 in New Zealand Consols, did it not? —I have a general recollection of the transaction —not an exact recollection. 102. Part of the second million ?—I have heard there was £150,000 so invested. - 103. Could you give the date? —Not from memory. 104. Can you ascertain ? —I cannot promise the information. lam told that there has been some reference to it previously, and that it was ruled out of order. 105. I ask if you could give me the date, or do you decline to do so for some reason ?—I could not give you the date from memory. 106. Could you ascertain ?—I could not without submitting the matter to the other directors, and we could determine whether we could give you the information or not. 107. Is there anything secret about the matter in any way? —I do not know what it may lead to. 108. It is a public account ?—ls not the Government in the same position as a private customer of the bank ? I have only a general recollection of it, and it appears to me that it is dealing with business about which I ought not to give information. 109. This investment was made by the approval of the Colonial Treasurer —the investment of the second million ?—Of that I have no recollection. 110. You know it must have been so ? —I do not think we would have sanctioned the investment of the amount unless we were quite satisfied that we were quite safe in doing so. It occurred nearly two years ago. 111. To refresh your memory, you know the Colonial Treasurer has to approve of the investments of the second million by the Act of 1894 ? —I recollect there was a clause in the statute by which the consent of the Colonial Treasurer was required for the investment of the second million. 112. Then you have no doubt that that was obtained—perhaps you will ascertain?—l can submit the matter to the directors. Ido not care to determine the question for myself. I understand that the directors will object to give information about Government business in the same manner as they object in private business. 113. I am asking you whether you complied with the law ?—I have no doubt we did at the time. 114. Did the Bank of New Zealand make any deposit with the Colonial Bank of a sum of money last year ? —That I have no recollection of, and the Colonial Bank might in that case be our customers, and would be in the same position as a private individual. 115. Do you consider the Colonial Bank investment is in the nature of a private account ?—lt would be under such circumstances as that. 116. Do you decline, then, to say that any deposit of a sum of £50,000 was made in the Colonial Bank ? —Yes, I must decline to answer that; but I venture to say this: As far as my opinion at the time is concerned, we were very willing to advance money to the Colonial Bank. 117. Did you? —I do not say we did. 118. At what time were you willing?— After the Bank of New Zealand was helped by the colony. It would never do to allow the Colonial Bank to fall into a weak position, because if a run ensued it was bound to react on the Bank of New Zealand. 119. lam asking whether it was done, not whether it was wrong?—l cannot tell you that. 120. Passing on to the audit. Speaking from memory, Mr. Booth said that it was desirable the directors should be empowered to direct the auditors to make special reports to the Colonial Treasurer ?—Direct the auditors ? 121. Yes?—l think Mr. Booth must have been misunderstood. 122. I will find the words he used. " Question 126. Did the directors approve of it ?—I am not able to say more about that; but I think the Committee should recommend that provision should be made by which the directors can call upon the Auditor to report upon anything they
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think should be disclosed to the Colonial Treasurer for the time being, so long as the bank bears the relation to the State it does at present." Do you concur with that?—lt would be better if the directors communicated direct themselves. 123. Have occasions arisen when such communications would be desirable in the interests of the bank ?—No, I cannot say that there have been occasions. We may have been near it once or twice, but the point has not been reached. 124. Can you suggest why Mr. Booth should so strongly recommend this as he did ? —I think if Mr. Booth had this matter recalled to his attention he would alter his suggestion from auditors to directors doing it themselves, or requesting the President to forward their communications. 125. That has never been done ?—No. 126. There is nothing to prevent, it ?—There has been one occasion only when we were near moving in that direction, and the President perhaps thought he had no right to take any notice of it. 127. Do you suggest, if any legislation is introduced, that some clause to this effect should be put in ? —Not through the Auditor, but through the President for preference. 128. Would there not be a danger of disclosing private accounts by so doing ? —I think not. It would not be in connection with private accounts; it would be in connection with discipline or management. 129. What position do you think the Colonial Treasurer should take up with regard to the Bank of New Zealand ?—Well, the idea has occurred to me that the Colonial Treasurer or Premier should be under the same declaration of secrecy as the directors, and should know more about the policy of the Bank of New Zealand than at present. 130. Would you suggest that it was desirable they should know any of its private business ?— That is a very wide question, when you come to private business. ■ 131. Yes, 1 know. I appreciate the responsibility of it ?—I would hardly like to recommend my suggestion respecting the Premier or Colonial Treasurer without consultation with the other directors; still, I think it would be an advantage to the bank and the colony if, say, either the Premier or the Colonial Treasurer were under the same pledge of secrecy as the directors, so that we might consult with him and take him into our confidence as to the management and discipline, but not with reference to private accounts. 132. Would you consider that you could give sufficient information to enable the Treasurer to form an opinion if you could impart no knowledge of private accounts to him ?—I think so. 133. Do you not think there might be a feeling of insecurity in the minds of the public in connecting politics with banking business ?—I fail to see where the connection would be between politics and the bank. If they were under the same declaration of secrecy as the directors no more distrust should exist than at present. 134. Would you suggest it should be the Treasurer or Premier in case these two offices were distinct, or both ? —I think it is a matter worthy of consideration whether one or the other should not be in that position, so that on special occasions the directors might discuss important matters with him. 135. Have you discussed this with the directors on the board?—No, I have not. 136. Do you not think it would be desirable in view of possible legislation on the subject ?—I think I may have spoken on the matter to Mr. Booth, but I am not quite clear about it. 137. Do you not think, in view of possible legislation, that the directors should carefully consider it and make suggestions to the Committee on the subject ?—Yes; I think it would not be amiss to do so. 138. Mr. Booth has been very strong in insisting upon an increased audit. Do you consider that the present audit is sufficient ?—I know that the present audit is very searching; but, still, the Government Auditor is nearly always in Wellington, and cannot spend much time in travelling over the colony. Certainly a system of audit separate and distinct from the bank audit must be beneficial; but that might be obtained by Mr. Butt having a coadjutor or assistant to travel round the districts, or to discharge his duties when he (Mr. Butt) was travelling. 139. Would you suggest that that assistant should be subordinate to Mr. Butt, or that he should have separate duties ?—That is a very broad question. Of course, two gentlemen with co-ordinate duties might clash. 140. Of course, you have thought the matter over, and are in a better position to state what should be done than the Committee is ?—I think it would be better for the Auditor to have an assistant working under the one command. 141. Would you prefer an assistant or a co-ordinate?—l am not referring to Mr. Butt particularly; but I think the Auditor should have an assistant. 142. Do you think it would be practicable to have one stationary auditor and one travelling auditor? —I think the other system would be better. 143. The assistant?— Yes ; so that both might move about occasionally. 144. You have suggested that a different system of audit might be introduced, as a check. Do I understand you correctly ?—I say that an assistant auditor to audit the accounts would probably introduce a different system from that of the bank's inspectors or travelling auditors. He would probably look at things from a different point of yiew from the inspectors, and would probably in some cases make different recommendations. 145. You are not, in the remarks you have just made, suggesting that the present system is not a good one ?—No. 146. But it may be desirable to improve it ?—Yes. One man may make up a different balancesheet than another man would from the same material. 147. Since you and the other directors have come into office, am I right in saying that your object has been to confine the bank's business to a less speculative and safer character ? —Yes ; we think the system under which the bank has worked during late years should be restricted. If we
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continued on the same system, of course, there would have to be another Estates Company in future years. 148. Is that the opinion of all the directors ? —I think so. 149. And the President ? —Yes. 150. Are you convinced that the present system is a safe one ? —-We think so. We are working to the best of our knowledge and ability in the interests of the bank. We have had to decline business which we did not consider safe, and have perhaps to offend some people in consequence ; but we have to keep the bank safe. 151. Do you make advances now on landed properties? —A good many advances are supported by landed properties. A man in business, for instance, may offer property as security for an advance. 152. Do you actually invest money in that way ?—No. 153. You do not make advances for investment, but only for purposes of security?— For purposes of business. 154. You know it is illegal for banks to lend money on landed security?—l am aware of that. 155. But that has been got round in various ways. Are you of opinion that it is undesirable for the bank to take up the position of a loan company ?—Certainly. 156. That has been the case in the past probably ?—I think it is very probable, but I have no proof of it. 157. Do you think it is desirable for a bank to carry on trading concerns if it can be avoided?—No, Ido not. I prefer to dispose of them. Asl said yesterday, it is not in the interests of our shareholders to give them away ; we must have a reasonable value for them. 158. You have parted with some ?—Some have been sold. It is a settled policy to dispose of the whole. 159. Are you prepared to sell them now at the price the purchaser can make interest on his money ?—Yes. 160. Now, with respect to profits. I want to know how far you can gauge the profits on accounts purchased from the Colonial Bank. Do you think an estimate can be made a year after the' purchase ?—ln making that purchase we had some material to guide us. We knew perfectly well the Colonial Bank had been paying dividends of 7 per cent, for years past. 161. Did you, trust to them ?—I do not trust to one stick alone but to the whole bundle. We knew that it had been appropriating money for dividends which ought to have gone for bad debts, and we also knew that there had been a great deal of competition between the Colonial Bank and the Bank of New Zealand for business, resulting in great loss to both banks. 162. Did you come to the conclusion that these dividends were rightly paid —the last one, for instance, of £19,000 ?—My own view is that some of them ought not to have been paid ; but that does not touch the general earnings of the bank. 163. You could not put those dividends down as earned?— That was only one item forming our basis. If they could make that amount clear in one year, we knew that we could work at onethird of the expense, and could make a good business out of the Colonial Bank. 164. As a matter of fact, the Colonial Bank lost £400,000? —They lost a considerable amount. 165. More than that was paid in dividends, was it not? —I think not. 166. Do you know how much was paid in dividends?— No. I know that I received dividends about twenty years ago, when I was a shareholder, and I think they have been paying dividends ever since. 167. During the last six years have they not lost more than they have paid in dividends?—l could not say. What we claimed they lost in our settlement would be more than they paid for six years. 168. Do you think if they had valued their assets correctly year after year, as they were bound in law to do, they could have paid any dividends for the last six years ?—I could not say that. There is nothing on which I could base that opinion; but if they had restricted their business to safe lines they could have paid dividends. 169. But if they had provided for losses, could they have paid dividends ? —I could not tell what the losses were, or when they were made, only the total at the end. 170. Did you place any reliance in what they were paying in dividends in forming your estimate of the good-will? —We did not attach any value to that. 171. You told us that you examined the balance-sheet with a view of seeing the amount of assets, liabilities, bills, and so on ?—There was the volume of business before us. 172. I did not understand you to say you attached any value to the dividends paid ?—We must attach some value to the fact that it paid dividends, but we did not attach any money-value to that. 173. I asked you before whether you were in a position to say whether the profits derived by the Bank of New Zealand from the purchase of the Colonial Bank's business were any particular amount. Can you say how much ? —No ; it has not been taken out separately. 174. We have one taken out through Mr. Watson, by Mr. Gibbs I think it was ?—-I think that is only an estimate. We had an estimate made by Mr. Andrews, the acting general manager, and Mr. Butt favoured us with his view as to what was really the profit of the Colonial Bank. Those estimates were made before we purchased. 175. Are you in a position, for the short time you have had charge of the business, to say how it is going to pay ? —My impression is that it will pay the Bank of New Zealand remarkably well. 176. Mr. Watson estimated the increased earning-power of the bank at £30,000 last year? —Yes. 177. Have you any reason to suppose that is a high or low estimate?— The benefits to the Bank of New Zealand from economies and profits, I consider, will be £30,000, or more; but, setting aside that question, by the purchase of the Colonial Bank we have practically disposed of a very serious competitor.
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178. Then you are satisfied with the purchase ?—Yes. 179. You were not satisfied at the time ? —During the negotiations I did my best to ascertain the full value of the business, and get it as cheaply as possible for the Bank of New Zealand, because I considered that the gentlemen who were selling knew what they were selling, and knew more of its value than we, as directors of the purchasing bank, did. 180. Do you consider now there is no good-will attaching to the Bank of New Zealand ?—The business that we have must be of enormous value. If you take the balance-sheet of the last year you will see from the profits made there is a large value in the good-will. 181. Now, take the colony's liability for the debentures. There is two million eight hundred thousand pounds' worth of debentures which go to the bank, subject to adjustment. As the Assets Board's properties are realised these debentures will be paid off, will they not ?—That is a matter for the Assets Board to determine. 182. Have they not to pay them off? I thought that was obligatory on them under section 24 ? —That is for the Assets Board to arrange. 183. They are bound to pay off the debentures on the due date. They pay off the amount realised—that will be, we will suppose, £1,700,000 or £1,800,000 at least. That would reduce the gap to something like £1,000,000 —the gap between the amount of debentures issued and the values of the properties transferred ?—The gap at present is £850,000, of which £50,000 a year, or possibly more, has to be paid to the Assets Board annually by the Bank of New Zealand. 184. Supposing the gap is £850,000, will not the bank be in a position to pay that off at the end of the time ?—I would not like to say. I cannot tell what position the bank will be in then. 185. But they will receive the cash for those debentures ?—The Bank of New Zealand is present owner of the debentures, and I presume the bank is not going to sell those debentures. 186. But supposing a certain number were redeemed, will not the bank be in a position to hand over the debentures again back to the Board ? What should prevent it ? —lf £50,000 was paid annually for ten years the bank would hold then £2,300,000. They could hand the debentures back to the Assets Board, in exchange for cash received for properties; but I cannot state what would be the position in ten years. 187.- But, with the present finance of the bank, if the position is not changed, would they not be in a position to hand these debentures back ? —I could not say. More than £50,000 a year may be paid by the bank to the Assets Board. 188. Apart from that payment, is there any reason why, with the present finance, the bank should not hand back the debentures ?—The debentures would represent assets to their face-value at the time, but the bank could not part with them without consideration. 189. It would lessen the capital ? —I could not say it would lessen the capital, but it would lessen the assets. 190. It would be the capital, would it not ?—I do not know what the position would be at the time. 191. If the bank goes on well, do you think it will require such a large capital as £2,000,000 guaranteed at the end of ten years ?—lt is very difficult for me to say. If the bank could wholly regain public confidence in the matter of deposits, and the confidence of people generally in New Zealand was in the bank, they could do without it, because if you examine the accounts of the Australian banks doing business in New Zealand you will see that they rely largely on New Zealand money. 192. Provided the bank retains the confidence of the people of New Zealand, you will not require all that capital ?—lt depends upon the volume of business. The volume of business may increase as the confidence of the public increases, which will be shown by their deposits. 193. Do the facts within your knowledge warrant you in saying whether the colony is likely to incur ultimate loss through the bank?-—Unless some serious calamity occurs in the colony, and assuming the bank is well looked after and is efficiently managed, I think it is only a matter of time when it will clear off its liabilities —it may be a long time. 194. Ten years ?—I do not know. 195. You do not anticipate that ten years will clear everything up? —No, Ido not. There are very large repayments involved. There is the two millions, "A " stock, and whatever may be estimated on other accounts, and there is the half million of capital furnished by the colony in addition. 196. I refer rather to the disposal of the globo assets and trading concerns, and leaving the bank with purely banking business ?—lt will take a long time to dispose of the properties of the Assets Board and to relieve us of some of the trading concerns. 197. Mr. Booth told us that the trading concerns would be cleared up in two years ?—I hope so. We are very desirous to clear them up. 198. Can you form an estimate of how long it will take to clean up the trading concerns ? —lt would be only a guess ; I have nothing to base conclusion on. I know, if I were out of business, there are one or two of the trading concerns I would buy myself. 199. Last year it was put down at two years. I do not know how the directors based it. I hear Mr. Booth based it at two years then ?— It only shows that Mr. Booth's estimate has grown to three years now. We shall realise them as soon as we can, but we cannot throw them away. 200. Do you consider a disclosure of the bank's true position by means of this inquiry is calculated to injure the bank ?—I know that it is injuring the bank. 201. But afterwards, as a final result?— Probably, as a final result, if the public are convinced that the whole of the matters in connection with the bank have been cleared up, and that they know the worst as well as the best—in such a contingency, probably, an inquiry of this nature would be beneficial. 202. Have you any suggestion to make with regard to how we could improve the management of the bank, or with regard to the legislation which is necessary to complete what we have already
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begun, or in any other way ? —I would prefer to confer with the other directors, and I have no doubt they will agree with me, to give the matter consideration, and we may make a joint recommendation, or, if I differ from the others on any material point, I will make my recommendations separate. 203. Mr. G. Hutchison.] Have any overtures been made by the Bank of New Zealand since you have been a director—since September, 1894—t0 purchase any bank other than the Colonial Bank ? —I am not in a position to give evidence on that matter. I am under the impression that some overtures were made. 204. As a board has the bank done so ? —As a board, no. 205. Is the guarantee you got in respect of the two amounts, aggregating £25,000, contained in the document of 18th October: that is, the contract of sale and purchase laid on the table of the House ?—lt is included as the " C " list. 206. Which, you say, was guaranteed by the Colonial Bank. Have you a copy of the agreement there —it is 8.-27 ? Which section do you say the £25,000 is in? In clause 28 it says : " It is agreed that the selling bank shall guarantee the due payment of all amounts payable under or in respect of any security mentioned in the memorandum at the foot of the said " C ' list as being held by the purchasing bank, and given or executed by any person or company whose name appears as a debtor in the said "C " list; but the said selling bank shall be entitled at any time to pay off and take a transfer of all or any of the said securities." So that the amounts in the "C " list have been mentioned by Mr. Watson as amounting to £98,382. Does that amount include the £25,000 or not ?—I do not think I can give the details of that account. 207. We have been told the amount by Mr. Watson. Can you state whether the amount stated by Mr. Watson includes the £25,000 at the foot of the list ?—I think that is giving particulars in reference to the " C " list, which I am not prepared to do. 208. But you are aware that Mr. Watson has stated that the amount in the " C " list is £98,000 ? —The amount of the two columns ; he may have stated that. 209. That is the statement as laid before Parliament ?—I have not concealed from the Committee the figures of the "C " list—the total; but the details I think I ought not to give. 210. But we want to know, as a matter of public information, whether this amount stated by Mr. Watson includes that £25,000 or not ?—I think that is a matter of detail, and I am not able to state it. 211. Is the guaranteed £25,000 covered by the £327,305 which you took as cover for the " B " and " C " lists ?—lt is not within that. 212. Supposing that the sum of £327,305 is absorbed in connection with the accounts in the "B" ard " C" lists, have you any fund from which you can be secured in respect of the £25,000? —There is the uncalled capital of the shareholders of the Colonial Bank and other property. 213. You have nothing in hand?— Occasionally we have, but the amount cannot be stated. 214. I am assuming that the £327,305 is not in existence ?—We should have to go back to the liquidators. I think we have the £20,000. 215. You mean that the debentures have since been retired by the bank?—l am under the impression that we have the £20,000. 216. That is the amount of the debentures ? —Yes. 217. Have-you given up the debentures to the liquidators of the Colonial Bank ?—I cannot say what has been done with them. 218. The £5,000 is still a matter of dispute ?—The guarantee is not discharged. 219. Has the £20,000 been, meanwhile, paying interest to the bank until you get the money? —Oh, yes, we have the principal and interest. 220. You say you have ?—Certainly. 221. What is the position of the £5,000 in respect to interest ?—The bill was paid at maturity. We may say the security supporting the bill itself is a matter of dispute. 222. Do you remember when the £20,000 was paid? —I do not know. 223. Was it last year or this year? —I am unable to say. 224. Was it before Mr. Ward left for England?— Now you are going back to the " dark ages " almost. Besides, you are getting into private business. 225. I suggested that it was last year or the year before last, and you reply that that is going back to the " dark ages " ?—Yes, to business of that kind. 226. You apply the term to business of this kind?—We have forgotten about business of that kind. 227. You were only appointed in 1894?— Yes. 228. I am asking when that money was advanced ?—That I understand. 229. Was it advanced before Mr. Ward left for England ?—When you mention names I think you are getting into private matters. 230. Was it before January, 1895 ? —I am unable to say :in fact, I must decline to say when it was. 231. You have told us that before authorising this advance of £20,000 the board asked for and obtained the articles of association and a balance-sheet. Can you say what date that balance-sheet was made up to ?—That is going into private business. 232. You decline on that ground, do you? —Yes. 233. You have been asked before what the Colonial Bank had to do with guaranteeing these two transactions. Do you propose to throw any further light on that matter ? Why should you stipulate that the Colonial Bank should make good two transactions which the Bank of New Zealand had entered into ?—We were masters of the situation, and thought there might be trouble in respect to them, and therefore we secured ourselves. •31—1. 6.
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234. Was the £5,000 bills of exchange business that otherwise would have been in the Colonial Bank ? Did you get the bills of exchange from a firm doing business with the ColonialJßank ? —That is private business again. 235. You do not remember any other matters being guaranteed other than the £25,000, outside the " A," "B," and "C" lists, that we know of, do you?—l have no recollection of any other. There is, generally, the business of the Colonial Bank, which was guaranteed in the agreement. 236. Included in the "A," " B," and "C" lists, we understand. Was there anything else outside that, plus the £25,000 ? —There are quite a number of guarantees under section 25. 237. Were there any amounts guaranteed which are not referred to in the document of the 18th October?—No ; I do not think so. 238. Who was it suggested the reference to Mr. Seddon of the subject of Mr. Mackenzie's appointment as General Manager ?—That I am unable to tell you. 239. The directors as a board were not able to come to a conclusion on it: is that so?—A minority were not in favour of Mr. Mackenzie's appointment at that time—that is, after the purchase of the Colonial Bank was effected. 240. Then, a deputation waited on Mr. Seddon. Can you say who proposed the idea of that deputation ? —I cannot say. It arose amongst ourselves. 241. And the result was that the majority prevailed, and you arranged to take Mr. Mackenzie on with a three months' notice ?—The minority gave way, and Mr. Booth stated he required his dissent to be recorded. 242. You did not think it necessary to record your dissent?—l supported him in his contention, but did not think it necessary for myself. 243. And the other members of the Board were present, including the President ? —Yes. 244. Did you make a similar reference to Mr. Seddon as to the tenure of office of the two inspectors ? —No. 245. Did Mr. Watson see Mr. Seddon ?—I am under the impression that he communicated in some way with him. 246. I suppose he told you so?—I think he mentioned it. 247. You were asked a question yesterday as to the compilation of balance-sheets as to bills discounted being shown as a liability ?—Yes, the day before. 248. This is a point I want you to give information upon. Do you think it is a proper mode of drawing up a balance-sheet to deduct from an undisclosed amount of bills receivable the undisclosed amount of bills under discount, and to show the difference as an asset ?—Seeing that we have an institute of accountants here I think that information should be ascertained from them. I look upon a balance-sheet as a summary of balances. Bills are in a different position to other assets and liabilities. 249. Take a balance-sheet as a statement of liabilities and assets. Is it proper, in making up a statement of that kind, to deduct an undisclosed amount of bills payable from an undisclosed amount of bills under discount, and to show the amount as assets where the one is smaller than the other ? —I have no opinion to offer. 250. Have you not a form of balance-sheet you use for your customers ?—Yes. 251. Have you any objection to produce a copy of it ?—I can get one, no doubt. 252. It would be instructive to the Committee to have it ? —I do not say it is perfect. 253. It is usual for banks to have such things ?—We want to know what the contingent liabilities are in the case of balance-sheets of customers being submitted to us. 254. Hon. Mr. McKenzie.] Mr. Watson, in giving his evidence here, stated that, in connection with the liquidation of the " B " accounts of the Colonial Bank, a surplus had accrued gradually from the liquidation until a large deficiency unforeseen by the Bank of New Zealand itself occurred in one account. Is that correct ?—I believe there was money accumulated until a deficiency accrued. It was to provide for such a contingency we took an umbrella cover. 254 a. The officers who instructed you told you it was advisable to make a large cover, and it was a good thing it was done ?—Yes; I think the result justifies their representations. 255. Regarding this advance of £20,000. It was stated in evidence here—l think by Mr. Booth—that it was recommended by the President, and you tell us that that £20,000 was paid off? —Yes ; it was paid off. 256. Did you consider it at any time yourself as a bad or doubtful debt ?—Well, near the close of our negotiations, owing to a statement made by a Colonial Bank director, I saw that there was some danger in connection with it. As I said before, this statement put us on our guard. 257. Well, it is now paid off?— Yes. 258. It has been stated by more than one witness, in answer to questions put, that the value put on the Colonial Bank's accounts by the officers of the Bank of New Zealand was very drastic, and that they made rather severe writings-down in connection with them. What is your opinion of that ?—My opinion at the time was that the amount held in reserve against them was not excessive. 259. If the same rule that has been applied to the " A," " B," and " C " lists of the Colonial Bank had been applied at the same time to the Bank of New Zealand if it had had to go into liquidation, what would have been the result? —We should no doubt find some "B" accounts. But, then, we were buying this business, and we would not buy anything but good business. 260. It appeared to me while you were giving your evidence that you looked upon the officers of the Bank of New Zealand as being very trustworthy, while you had doubts about the officers of the Colonial Bank? —I hardly think my answers would convey that impression. I did not consider it was the business of Mr. Mackenzie, as representing the selling bank, to tell us all he knew. 261. lam not putting it in that way. You have now a number of officers of the Colonial Bank in the service of the Bank of New Zealand, and it appeared to me from your evidence that
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you thought the Colonial Bank officers were not to be relied upon because they had made a mess of the Colonial Bank, but that the officers of the Bank of New Zealand were to be relied upon?—That is an incorrect impression. The officers of the Colonial Bank, excluding Mr. Watson and Mr. Mackenzie, Ido not suppose were in any way responsible for the position of the Colonial Bank. It is the directors and the head office of the bank who are responsible. It is the same with the Bank of New Zealand. I take it that the head office of the Bank of New Zealand was responsible for the position into which the bank got, and not those in charge of the branches. 262. But there are officers you have at the present time in the Bank of New Zealand who must have been equally responsible for the position into which the bank got as Mr. Watson and the officers of the Colonial Bank were? —I do not know what reports were made by Mr. Watson and the other officers, but I know that some reports were made to the directors of the Bank of New Zealand by their officers which were not attended to. 263. Might not that have occurred in the Colonial Bank?— Yes; that might be so. I would lay it down as a principle that the head office is responsible for a bank, and not the branch officers, who only report to the directors and enable them to shape their business. 264. Do you think that if the Colonial Bank had not been purchased by the Bank of New Zealand the directors could have it carried on ?—lt would have been a very hard struggle. 265. If they had called up more capital ? —lt would have been very hard to rehabilitate the bank. 266. I have made out the position, and find that it could have paid 10s. in the pound, and paid its own shareholders 7s. in the pound?— That is a very curt way to put it. They have received from the Bank of New Zealand £133,906, and that is something like 13s. sd. in the pound. 267. Could the Bank of New Zealand have done that without State aid ?—lf they had not had State aid Ido not think they could. They had so much more to pay. 268. Then, the Colonial Bank was in a better position than the Bank of New Zealand? — Undoubtedly; while, as I said before, we were in a position to buy, and were only prepared to pay for what was good business. 269. Would it be possible to sell the good business of the Bank of New Zealand now ?—That I do not know. Banking competition is very keen in Australia now, but I hardly think it would be possible for an Australian bank to conduct the Bank of New Zealand business to the same extent that the Bank of New Zealand does. 270. You have stated, as well as Mr. Booth, that this inquiry was injuring the Bank of New Zealand ? —Yes. 271. Well, Parliament may from time to time find it necessary to look after the money which the colony has guaranteed, and hold inquiries. Do you think that would be detrimental to the bank ?—Outside customers do not know the scope of these inquiries. Some think that by this inquiry you are obtaining a knowledge of our private business, and possibly such ideas are fostered by other banks. 272. Suppose it was possible to separate the bank into two parts—to dispose of the commercial part to another bank, and the Government to take the other part over. What would you say to that ?—I have not considered that. It would require much consideration. 273. If the bank is to be made a political shuttlecock between political parties, do you not think it would be better to do that ? —lf the bank is to be made a shuttlecock between political parties it will be a very bad thing for the country and for the shareholders. 274. Do you think the shareholders have anything to do with it ?■—Yes, we are taking money from them. They have to contribute towards the liabilities, and must be the first to bear loss. 275. You were asked by Mr. Hutchison whether overtures had been made by your board to take over any other bank. Do you know if that was done ? —No. 276. Had you heard of it ?-»-I heard something of that. 277. Did you hear that Mr. Murray tried to get the National Bank?—My idea is that inquiries were made at Home. 278. You were one who recommended the purchase of the Colonial Bank? —Yes. 279. Do you think that the National Bank would have been the better of the two ?—No; I think the Colonial Bank was in the better position. It was supported by a great number of shareholders and people of great prestige and power in the colony. 280. During the whole of the time these negotiations in connection with the legislation for the Bank of New Zealand were going on, did any member of the Government interfere with you or any other director, or endeavour to bring any pressure to bear on the bank ? —I have answered that before. No; we were left wholly to ourselves. 281. Hon. Mr. Seddon.] Has not the legislation passed been disastrous to many of the Colonial Bank's customers ?—I would not say " has been " ; but I can say this : that, if the Colonial Bank liquidators press their liquidating powers, it will, I think, be disastrous to some of the Colonial Bank's customers. 282. And such an occurrence as that would be due to parliamentary interference ? —As the law is at present —that is, the law binding the liquidators to their functions to realise the accounts under their control —they have scarcely any latitude. 283. If it had not been for the State coming to the rescue of the Bank of New Zealand, then the Colonial Bank—its customers and shareholders —might have gone on without suffering the same losses and hardships they are suffering now ?—I presume that, if the Bank of New Zealand had not been put into a position to purchase the Colonial Bank, the Colonial Bank would have called up money and gone on with the business, and in that case would have nursed the accounts now in the "B"list. 284. In that case the purchase must have prejudiced these accounts in the " B " list ?—Yes. 285. It means that if the liquidators press these people they will have to be made bankrupt ?— They will suffer very great hardships, and probably some will be made bankrupt.
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286. Were the whole of the accounts now in the " C " list originally in the " D " list, or were there only three lists—" A," " B," and " C " —at the first ?—Three lists only : " A," " B," and " C." 287. According to what you said, in answer to Mr. Hutchison, you stated that the accounts in the " C " list were originally in the " D " list ?—No, there were three lists only : " A," " B," and "C." 288. Subsequently a fourth list was made, which became the "D " list, and in which the dead accounts were put? —Only dead accounts. There was a purpose in that. The Colonial Bank people wanted a certain amount of money. 289. Were there not accounts that were in no list at all some time during the negotiations ? — Yes, there were some outside, because we could not get the information we wanted for them, we were so pressed for time. 290. Subsequently they were placed in either the " A," " B," " C," or " D " lists, were they not ?—Yes. 291. Under section 15 of the Act of 1894 appears the following : "If, upon the report of the auditors, or either of them, confirmed by the President of the bank, it shall appear to the Colonial Treasurer that the affairs and business of the bank are in any respect improperly or unsafely conducted, he shall call the attention of the directors thereto, and it shall be imperative upon the directors to amend the management and conduct of the said affairs and business in such manner as the Colonial Treasurer may by any writing require." According to that, the President has power to report to the Colonial Treasurer, who might, if he considers it necessary, for satisfactory reasons, place the bank in liquidation ?—That would be very near the meaning of that section. 292. It was in reference to that, then, that you suggested that this power should be given by the Legislature to the Colonial Treasurer, and that you think he ought to have other channels for ascertaining information than he has at the present time?—l might say that there might be serious disagreements between the board of directors, and, as there is no defined mode of communication with the Colonial Treasurer, we should be authorised to communicate with him through the President, and be in a position to say to the President, " Hand that to the Premier or Colonial Treasurer." • 293. As the matter stands at the present time, you are of opinion that there is not sufficient provision made for the Treasurer, or whoever may be acting on behalf of the Government, being sufficiently posted in the affairs or business of the bank so as to insure its being safely conducted ? —The Colonial Treasurer has great power at present, but I should prefer some provision by which a minority of the board could communicate with him. 294. According to the present arrangement he has to depend entirely upon the Auditor and President ?—Communications go from them to the Treasurer. 295. You have stated here that your suggestion has no reference to the private accounts of customers of the bank ? —Not at all; it would have reference to the policy, discipline, and management. 296. Then, if an impression got abroad, from your answer, that you wanted to tell the Government the position of the accounts, that would be erroneous ?—lt is certainly erroneous, and I am certainly opposed to any such idea. 297. Mr. Montgomery asked the question whether the Colonial Bank had not lost £400,000, and whether this was not more than it had paid in dividends. Your answer was, " No, but that during the last six years it had lost more than it had paid in dividends." Will the loss be as great as it would have been if the bank had worked out its own destiny ? —I cannot answer that question. The competition between the Colonial Bank and the Bank of New Zealand was extremely severe, and, if continued, the results would have been disastrous to both. The Bank of New Zealand was placed in a strong position by the colony's assistance, and no doubt the Colonial Bank thought it was placed in such a strong position as to make their business more "difficult to conduct successfully. 298. If you were a shareholder of the Colonial Bank, and viewing in the light of subsequent events what has transpired since the sale and purchase, do you think it would have been better to allow the Colonial Bank to go on ? —I think the wiser thing was to sell it rather than go on. If calls had been made to the extent of £1 or £1 10s. per share, probably the shares would not have been quoted at that amount after the calls were fully paid. It would have taken years before they could have rehabilitated the bank and gained public confidence. 299. Although you say it was a good thing to sell the bank, you have previously stated that you do not think they got the full value of it ?—I do not think I said that. 300. Do you think they made a good bargain ? —Yes; it was only the Bank of New Zealand who could have bought it. If the National Bank had bought it, it could not have made so much out of it as the Bank of New Zealand. We have branches all over New Zealand ; and, as I mentioned the other day, we have effected economies, and the joint salary list is close upon £20,000 less than the two separate establishments for the last year. 301. Would it be an advantage to the Bank of New Zealand to purchase, amalgamate, oxabsorb the National Bank ?—Once the debentures are placed in the business, and proper financial arrangements are made, the National Bank would only be a small bite. 302. I am asking if it would be in the interests of the bank or the colony if it could be done ?— I think it would be an advantage to the Bank of New Zealand, because that business could be worked at very little expense to the Bank of New Zealand; but there is the public to be considered. My impression is, that too great banking facilities have been given in the past, and the accounts have not been sufficiently restricted. Some one has to make up the losses arising from this cause —either the shareholders or the colony. 303. You know that in Australia there were associated banks, where the stronger banks went together for defence purposes ?—Yes. 304. Would not an alliance with the National Bank for defensive purposes help to put down offensive competition ?— A good deal must depend on details, and the extent of an arrangement of
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that kind. Until a short time ago there were well-defined lines on which the banks worked, and each of the banks did not compete in certain directions.; but it would often happen that when a man found he could not get the accommodation he required from one bank, he would go searching about to see if another bank would give it to him. I think that, generally, there has been too much accommodation given. 305. Take the banks now doing business in the colony : for purposes of their own they might unduly compete and do business at rates which might suit them for the time being, but which would be injurious to the Bank of New Zealand and the colony. Would it not, in that case, be better if the position of the Bank of New Zealand was strengthened by an alliance with the National Bank ?—Yes ; but the fact must enforce itself upon the colony that it has five millions or so at stake, and legislation may be necessary. 306. Is it not a fact that the foreign banks doing business in the colony have not assets in New Zealand equal to their liabilities in the colony ?—I was under that impression some time since. I have not looked the matter up lately. 307. Is there not a necessity, for the preservation and safety of the interests of the people in the colony, that it should be insisted upon that all banks doing business in the colony shall have assets within the colony at least equal to their liabilities ? —I have no doubt it is so, and it is almost the duty of the Government to note such an occurrence and prevent it continuing. 308. You have stated that, owing to the competition in the other colonies, you have had to conduct your discount business at very much lower rates than those in New Zealand ?—Less than in New Zealand. 309. Then, if the foreign banks bring the same rates of discount into New Zealand, you would have to lower your rates? —Certainly, particularly to safe customers. 310. Would that not militate against your being able to make the money to pay the colony ? — Yes, unless the interest rates came down proportionately, which could hardly be the case. 311. The colony would be interested in such a case ? —Yes. 312. That is all I desire to ask you.—l would like to state that I have had a conversation in reference to Mr. Booth's evidence in connection with the " C " list, and Mr. Booth states that he did not intend to convey the impression that a resolution was passed by the board not to take over the "C " list. We did not take over the "C " list when completing the agreement for purchase, because we had not sufficient time to ascertain its value. 313. Hon. Mr. McKenzie.] From your experience as a director of the Bank of New Zealand and a business-man, do you think it would be advisable to pass a short Act of Parliament to prevent any member of Parliament dealing with the Bank of New Zealand?— You have prevented directors obtaining accommodation already. Do you want to close the bank's business altogether? The board of directors will look after the members of the Government, or Parliament, or any one else, if they want to obtain money without sufficient security.
Monday, 14th September, 1896. „ John Marten Butt sworn and examined. 1. Hon. Mr. Seddon.] What are you, Mr. Butt ? —Colonial Auditor of the Bank of New Zealand. 2. What were you prior to being appointed Auditor? —I was inspector of the Bank of New Zealand. 3. How long have you been inspector of the Bank of New Zealand? —Since March, 1891. 4. What position did you hold prior to that ? —I was one of the assistant inspectors prior to that. 5. What positions have you held since the Ist January, 1888 ?—ln 1888 I was assistant inspector, and remained so until 1891, when I was appointed inspector. 6. Have you ever held any other positions ? —During the time I was assistant inspector— that is to say, from April, 1890, to February, 1891 —I was left in charge of the bank owing to the resignation of Mr. Tolhurst, and pending the appointment of a general manager by the London board. 7. You were acting general manager? —I was not appointed acting general manager. I was simply, in virtue of my senior position in the bank, left in charge of the bank. 8. Any advice tendered, or balance-sheets signed by you, were incorrect if they stated you were acting general manager?—l do not recall signing any balance-sheets as acting general manager. 9. According to Exhibit 53, giving the positions in the different years, Mr. J. M. Butt is set down as acting general manager from April, 1890, to December, 1890. Is that correct?—As I say, I was left in charge of the bank from April, 1890, till February, 1891. 10. Were you acting as general manager?—l was discharging the duties of general manager. When a man is appointed general manager the appointment is made by minute of the bank. I was simply, as senior officer of the bank, discharging the duties of acting general manager. I would like to explain that the board of attorneys were acting for some time, and were sitting every week, and taking an active part in the management of the bank. 11. Have you sent any documents in during the period from April, 1890, till December, 1890, as acting general manager?—l cannot say. It is likely as not. Ido not recollect signing a balance-sheet. 12. Did you receive any letter asking you to take charge signed by the chairman of directors? —Not to my recollection. There is a minute placed on the board's minutes, and it was in virtue of that that I acted.
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13. There was a resolution passed that you were to be acting general manager?— That I was to discharge the duties. 14. You were made acquainted with that resolution ? —Yes. 15. Then you were appointed acting general manager?— You can put it that way. I wanted to draw distinction between a person merely acting as general manager and a person holding an appointment, who might be disrated afterwards. It would be derogatory to the latter to have a man put over his head. 16. That did not prevent you discharging your duties as general manager?— Certainly not. 17. Who was chief inspector on the 31st March, 1888 ?—Mr. John Murray. 18. Who was responsible for that balance-sheet ? By whom would it be compiled ?—By the officers of the bank and inspectors' staff. 19. Do you remember whether, as inspector at that time, you reported as to the position of the bank ?—No, I did not report upon the position of the bank as a whole. 20. Did you report on the position of the bank as regards its assets at that time ?—No; the only reports I made were in respect to inspections at the different branches I made. 21. Who was inspector of the Auckland division in 1888 ?—I think, as regards the City of Auckland itself, that it was within my care nominally ; but inspections of the Auckland branch were not held, because the manager was on the spot, and attended the board meetings every week, and reported direct to the board. 22. Go back to 1890 : You remember what transpired in 1890 in respect to the position of the bank and the formation of the Estates Company ?—Yes. 23. As inspector, had you any previous knowledge of the condition of the bank, or did the state of affairs disclosed by the shareholders' committee and the Hon. George Buckley come upon you as a surprise ?—The committee of 1888 ? It was partly a surprise. I did not know that the position was so bad as it turned out to be. The custom was to divide up the work of the bank among the different officers, and each of us had about as much to do as we could manage; so that none of us took a comprehensive view of the whole position. 24. Did you not accompany Mr. Horton and Mr. Johnston Home in 1888 ?—Yes. 25. 'Had you not with you at that time the fullest information with respect to the Bank of New Zealand? —Yes. 26. Did you take with you the balance-sheets, reports, and papers in connection with the Bank of New Zealand to London ?—I took with me a tabulated statement showing the result of all the reports which had come in. 27. What position did that show the bank to be in ?—lt showed the bank with a deficiency of about £800,000, in round figures. 28. That was in 1888 ?—Yes. 29. Have you got the balance-sheet of the 3ist March, 1888 ? —Yes. 30. You will find there £1,560,861 Bs. 3d. as assets over liabilities ?—Yes. 31. What was the balance-sheet you say you took to London which showed £800,000 deficiency? —It would be this one, probably—March, 1888. 32. Are the two things consistent? Which is correct, the balance-sheet showing £800,000 of deficiency or this balance-sheet showing a surplus of £1,560,861 Bs. 3d. ?—Undoubtedly there was a deficiency of £800,000. 33. In other words, that balance-sheet is what is called a "cooked " balance-sheet ?—lt depends upon the valuation of the securities. The securities were revalued for the purposes of the bank. 34. When did you take your balance-sheet Home ? —ln May, 1888. 35. Between the 31st March and May, 1888, was there a revaluation ?—Yes. 36. And with this revaluation a deficiency of £800,000 was shown ? —Yes. 37. Who made the revaluation ?—lt was made, first of all, by the officers of the bank, and their work was reviewed and scrutinised by the committee of investigation. 38. Now, in 1889 the assets over liabilities were shown as £1,213,273 12s. 7d. ?—Yes. 39. And the writings-off were only £109,565. Therefore, according to what you say, there was an ascertained liability of £800,000. Can you tell us why that amount of assets were shown over liabilities when there was an ascertained deficiency of £800,000 ? —The deficiency of £800,000 was very much a question of valuation of securities. The committee of investigation came to the conclusion that £800,000 would be required to clear up the overvaluations and the bad debts. The sum of £800,000 or thereabouts was accordingly put to the Contingency Fund on the liability side of the bank, and as the bad debts were determined by sales of securities or otherwise a corresponding amount was written off the Contingency Fund. 40. What was the date when that Contingency Fund was created?—l cannot be quite sure, but I think it was in 1889 that it was passed. 41. In 1890 the assets over liabilities were given as £1,224,783 lis. sd. ?—Yes. 42. Or £10,000 more than they were in 1889, in round numbers?— Yes. 42a. And yet there had been this Contingency Fund created of £800,000? —Yes. 43. Were did they get the assets from ?—The Contingency Fund is shown on the other side of the account amongst the liabilities. 44. Under what head would that be shown?— Under the head of "Deposits and other Liabilities," £8,090,653 4s. 6d. 45. If you turn to the balance-sheet of March, 1888, you will find that " deposits and other liabilities " were then £11,156,607 18s. Id. ?—Yes. 46. You will find in the balance-sheet of the 29th September, 1888, that they were £10,719,653? y eSi 47. At the 30th March, 1889, the " deposits and liabilities" were £10,088,293 10s. Id.?— Yes. 48. And at the 30th September, 1889, £8,719,634?—Ye5.
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49. And on the 31st March, 1890, they were only £8,090,653 ?—Yes. 50. And yet you say that £800,000 was put in as .a Contingency Fund and increased the " deposits and other liabilities " ?—Yes. 51. Can you tell me how that £800,000 was provided ?—£500,000 of Reserve Fund of 1887 and £300,000 was written off the capital. 52. That is how the contingency of £800,000 was provided ?—Yes. 53. Was anything else done in the way of raising capital in 1888 ?—Yes. Resolutions were passed by the shareholders increasing the capital of the bank, and there was an issue of £500,000 fresh capital. 54. An issue of new shares ?—Yes. 55. Now, would the £800,000 be the ascertained losses which would go back beyond the year 1888?— Yes. 56. If we say now that the total ascertained losses in 1895 was £4,000,000, £800,000 of that was incurred before 1888? —I think it would be more correct to put it this way :In 1888 there had been a valuation of securities made which, in the opinion of the committee of investigation, left a deficiency of £800,000. The deficiency was provided for by writing off the Reserve Fund and £300,000 of capital; but the properties and the accounts which were responsible for these deficiencies were carried on, and it was subsequently found that the provision made in 1888 was insufficient ; so that the roots of a good deal of the writings-off which have taken place since 1888 are found in the period before 1888. 57. But in 1888, supposing you had cleaned the slate, £800,000 was the ascertained losses?— It was the ascertained loss on the securities at that date. Where you have a large mass of securities liable to fluctuation in values you can never say your ascertained loss is so much, because you have not put them to the test of realisation, if subsequent events reduce the value of properties —if there is a heavy fall in the value of products and land—the value of properties must suffer accordingly, and you have later on to revalue the securities and again acknowledge that they are short. 58. But did you not clean them up and give them to the Estates Company in 1890?— Accounts that were supposed to be doubtful and properties were handed over to the Estates Company in 1890. 59. Then, any loss would be in the properties of the Estates Company ?—ln properties handed over to them ; but there were many still in the accounts of 1888 which depended on securities, and which afterwards turned out to be insufficiently secured. 60. You handed over to the Estates Company in 1890 what was an additional loss, from 1888 to 1890, when you handed them over ?—I think it was about £350,000. 61. Then, the bank itself in 1890, when it handed these properties over to the Estates Company, was to the bad £1,100,000? —Yes; that is a matter of valuation. Mr. Hean was sent out by the London board to make an independent valuation of the assets, and he reported that there was a deficiency then, after the £800,000 had been taken into account, of about £350,000. 62. Then, the direct bank losses from that time to this time being £3,000,000, as shown in the writings-off since, there has been £2,000,000 since that time ? —I do not know how you make your £3,000,000. 63. The total here is £3,095,799, and included in that is £764,306 deduction of Estates Company Share Account ? —Yes ; the £764,306 in the Share Account, of course, would represent the further depreciation in value of the properties handed over to the Estates Company. 64. Exclusive of that £764,306 there has been £2,700,000, or a million in the bank itself, fromthe cleaning-up which took place in 1890 —from 1890 to 1895 ? —I would not like to speak positively about the figures; but, if the Committee wishes, I can get the exact figures. 65. I wish you would. These are supplied by Mr. Watson from the bank [printed statement handed to the witness]. —Here the total bank losses are put down at £2,160,357. I have accounted for £1,150,000 of those ; £596,509 was the amount estimated to be short by myself for the present board of directors last year, including up to this year, of which there is the Contingency Fund still in existence; it has not been applied. That would make the losses in the bank, as you say, about a million. I would like to say that that began with 1888. The first item on the list, £216,000, were accounts to be known as bad in 1887, which were carried forward and written off in 1888; so that you have about £800,000, and that £800,000 includes accounts which, at the 31st March, 1888, were thought by the committee of investigation to be good and recoverable, but which afterwards, owing to a variety of causes, proved to be otherwise. Besides the accounts transferred to the Estates Company there were several large accounts which were supposed to be good, and which were therefore carried on as bank accounts ; so that you have to consider that these accounts were legacies from a time prior to 1888. 66. In other words, they ought to have gone to the Globo Account, and did not ?—No. They were considered good accounts at that time, but they were large accounts; and the causes which led the bank into its trouble—or much of it—affected these accounts as well, and these accounts had to be afterwards written off. 67. In other words, Mr. Buckley was right, and the committee was wrong when it said that enough had been written off?— There had not been enough written off, as was proved by Mr. Hean in 1890, when he came out; but, as I said before, this is a matter of securities and valuations. 68. Who is responsible for these accounts being taken up and considered good—the general manager or the directors? —It is a divided responsibility. In some cases the manager will take up an account on his own responsibility, and it may turn out to be wrong. In other cases, accounts are submitted to the directors and carefully considered by them, and they deliberately take them up. 69. Were any losses made on directors' overdrafts ?—I respectfully decline to answer questions respecting private accounts of the bank.
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70. Well, we have a report here of the shareholders' committee, in which the words used are these words: " And, finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy losses have arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." Do you concur with the report of the shareholders' committee? — The shareholders' committee report is correct as to fact. 71. Had you anything to do with the compilation of that report, or supply information on which it was based in March, 1888 ? —The balance-sheet showing the deficiency of £800,000 ; I revised and went over it. 72. Could you produce that balance-sheet ?—I think so. It is in the bank, no doubt. I would like to explain how that was done. As soon as the committee of investigation was appointed—or, rather, as soon as it became certain that it would be appointed —the inspector sent a circular to all the different branches and agencies of the bank instructing them to send in reports. The reports were to be divided under four heads. First of all, list of all accounts considered fairly good and adequately secured ; there was then to be a list of all the doubtful accounts, with a carefully thought out estimate of the deficiency. These were what I might call operative accounts, but to which there was a measure of doubt attached. The third list was to be a list of doubtful accounts which had been stopped, and, in respect to these accounts, the managers and agents were to make a careful estimate of the deficiency. The fourth list was to be a list of properties owned by the bank —properties which had fallen into their hands —and these were also to be valued and an estimate made of the shortage, if any. The managers were told in all important cases to obtain an expert professional valuation. This was done. When these reports come in the assistant inspectors were instructed to look over the reports from the districts under their charge, and to say if they thought they gave a true and fair view of the position. Then these were all collated, and the statements I have spoken of were laid before the committee of inquiry. As regards the returns from places under my charge, I went through them, and they appeared to me to be reasonable and fair. The other assistant inspectors did the same. Then Mr. Murray, the general inspector, overhauled them himself, and stated that, in his opinion as chief inspector, they presented a fair account of the bank's position at that time.' 73. Is it correct that in the face of that the directors declared a dividend for the 31st March, 1888, of 7 per cent., absorbing £35,000 ?—Yes. 74. And on the 30th September, 1888, of 7 per cent., £24,500 ?—Yes ; I have no doubt but that those figures are all right. 75. And in 1889, although you yourself have sworn that there was an ascertained loss of £800,000, they declared a dividend of 7 per cent., amounting to £33,063? —Yes; you see the deficiency was to be provided for by the writing-off of the reserve fund and capital. 76. But in 1888 there was nothing done in that way?—lt was provided for in 1888. So you might say, if the shareholders were to make good the losses out of principal, they were entitled to interest on what was left. 77. You think, then, according to this, because you say there were not writings-down sufficient by £200,000, although there is a loss of a million, and with nothing to meet it except the Contingency Eund, it was a proper thing to declare a dividend in 1888 ? —The directors thought they had provided for the deficiency by writing off capital, and, having done that, thought they were justified in declaring the dividend. 78. Was it before or after this Contingency Fund had been provided for that the dividend was declared in 1888 ?—I think it was after provision had been made for the writing-down. 79. Was it before or after the committee reported that the dividend was declared ?—I could not say without referring to the record. 80. Was the Contingency Fund provided after the report of the committee ? —lt was based on the report of the committee. 81. Very well, then. The dividend being declared on the 31st March ?—lt would not be declared on the 31st March. It would be declared at the shareholders' meeting after the 31st March. 82. Was it at the same meeting? Here you have the balance-sheet of 1888; the shareholders' meeting was held on the 26th April. Was it not at that meeting the dividend was declared ?—Yes. 83. Was it not at the same meeting that the committee was appointed ?—Yes, apparently so. 84. Then, these reports you have referred to now were in the bank before that ?—The report was ready. 85. And had not been sent in ?—I would not be quite certain as to the date. I think they were ready for the special committee when they were appointed. If you want me to say that it was practically known on the 26th April that there was this deficiency of £800,000, I say, yes, it was. 86. Under such circumstances, do you think it was a proper thing for the directors to have declared that dividend ?—Well, I would not like to express an opinion about that. You have to consider what was in the minds of the men at that time. They decided upon this course, having this committee of investigation in view. I would not like to express an opinion as to whether it was proper or improper without knowing what was in their minds. 87. Had the officials in the bank done their duty and made the directors acquainted with the true position at that time ? —Yes ; I believe' so. I was not in communication at the time with the board. 88. You are aware of your own knowledge that the inspectors had sent in their reports, which had been supervised by Mr. Murray, and gone into by the directors of the bank?—l know the reports were put into the committee, but whether they were put before the directors I have no knowledge.
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89. But the probability is that they would be ?—Yes. 90. There have been declared, from 1888, 1889, 1890, 1891,1892, 1893 to 1894, total dividends amounting to £265,688 ?—Yes. 91. And during that period, when these dividends were declared, there were ascertained losses of over three millions ?—lf you put on one side the deficiencies in connection with the Estates Company the writing-off was one million. I would like to explain, if I may, that these writings-off included the ordinary bad debts which every bank makes from year to year, and they also include a considerable sum representing what are really cross-entries, which arise in this way : When you have a doubtful account in the bank which you are trying to pull round, you do not cease to charge interest on it, because to do that would immediately sound a note of alarm to the debtor. You continue to charge interest upon it, but carry the interest to a suspense account. When you come to write off the debt, part of tbe debt consists of the suspended interest, so that the effect is to swell the apparent and to disguise the true loss. I think it is fair to say that the many bad debts which you make in the course of your business—and you could not carry on your business without making them—ought not to be put in the same category as debts which have to be written off shareholders' capital. 92. Well, now, taking the original capital of the bank at £900,000 ?—The original capital was a million. In 1888 it was a million. 93. To have losses, in round numbers, of over four millions, what state of things does that disclose to your mind ? —I have not been quite able to see how you get your four millions. 94. Take the Estates Company losses and the £3,095,000. It is easily got at. There is £800,000 still in the Estates Company?— Yes; that brings it to three million nine hundred thousand odd, against which you have the Contingency Fund, £171,000, and the £216,000 which I have already said was carried forward from 1887. 95. My question refers right through ?—-If you go back before 1888 the writings-off would be larger. 96. Much larger than four millions ?—Yes. I thought your answers were directed to 1888 and onward. 97. If you go back beyond 1888 it would be more than four millions ?—Yes; if you go back and come to the present day there is no doubt that the writings-off are more than four millions. 98. As shown here, of course, there is £216,188. That would make £3,789,000 ?—Something like that. 99. Taking it back, it discloses, does it not, reckless trading and an undesirable state of things to have these losses of over four millions ?—lf I were asked to make a statement about that I should say that, first of all, it would be fair to deduct all the cross-entries I have described ; then, it would be fair to deduct the losses made in the ordinary trading of the bank —losses which are inseparable from the trading of any bank. 100. Can you give us the amount of cross-entries as you go along—the amount of crossentries, the amount of losses you have just now mentioned—so that we may ascertain from that standpoint what has been the cause, and whether or not the persons who are responsible are to be blamed or otherwise? —It would not be easy to work it out, because you could not take a particular account in which a debt occurred, and say this was a loss made in the ordinary trading of the bank, or this was a loss which was written off capital, because they treat them as a whole; but it would be fair to say to an expert in banking, What would you consider a fair allowance for ordinary trading losses in a bank dealing with so many millions of money in accounts ? Then, you might hold the officers and the directors responsible for the balance written off, and then you would have to consider how far that had been due to reckless trading, and how far to circumstances over which the directors had no control—to the fall in value of the staple products, depression in the industries of the colony, and things of that kind. 101. What percentage would you, as a banking expert, consider, taking the business of the bank, a fair margin in regard to cross-entries ?—I could not say anything about the cross-entries without having them turned up. 102. Could you say what would be a fair percentage of loss in the ordinary trading business?— I should think it would not be out of the way to estimate ordinarily losses at from £40,000 to £50,000 a year. 103. Do you estimate now, with your management, that the Bank of New Zealand is going to lose forty or fifty thousand a year under this head ?—I hope we shall be able to reduce it, and keep it under that, because the bank is now managed more strictly than any bank I ever heard of. 104. What do you think you will be able to bring it down to under the present management ?— I would not like to hazard an opinion. It is quite a new departure in my experience. 105. Do you think you will reduce it by half ?—I hope so. 106. Do you concur in Mr. Watson's estimate of twenty or thirty thousand a year?—l hope we will be able to bring it down to that. 107. Then, in your estimate of the profits, taking the earning-power and business done by the bank, do you think it could stand that ?—When you come to estimate the profits you find you have set yourself a very difficult task. A year ago I should have put an estimate of the bank's earnings considerably higher that I would put it now. In the interval the value of money has fallen very much —so much so that the fixed deposits of the bank are losing favour with investors, they get so little for them. The fixed deposit is becoming less popular than it was, and that strikes at the stability of the bank's resources, and compels you to accept lower rates for advances, while it also compels you to hold a larger amount of your resources in ready, available securities—more cash, moie money at short call, and so on. Until these conditions have adjusted themselves, and we can see what the effect will be, I should be sorry to commit myself to an estimate of the bank's earnings. 108. What did you earn last year; it was £52,572, was it not ?—Yes ; net. * 32—1. 6.
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109. £54,000 was written off out of the bank's profit and loss ?—Yes. 110. That is £102,000?— Yes. 111. That is exclusive of what you call cross-entries and ascertained losses? —Yes. 112. Would part of the £54,000 be the proportionate share of the losses under the head " Crossentries " for last year?—lt did come in, I think, to some extent. 113. Can you tell us to what extent ?—Not without reference to the books. 114. We will now come to 1889 : You remember there was a private Bill put through by the bank in that year ?—Yes. 115. Were you aware of the provisions of that Act, and are you acquainted with them now ?— I have a very vague remembrance of them. 116. Your position in 1889 was simply sub-inspector?— Yes. 117. Who was the general manager in that year ?—ln the early part of 1889 Mr. Tolhurst was acting general manager. In the end of 1888 Mr. John Murray was acting general manager; but I cannot say, at the moment, when Mr. Murray ceased to be general manager and Mr. Tolhurst became acting general manager. 118. How long did Mr. Tolhurst remain general manager? I want to ascertain who was general manager in 1889, when that Bill was promoted ?—I can give you the dates now. Mr. Tolhurst was appointed to assist in the general management in November, 1888. He was appointed acting general manager in January, 1889, and he remained as general manager until March, 1890. 119. Then, on the 2nd August, 1889, Mr. Tolhurst was the general manager of the Bank of New Zealand? —Yes. 120. Would he be responsible for the legislation promoted at that date?—l do not know to what extent he would be responsible. There was a board sitting in Auckland, of which Mr. George Buckley was president. 121. Who were the members of that board on the 2nd August, 1889 ?—I can get them for you. I have not the names here. 122. Would these be the names : Messrs. W. H. Colbeck, Taylor, Wilson, George, Bull, John Murray, and J. Peacock?— They are probably right; I could not swear to them. You were asking who was responsible for the legislation. I was going to say that Mr. Tolhurst may either have initiated it and obtained the board's sanction, or he might merely have acted as servant of the board in seeing it put through. 123. Subsection (3) of section 5 of the Act of 1889 reads as follows : "In making up balancesheets from time to time for the purpose of declaring and paying dividends, the board may, if it thinks fit, discard the said liquidation account, and may make up such balance-sheets without reference to the state of such liquidation account or the said assets, and may pay dividends from profits on current business without regard to the estimated surplus or deficiency of the said liquidation account or the said assets at the time of making up such balance-sheets or paying such dividends." Does not the effect of that subsection mean that the directors may be kept free from an action at law by the shareholders ?—The effect of the clause is, of course, quite clear. It empowers the directors to disregard estimated surpluses or deficiencies in the liquidation of accounts in making up their balance-sheets. 124. In fact, it is to legally empower the directors, if they thought fit, to declare dividends notwithstanding any losses?— Notwithstanding an estimated surplus or deficiency. If it was an ascertained loss it would be a different thing. 125. Then, they could go on for ever declaring dividends if the losses were not ascertained?—l do not know what the effect of the clause was, but it gave them a good deal of power. 126. In fact, it shields them from legal or criminal proceedings ?—That I could not say. That is a legal point. 127. In other words, it is legislative power to enable the directors to place " cooked " balancesheets before the shareholders if they thought fit, is it not ? Do you know any other case in your experience where such power has been given ?—There was subsequent legislation to the same or similar effect. 128. That is the first banking legislation. Coming to 1894 : What was your position in May and June of 1894 ?—I was inspector. 129. In other words, principal officer of the Bank of New Zealand? —The general manager is the principal officer. 130. Where was he at that time ?—He was in Auckland in May. 131. He went to London, did he not?—lt was in June, 1894, that Mr. Holmes went Home to England. 132. What was the time?—l have not the date, but it was towards the end of June. 133. Do you remember Mr. Murray coming down to Wellington to interview the Government relative to the position of the Bank of New Zealand ?—Yes. 134. Was Mr. Holmes in the colony at that time, or was he absent on his way Home ?—I think his leaving for London and Mr. Murray's leaving to come here was about simultaneous. I have not the dates exactly. 135. Did Mr. Murray see you when he came to Wellington?— Yes. 136. Did you place before Mr. Murray the position of the bank at that time ?—No, I do not remember doing so. 137. Were you asked to do so ?—No, I do not recall that I was. 138. And you were chief inspector?— Yes. 139. And you were not consulted ?—He did not ask me to put the position of the bank before him, to make up any statements, or anything of that kind. He told me what was contemplated, and that the London office had instructed him to interview the Government, and I think that was really all that passed between us. I had been away in Rotorua immediately before that, and Mr.
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Michie had been carrying on my duties. But, before that, Mr. Murray had been in the habit of coming in and out of the bank, and he would ask questions on different things —as to the course of the deposits, and so on—and I had told him that the deposits were running out, and that the financial condition of the bank was anything but satisfactory. 140. But you did not go into details ?—I do not remember going into details. 141. Do you know Mr. Hanna, who at one time was connected with the Bank of New Zealand, and subsequently with the Estates Company?— Yes. 142. Where was he at that time ? Was he in Wellington, or where ?—I am not sure where he was. 143. Had you any communication with Mr. Hanna with respect to the Estates Company at that time ? —No. 144. Do you know whether Mr. Murray had?—l could not say. 145. Do you remember the legislation which took place in 1894? —Yes. 146. Do you remember that the colony gave a guarantee for two millions of "A" shares? —Yes. 147. In your opinion, were the steps then taken in the interests of the colony ? —Yes. 148. What do you think would have been the effect otherwise, from your position in the bank and knowledge of banking in the colony, supposing the colony had not come to the rescue of the Bank of New Zealand ? —I think the bank must have stopped, and I think that the effect on the prosperity of the colony and on many thousands of its people would have been a disaster that it is difficult now to compute the magnitude of. 149. Do you think any of the other banks would have been detrimentally affected if anything had happened to the Bank of New Zealand?—l do. Ido not see how they could have escaped. 150. In your opinion, do you think there would have been what is termed "an all-round smash " ? —Yes, that is my opinion. 151. And that we should have had a second edition of the Australian crisis ?—I not only think that, but I think you would have restarted the Australian scare. I think the position over there would have been affected. 152. You think that closing your bank branches in Australia would have brought the bank crisis back to Australia again ?—I think so. I think it would have alarmed people over there and destroyed the confidence which was then beginning to establish itself. 153. In other words, you are of opinion that what was done by the Colony of New Zealand in coming to the rescue of the bank was a benefit not only to the colony here, but also to the other colonies ? —That is my opinion. 154. Had the financial crisis in Australia anything materially to do with the loss of deposits and the position in which you found the Bank of New Zealand in 1894 ?—Undoubtedly. 155. In what way ?—lt alarmed timid people in the colony and in London, and the consequence was that they began to withdraw their deposits from all the New Zealand and Australian banks. I think that it had a greater effect upon us, because we had been through a crisis before. 156. The crisis you allude to was, I suppose, in 1888 ?—Yes. 157. In 1893 legislation was passed giving the Bank of New Zealand power to increase its capital; is that not so? Section 3of "The Bank and Banking Act, 1893," says, "Notwithstanding anything contained in any Act of the General Assembly of New Zeland relating to banks, or contained in the charter of a bank, the shareholders or proprietors thereof may from time to time, by extraordinary resolution, authorise its capital to be increased to such amount and upon such terms, and either with or without special privileges, preferences, and priorities to the holders of shares in such increased capital, as they may from time to time deem expedient, and the same may be increased accordingly. Any extraordinary resolution as aforesaid may provide that the holders of shares in such increased capital shall be entitled to such special privileges, preferences, and priorities in relation to any capital which at the time of the passing of the extraordinary resolution has been subscribed," and so on. By that Act power was given to the Bank of New Zealand to increase its capital? —Yes. 158. Were any steps taken by the bank to increase its capital ?—At that time the board of the bank was in London, and I do not know what they did. I think it is probable they thought of doing so, and I dare say that they made inquiries as to the feasibility of doing so. At all events, they did nothing effectual. 159. In 1894 legislation was passed, and at the end of that legislation a position was offered to you, was it not ?—Yes. 160. The position as Auditor ?—Yes. 161. What date did you assume your duties? —The Ist November, 1894. 162. After having assumed that position did you go minutely into the position of the bank ?— Yes. 163. What was the position?— Well, I found that provision would have to be made for bad debts incurred. 164. To what extent? —The result of my investigations up to the last half-year, 31st March, showed that provision was required to the extent of about £600,000. That includes, of course, what you might call trading losses for 1894,1895, and 1896. 165. Did you acquaint the Colonial Treasurer of your discoveries ?—I acquainted the President from time to time. 166. Did these come upon you as a sudden revelation ? You had been chief inspector, and you made these discoveries after assuming the position of Auditor. Did they come upon you as a surprise, and as the Auditor? —I knew that further provision would be required, but I did not know to that extent. I had not time to acquire minute knowledge ; but I knew that further provision would be required.
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167. You are aware that, in 1895, the position of the bank was placed before the Government by the directors ?—Yes. 168. And that the Government were informed that the Bank of New Zealand could not go on with the Estates Company as it was?— Yes. 169. You know the legislation which took place in 1895 ?—Yes. 170. What necessitated that legislation ?—The position of the Bank of New Zealand Estates Company. 171. Anything else? —And the losses in the bank. 172. You have seen the balance-sheet, and audited, no doubt, the position of the Estates Company —you are auditor for that as well as the bank, are you not ?—No; I am not auditor for the Estates Company. 173. But you had to audit it on account of the Realisation Board? —Yes ; there has been a partial audit with the view of ascertaining the position of the company. 174. You had no power under your authority as Auditor of the Bank of New Zealand to audit the accounts of the Estates Company?— No. 175. Had the accounts of the Estates Company come under your review at any time after you were appointed Auditor, and the time you reported to the President—the 31st March, 1895 — losses to the extent of £600,000 in the bank ? You were appointed Government Auditor in 1894, on the Ist November ?—Yes. 176. At the time you reported to the President as to the condition in which you found the Bank of New Zealand, had you under your review the accounts of the Estates Company?— No. In 1895, before the legislation had been gone into, I looked into the balance-sheets and accounts of the Estates Company to a sufficient extent to satisfy me that there was a very large deficiency there ; and it did not appear to me that, with the heavy burden they had to pay in the interest on the debentures, there was much prospect of their being able to pay dividends on the shares to the bank to any extent, and I reported that to the President. 177. Now, had not the bank lost heavily with the Estates Company in 1894 and 1895?—1n what way, Sir ? 178. Had the Estates Company been able to pay interest on the £1,850,000 shares in the Bank of New Zealand? Had they paid any dividends on those shares? —No. 179. That was a very heavy loss to the bank, was it not? —Yes. 180. Would it not be your position as Auditor of the bank to audit the accounts and see what the position of that concern was? —It was on that account that I looked into the position to satisfy myself, and I saw that there was a large deficiency, and that their burdens were so heavy that they could not pay any dividends. 181. During the session of 1895 there was a Committee of inquiry. Did you attend that Committee and give evidence ? —I attended on one occasion and put in some documents, and I afterwards supplied some information at the request of the Chairman. I was not examined before the Committee. 182. What were the documents you put in before the Committee?—l gave them the balancesheet of the bank, the balance-sheet of the Estates Company, the balance-sheet of the Auckland Agricultural Company, the combined balance-sheet of the Auckland Agricultural Company and Estates Company, and a list of the freeholds—a list, in fact, of the Estates Company's properties. 183. Was the whole information available at that time placed before the Committee so as to enable it to come to a decision as to the position of the bank and the position of the Estates Company ?—There was one feature of the Estates Company that, I think, was not put before the Committee, and that was that the Estates Company had left out of its balance-sheet its contingent liabilities as guarantor to the bank for the overdrafts of the stations with the bank. Ido not think that was put before the Committee. 184. How much did that amount to ? —lt amounted to between £40,000 and £50,000. 185. There is a difference of £54,000, is there not, in Mr. Hean's valuation?— Yes. 186. Was that placed before the Committee? —Yes. 187. In what way was it placed before the Committee? —It occurs as an item in the balancesheet, and it is also shown at the foot of the list of stations. 188. Was it put as a lump-sum, or so much as on each station ?—A lump-sum. 189. Did you examine the books of the Estates Company and ascertain whether that was kept there as a lump-sum, or how it was kept ?—lt was kept as a lump-sum. 190. Until when ?—Until December, 1895. 191. What was done with it then? —It was then spread over the different stations. 192. By whose authority?—l could not tell you by whose authority. 193. Was a portion of it put against the Agricultural Company? —Yes. 194. Did Mr. Hean value the Agricultural Company's properties ? —He did not value them actually, but he valued them incidentally, because he valued the shares of the bank held in the company, and the bank was the only shareholder. The value of the shares was dependent upon the value of the property, and I believe—l am not sure—that he had a valuation made by Mr. McCaw, who was inspector of stations for the bank at that time. I think he had this valuation made in order that he might estimate the value of the shares. 195. Do you think that placing £16,000 against the sheep of the Agricultural Company by the direction of the attorneys of the Estates Company would be a proper thing to do in your opinion? —I do not see anything improper in it. 196. How did it come out when you came to realise upon the sheep ? The sheep are not there ; and, if you put £16,000 on the sheep that are not there, can the value be there ?—lt might not be a very wise thing to do, but Ido not think there is anything improper in it. There is no improper motive in it so far as I am able to ascertain.
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197. As a banking expert, is it a usual thing to do, if there are no assets against such a large sum as £54,000, to make assets by placing a sum like that against sheep in the way described? Has it been the usual practice in the Bank of NeW Zealand ?—The whole circumstances were unusual. It was an abnormal state of things. In 1895 the estates had been sold to the Realisation Board for a lump sum, in which this sum stood as a part, and it was thought immaterial whether it should appear in the books as part of the price kept as a separate item, or whether they should make a proportion of it. They thought, I suppose, that it did not matter which course was adopted, and in doing what they did no one was any the worse. 198. But, in realising the sheep on the station, when the sum was placed against them as you mentioned, it would make the loss greater by that amount when they were realised, would it not ?—Yes. 199. And these sheep had been given at a certain value to the parliamentary Committee, and this £54,000 or whatever the amount might be would increase the value of the sheep by that amount ? —But this separating of the £54,000 was, I think, against the land or stations as a whole, not against the sheep only. 200. If you put it against sheep and not against the stations it would be all the worse for the sheep when realising on them, would it not ?—lt would make it all the worse for the sheep, no doubt, when realising. 201. You are directed by law to issue certificates for the Colonial Treasurer on account of the debentures to be issued, are you not ?—Yes. 202. Have you issued a certificate, and, if so, for what amount—the first certificate ?—£2,810,000 odd. 203. Will you explain to the Committee how you arrived at that amount ?—I have not the figures here, but I took the price mentioned in the Act, £2,731,706, and I ascertained the liabilities of the stations to outside creditors —that is, creditors other than the Estates Company—and I added that on. Then, I ascertained the incomings from the 31st March, 1895, to the 31st March, 1896, and I deducted that, and I ascertained the outgoings during the same period, and added that 0n—£2,810,496. 204. You have stated that the whole of the assets were sold to the colony for £2,700,000 odd : is that so ?—The properties shown in the statement submitted to the joint parliamentary Committee were sold to the Assets Realisation Board, and the price was said to be £2,731,706, subject to adjustment. 205. Was that adjustment in your opinion forward, or was it an adjustment to go beyond the 31st March, 1895 ?—The adjustment was, in my opinion, to enable the position at the 31st March, 1895, to be ascertained. When the joint parliamentary Committee was sitting I was looking into the balance-sheets of the Estates Company, and I found that I had been under a misapprehension with regard to them. I thought that they brought the liabilities of their stations themselves into account for the 31st March, so that their balance-sheet included all liabilities, actual and contingent. I find, as I have said just now, that it was not so, and that their balance-sheets did not show these contingent liabilities of the stations. I called the attention of the President of the bank to it on two occasions, but he said, " The Bill which is to be brought down to give effect to the recommendations of the Committee will have a clause in it which will enable those contingent liabilities to be adjusted." 206. Then, before the parliamentary Committee had concluded its labours, you actually knew about this £42,000 which had been kept from them ? —I knew about it, but I did not know about it being kept from them. 207 According to the President, it was to be lapped up in the clause of the Bill? —There would be a clause in the Bill to meet the case. These liabilities were represented by assets, which were also excluded from the information laid before the Committee. 208. Then, there were assets as well as liabilities, and if both were equal there would be no necessity to put it before the Committee ?—I think it would have been better if it had been put before the Committee. It would have saved all this trouble. But it does not matter very much, because there are liabilities on the one side and assets on the other. The assets passed to the Assets Board, and it seems reasonable that the Assets Board should pay for them. 209. Then, you think your certificate to Parliament ought to have provided for £2,800,000 instead of £2,700,000 ?—That was my view. I took, no doubt, a wrong view of the cash received as proceeds of sales of properties made by the Estates Company between March, 1895, and March, 1896, when administering them on behalf of the Assets Realisation Board. They sold certain properties, and received a certain amount of cash. I was asked by—l think it was the General Manager of the Assets Realisation Board ; I am not quite sure—but, at all events, I was asked to leave these proceeds to be settled for in cash between the two companies—that is, the Assets Realisation Board and the Estates Company, the reason given being that the Board would require some cash to start with, and that it would be facilitating their operations during their first year, and also assist them in paying the year's interest which was due on the debentures. I thought it over, and felt, myself, that it did not make any difference to the responsibility of the colony whether the amount was included or not included, and left it out. I now think I did wrong. 210. What was the amount ?—£27,000, I think. 211. You have no doubt that when you issued your certificate then there was £42,000 not included and £27,000 you left out —that is, £69,000. Were there any other items that were not taken into consideration, either as included in the outgoings or the incomings?— There were some small amounts pertaining to this item I have mentioned—some interest on the amount received, and some expenses connected with realisations, which all related to the same thing. After I had sent in my certificate, the Estates Company people told me that they had omitted to claim for an amount representing a call paid on the Thames Valley Land Company's shares, nearly £7,000. I pointed out that my certificate had gone in, and that they would have to arrange with the Assets.
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Realisation Board, and they told me they had arranged to settle in cash. I did not include in the incomings produce to hand, because it had not been turned into cash. I was making what was tantamount to a cash adjustment, and I could not bring into it so many bales of wool and so many carcases of frozen mutton. That was the view I took. 212. But it was an asset realisable and in the course of being realised?— Yes. 213. And you did not think you were justified in calling that an incoming for the year?—lt was not incoming to be taken to account as a cash item. 214. The result, at all events, of issuing the certificate, in view of the issue of debentures, would be that at the end of the term the colony would be responsible for any deficiency therein on £100,000 more than was originally fixed by Parliament? —It. was about £80,000 more. I would like to point out that, although that was the case, the assets of the Realisation Board were larger by the same amount. To understand my position, you have to remember that the colony guarantees the deficiency, whatever it may be, in the ultimate winding-up of the Assets Realisation Board ; so that if you increase the assets of the Board with the one hand and increase the liabilities with the other the deficiency remains exactly what it was ; so also if you reduce the assets of the Board and reduce its liabilities the responsibility of the colony remains what it was. It makes no difference. 215. It makes this difference : In paying interest to the Realisation Board on the debentures, they have to pay more interest every year, and if it is a less amount it is so much less ?—No; because the object of the Assets Realisation Board will be to pay off these debentures as they can with the money that comes into their possession. If their assets are large they will be able to pay off a correspondingly large amount of debentures, and vice versd. It is as broad as it is long. 216. Are not these debentures issued by the Colonial Treasurer guaranteed by the colony?— No ; the colony guarantees any ultimate deficiency. 217. And the interest paid on these debentures would not be greater if issued for £2,800,000 in lieu of £2,700,000? —It might be a little more the first year, but, as you redeem, the larger the amount of cash resources the larger the amount of debentures that would be redeemed. 218. But suppose this contingency: that the Assets Board did not redeem ?—Yes; it must either redeem or build up a fund to be available for redemption. 219: But it is on the debentures that the liability of the colony rests ?—lt is on the deficiency after the realisation of the assets. 220. Do you anticipate that at the end of nine years the whole will be realised and that there will be a loss?—I think that must be so. Ido not see how the value of these properties is going to increase to a sufficient extent to fill up the hole. 221. Do you think there is a possibility of the bank earning any surplus after providing for interest on the new capital and the shareholders' call with which they will be able to fill up the hole ?—I think it is only a question of time; given good management and an ordinary state of affairs in the colony. I think it is only a question of time. The bank's profits for all time are pledged to the Assets Realisation Board, with the exception of a comparatively small amount it has to pay on its preference shares and the dividends that the directors are authorised under certain conditions to pay on the money which is now being paid up in the shape of calls now being paid by the shareholders. With those exceptions everything the bank earns goes into the coffers of the Assets Realisation Board, and is available to extinguish any deficiency. 222. Since the first certificate was issued, you know that Messrs. Kember and Smith have been making a further adjustment, or otherwise going further into the position ? —The Colonial Treasurer refused to approve of the first certificate. He said, before approving it, he wished further investigations to be made, and, with Messrs. Kember and Smith, I have been going into matters more fully. 223. Have you come to conclusions now, and are these conclusions somewhat different from the conclusions you arrived at in sending in the first certificate ?—Yes. 224. You have not yet forwarded, or have you forwarded, to the Colonial Treasurer your certificate as to the result of these more recent investigations ?—No ;I am waiting to hear whether the Colonial Treasurer wishes to have further investigations made, or whether he thinks the position has been sufficiently examined into. 225. Can you give the result up to date, without further investigation, and inform the Committee as to whether it varies, and, if so, how it varies from the original certificate in amount and in detail ?—Mr. Kember, after the departure of Mr. Smith, was authorised by the Colonial Treasurer to arrange a settlement. I think it practically meant that he was empowered to agree with me as to an adjustment, which would be submitted to the Colonial Treasurer for his approval subsequently. The consequence was that we had to argue over the different items, and, in view of the importance to the bank of this question being settled, and to the fact upon which I have already insisted that the incomings and outgoings, whether you make them on the one hand a little more, or whether you make them on the other a little less, does not ultimately effect the responsibility of the colony. I decided, for the sake of settling the matter, to give way on certain points ; and I did so. The amount I understand he has agreed with me to recommend to the Colonial Treasurer is £2,680,000 odd. The differences are these : The inclusion in the incomings of a sum of £90,000, being the estimated value of the produce on hand for realisation. I regard that as practically the Estates Company making an advance to that amount in cash to the Assets Realisation Board, to enable them to apply it to the reduction of their debentures ; but Ido not think it matters much, and I have given way on that point. Then, I now, of course, include the £27,000 odd, and small items relating thereto, representing the sale of properties by the Estates Company, on account of the Assets Realisation Board. We have included on the other side the call on the Thames Valley Land Company shares, about £7,000. I could not get Mr. Kember to take the same view as I took about the adjustment of station accounts at the 31st March, 1895, as mentioned in the Act. I pointed out to him that the assets were not shown to the joint parliamentary Committee of 1895, and were therefore not reckoned in the price of
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£2,731,706, though they had actually passed to the Assets Board. Some of these assets were credit bank balances, others were accounts outstanding, others were bags of grain and stacks of hay, others were turnip-crops which the Assets Realisation Board's sheep had eaten. I said, " These assets have gone to the Assets Realisation Board, and are more than they expected to get. Are you going to adjust this ? If you will not allow me to adjust the station accounts, as, I say, the Act allows, how can we arrange it? " He said, " I will allow a lump sum of £30,000 for these assets." After endeavouring to get him to alter his views, I said, "It does not matter, because the Estates Company will have to square it out of their Profit and Loss Account. They will have so much less to pay the bank by way of dividends, so that the bank will be able to pay so much less to the Assets Realisation Board." It was practically a march round the circle, and we agreed to include a sum of £30,000. 226. That would be £12,000 less debentures to be issued, as provided by your original adjustment ? —Yes. 227. These together make a difference of about £130,000? —Yes. 228. What is the total ?—£2,680,000, I understand, in round numbers. 229. It is £130,000 less than your original certificate, in other words?— Yes, about that. 230. In the first report of Messrs. Kember and Smith there is £54,507 explained in respect to Mr. Hean's valuation. That is now admitted to be not in the station accounts ?—Yes, it is included in the price. 231. But not as against the station accounts? —I do not know that we went into that. The amount stands in the Assets Realisation Board's books, and, of course, they will deal with it as they think fit. They will either show it as a separate amount or apportion it. There is £83,380, valuation for false values of sheep. You have seen that paragraph in Messrs. Kember and Smith's report ? —Yes. 232. That is rather strong language. Was it warranted?—l do not think it was. I think, if they had asked me to go into that with them before sending in their report, that they would probably not have sent it in in those strong terms. I did not know what they were going to report. 233. Do you state that you are not responsible for values that have been accepted by the parliamentary 'Committee ?—I do not hold myself responsible for values. You mean the Estates Company's properties. 234. Yes?— No. 235. To your own knowledge this journal entry of £83,380 was not the original account against the sheep, but a writing-up of the sheep ?—lt appears that in May, 1894—1 think it was—the Estates Company decided that they would adopt a fixed value for their sheep, as was done by other companies, and they passed a minute to that effect. In 1895, when Mr. Foster was appointed colonial manager of the Estates Company, and was preparing his figures for the balance-sheet of 1895, he wrote the sheep down to the then market-value of the day; but when the attorneys discovered what he had done they disallowed it, and he then reversed his entries. 236. And that is the false entry referred to here?— Yes. 237. You have gone through the accounts. Is there not from each station-manager an account of the sheep valued every year at the 31st March"? —Yes, I think so. 238. Then the attorneys of the Estates Company have kept up a fictitious value, for there is what they call a standard value, while in the station-books the real value is shown?—l think the station-managers have sent up the values of their sheep, and then they are instructed what values they are to put them at. 239. The station-managers sent up what they believe the value of the sheep to be, and then they get orders from the attorneys as to what value they are to put on them?— No. When this minute had been decided on, and the value of sheep was put at a standard price, the stationmanagers were instructed by circular that the Estates Company had decided to do this, and they were given figures for what were on their stations. That, I think, was what was done. 240. If the sheep were worth Bs., they were told to put them down at 16s. ?—They were told that a standard value had been agreed upon, and was to take effect over a number of years. This may seem an extraordinary thing, but I have made inquiries, and foundthat it is the practice among companies. 241. They did not instruct them to put them down at double their value ? —-If you are going to have a standard value for sheep you must not take fright because the value may be low on a particular date. The object is to prevent balance-sheets being affected by fluctuations which are purely of a temporary character. 242. The £83,380 would not be a standard value ?—That was fixed in 1894. 243. If they have sold half their sheep, then they are still to keep up the other half, or they would be reduced correspondingly ?—They reduce the amount by the number of sheep sold. It was the value per head that was fixed, not the value in gross. 244. There was £94,000 in 1894 fixed as the value of the sheep, and in the interim sheep had •been sold to the value of £11,000. Would it not be reasonable to write off what sheep had been disposed of. It is given in evidence that £94,000 was the book-value of the sheep ?—No; I think the value of the sheep was £227,000. 245. But they were written down by Mr. Foster—that is the evidence?— Yes. 246. And later on Mr. Foster was told to write them up ?—No. 247. But the attorneys refused to sanction the writing-down? —Yes. 248. And Mr. Foster had written them down by £94,000 ?—Yes. 249. And in the interim sheep had been sold to the value of £11,000, and he only wrote them up to £83,000 ?—That is not so. When he came to reverse his entries he omitted to write up two or three stations. Instead of writing back the whole of the £94,000 he only wrote back £83,000. 250. It was not on account of the sheep which had been sold? —It had nothing whatever to do with it.
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Tuesday, 15th September, 1896. Examination of John Marten Butt, Colonial Auditor of the Bank of New Zealand, continued. 1. The Chairman.] I think, Mr. Butt, there were one or two matters you promised to procure information upon ? —I have ascertained the amount of the cross-entries in connection with Interest Suspense Account used in writing off bad debts. It is reported to me by the officers of the bank to be £160,000 odd. With regard to the statement I took Home, which I was asked yesterday to supply, I have to say that it is not quite ready yet, but the officers of the bank have promised to let me have it this morning. 2. Hon. Mr. Seddon.] Could you give me any information with regard to the Matamata Estate — as to why they gave £83,000 for a half-share, which was only valued at £53,000 ?—The arrangement was made by the London board, and what was done here subsequently was simply to carry out the London board's intentions. I could not say what motive swayed them in the arrangement they made. I have since been looking into the value of the Matamata Estate, and Mr. Foster tells me that his valuation to-day, based on the earnings of that account, appears to justify what the London board estimated within a few thousand pounds. 3. There was £81,649 paid for it?— Yes. 4. The bank was only entitled to half, and there was a question of buying out the other half? —Yes. 5. Well, the property-tax value, including everything, was only £54,000 ?—The property-tax value is very low, because the value on its earning-capacity is £150,000. The £81,649 which was paid is for one-half. According to that, they paid £6,000 to £7,000 too much for one-half. 6. Has there been anything spent on it since you have had it ? Have there not been large sums of money spent in improving it since that time?—l do not think so. 7. Have you seen the returns showing that this worked out in 1894 at a loss of £4,000 for the year ? Mr. Foster thinks upon that that it is worth double its value ?—Mr. Foster told me his' valuation. I did not go into particulars. 8. Did you make yourself acquainted with its purchase as Auditor—as to what was paid for it ? —I knew of it. 9. Do you not think it was a case which you might have reported to the Government ? —lt was up before the Committee of 1895. I thought that was sufficient. 10. Was a protest made by the bank authorities here to the London board giving £54,000 for half this property?—l did not know that. 11. Have you audited in any way these accounts of the Estates Company prior to 1895? — No. 12. Was this transaction with the London board, in respect to Matamata, brought under your notice as Auditor in 1894'? —Yes ; I knew of it. 13. When was that completed?—l think it was in February or March, 1895. 14. You were appointed in November, 1894 ?—Yes. 15. And you never drew the attention of the Government to this transaction at all as Auditor ? —No. 16. Mr. Watson has sworn that a protest was made against this transaction here. On whose advice would that protest be made ? —I could not say. Ido not remember about the protest. I would like to turn up the minute-book of the bank and see if anything is recorded about a protest. 17. To whom was the £81,649 paid? —Well, it was part of a compromise of a debt, and I could not tell you without referring to the entries which were made about it; but the bank was committed to it in 1893. I would like to be quite sure about the protest. What 1 say is that, so far as I know, no protest has been made since I have been Government Auditor—since 1894. As to what may have occurred at the time the transaction was advised by the London board to the people in New Zealand I cannot say without reference It is possible that some objection may have been made then. In 1894, when this transaction was completed by the transfer to the Estates Company, I do not recall any protest being made. 18. Was this £81,649 paid to the Loan and Mercantile Company ?—lt was reckoned as part payment of a debt. The interest in the property was accepted in lieu of payment of that amount. 19. They were indebted to the Loan and Mercantile Company ?—ls not that rather trenching on private accounts. 20. That is for you and not for me to say ?—I am afraid I cannot answer. 21. Do you contend, Mr. Butt, that growing-turnips are an improvement and should be charged as assets, while the value of the land upon which they are growing should be charged to capital account? —I think their presence on the soil enhances its value during the time they are there. It was put to me in this way : If you have a crop of turnips you can sell the right to eat them off, and that represents a certain asset. 22. But, on the other side, have you got the cost of putting them there ? —Certainly, and I think they who pay the cost are entitled to be recouped. 22a. Would that not apply also to grass?— Yes, except that one is in the nature of a permanent thing, and the other is more for a particular purpose. If the turnips had not been there the Assets Board could not have carried their sheep, probably. I do not profess to know much about these things. 23. You were present during the negotiations for the purchase of the Colonial Bank ?—Yes. 24. When did you first become acquainted with the nature of the circumstances and with the accounts and business of the Colonial Bank ?—I am afraid I could not give you the exact date without reference, but I think it was some months prior to the negotiations which ended in the acquisition of the bank. 25. Some months prior to that ?—Yes. 26. Did you go carefully into the accounts of the Colonial Bank?— Yes, as well as I could.
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27. With what object ?—With the object, as I understood, of being able to give a general report upon them if it was subsequently asked for. 28. Did you report upon the position in which you found the Colonial Bank ?—No; I never made any complete report. 29. Were you present at any interviews which took place as between the directors of the Colonial Bank and the directors of the Bank of New Zealand ? —-Yes. 30. You see this exhibit, No. 61 ? —Yes. 31. Do you recognise that as the certified statement sent by you to the Government, or a copy of it ?—Yes; it appears to be the statement. 32. Taking the assets as shown there, are they taken from the Colonial Bank balance-sheets, or where were they obtained from ? —They were taken from the Colonial Bank balance-sheets and the subsidiary lists. 33. Was the balance-sheet taken by the purchasing bank as the basis upon which the pur-chase-moneys were ascertained?—l believe it is stated so in the agreement. 34. You say this transaction was based on the balance-sheets of the Colonial Bank as at 31st August last?— Yes. Clause 2 of the agreement runs, " The business and assets of the selling bank, as disclosed in its balance-sheet hereinafter mentioned, a copy of which balance-sheet has been signed by such directors as aforesaid, shall, for the purposes of this agreement, be considered as the basis of the contract entered into between the said parties." 35. That would refer only partially as regards the accounts due; that was not taken as a basis ?—The balance-sheet is the result of the summing-up of the position of the bank, and the meaning it would convey to a banker would be that the items in it could be substantiated by subsidiary lists ; so not only must the balance-sheet be technically correct, but all that enters into its composition must be correct also. 36. Mr. Booth, in his evidence, says that they put the balance-sheet aside altogether and discarded it. Was he correct in his statement ?—ln a sense he was, because what the directors worked at was the lists, showing amounts of the accounts ; but, inasmuch as these lists were brought into the balance-sheet, you could not consider one without considering the other. 37.- What was the amount paid for the good-will?—£7s,ooo. 38. What was the amount paid for the landed properties and bank premises?—-We paid the book-va1ue—£129,399 15s. 2d. 39. Do you consider that the bank was worth £75,000 as good-will?— Yes. 40. Do you think the Bank of New Zealand made a good or a bad bargain ? —I think they made a fair bargain. 41. In respect of the accounts in the "B" and "C" lists you took cover for £327,305? —Yes. 42. Were the accounts gone into very carefully ?—Yes. 43. In your opinion, is that sufficient cover? —Yes. 44. On that side, if there was an error, do you think it would be?—l think it will come out very close indeed. I should not be surprised to see a thousand pounds on either side. I think it will come out very close. 45. The amount for the buildings and premises are set down at £129,000 ?—Yes. 46. You estimate that there will be a loss upon these, do you not ?—-Yes ; I think they are overvalued by, perhaps, £25,000. 47. But, notwithstanding the loss on the bank premises, you consider that you have made, irrespective of that, a very good bargain ?—A fair bargain. 48. Now, touching the accounts, has any notice been given to the customers of the Colonial Bank who were in the " A " or " B " lists?—No ; not to my knowledge. 49. No notice has been given to any of the customers in any of the lists ?—No. 50. A year has gone by since the Bank of New Zealand took over the accounts of those who are in the "B " list ?—Very nearly; in November we took it over. 51. There is only another year to work these accounts, is there not, according to the agreement ?—Yes; but there is a clause in the agreement stating that the time may be extended by agreement with the liquidators. 52. Now, persons carrying on a large business whose accounts have been transferred are not aware that cover has been taken, and that you have only another year to work their accounts?— That is so. 53. Do you think it is fair to those persons who are so situated ?—I think it places them very much at the mercy of the liquidators. 54. Supposing you had a customer in the Bank of New Zealand, and you found that his account was going behind, and that you had to put a sum in a suspense account, as against an estimated loss in his account, you would notify that customer, would you not, that his account was in that state ?—No ; you would endeavour to get the account into a better state, but you would not tell him that you had suspended interest on it and made provision for possible loss. You would try to get the account into a better state, but would not tell him what you were doing. 55. It is not the custom ?—No. 56. By that you are practically making him insolvent ?—I do not think you are making him insolvent. By doing that you are putting something away for a rainy day, and your object is to get your last sixpence out of him if you can. 57. In the meantime there are none of these people who know that you took over their accounts in the " B " list? —Not to my knowledge. 58. And you do not think it is advisable that they should be notified ?—I do not think so. Of course, as the agreement works, it places these men very much at the liquidators' mercy. If the liquidators take the view that, in the interests of all concerned, the best possible results would be obtained from the working of these accounts, then they should agree with the Bank of New Zealand * 33—1. 6.
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to carry them on. I think if the bank and the liquidators were satisfied that nothing could be gained by going on with the accounts, then they would say, " Now this thing must stop." 59. Are not the persons and corporations in the " A " and " B " lists to some extent prejudiced by the fact that you have taken cover up to the amount of £272,000 ? —The cover only refers to the " B " list, of course, and I do not see at the moment that they are prejudiced by the fact that a certain provision has been made in case of emergencies in their accounts. 60. But the persons whose accounts are in the " A" and " B " lists are practically customers now of the Bank of New Zealand?— The " A" list customers have their accounts practically in the Bank of New Zealand, and the liquidators have nothing to do with them. 61. And yet the customers do not know ? —No. They can tell by the way they are treated that thoy are first-class customers. A man who can take his account away at any moment does not need to be told that. 62. But is it not open to any one to say that cover has had to be taken for his account ? It is open for that to be said, is it not ?—No ; I do not see that. 63. Will you make inquiries as to whether a circular was sent round to customers with reference to that ?—I think I can say positively that there was no circular sent out by the Bank of New Zealand indicating which list a customer's account was in. 64. They might get an idea by the way they were treated in the bank parlour, or the "sweat-ing-room," and so on? —They would know how the bank viewed their accounts by the way in which they were treated. 65. Touching the question of appointments: You were appointed Auditor of the bank by the Government. You have read, no doubt, what evidence has been given with regard to the agreement, and the agreement has been produced ?—Yes. 66. Will you explain to the Committee the reasons given for that agreement. In justice to yourself you should give evidence ? —lt was first suggested to me that if the offer were made to me I should take the position by Mr. Murray, and I pointed out to him that I had a good position in the bank, and that I was getting within measurable distance of the Pension Fund, and that to cut myself adrift from that would be a serious matter to me. He pointed out, on the other hand, 'that my appointment would probably save the bank expense, and that from my acquaintance with the working of the bank I would be in a position to discharge the duties well, and eventually I came to the conclusion that I might be of service in that way. Then, when the offer of the appointment was made, I consulted the directors of the bank. I said, " This offer of appointment has been made, and I am disposed to accept it if some means can be devised by which I shall not forfeit my claim to the Pension Fund, otherwise I could not see my way to accept it." Then they agreed to give me an undertaking that, in the event of my ceasing to be Auditor for ony other reason than misconduct, they would reinstate me in my position in the bank, so that my claim upon the Pension Fund would be kept alive. Upon that understanding I accepted the position of Auditor. Some time afterwards the President told me he had been advised that his appointment and mine were defective. For one thing, there was nothing to compel the bank to pay our salaries ; and he said he had been advised to have an agreement made with the bank committing them to pay the salaries, and he said, "Of course, you can do what you like." Of course, I thought I had better have an agreement to the same effect; and when the agreement came to be drafted I thought I would put in the understanding I have told you of—that in the event of ceasing to be Auditor I would be readmitted to the bank. It did not occur to me at the time that there was anything wrong in it, and lam not prepared to admit now that there is anything wrong in it. The duties of Auditor are very much the same as the duties of an officer of the bank, and anything the Auditor does which is wrong must react upon the interests of the bank. It did not seem to me that it would hamper my conduct in any way. When I was taxed with it—some considerable time ago now —I then thought I should certainly have told the Government that I had accepted the office under those conditions. That I did not do so evidently was a mistake. There was no intention on my part to do anything that was wrong; but I saw that I had placed myself in a false position, and I said to the officer of the Government with whom I was in conversation at the time that I was willing to place myself in the hands of the Government—-"that I placed myself in their hands. 67. Who was it that taxed you with it ?—lt was the Premier. 68. Is he the officer of the Government that you have mentioned ?—I beg your pardon, I should have said member of the Government. 69. That is the history of the matter? —That is the history of it. 70. You will admit that the world might look upon it in a different light, although you yourself did not see anything in it ?—I would not be afraid to place it before any tribunal who were cognisant of the facts. 71. Of course, you have read that no man can serve two masters? —My answer to that is that I do not think I am serving two masters. 72. You think there is only one master in regard to the Bank of New Zealand ? —The colony is practically the only shareholder in the Bank of New Zealand. At all events, that is the position to-day. 73. There are other officers in the bank who have agreements. You have admitted that the President has an agreement similar to yours, or, at all events, guaranteeing his salary ?—Yes; I think it is simply guaranteeing the salary in his case. 74. There are two other officers of the bank also who have letters fixing their term of appointment ?—Yes. 75. In matters of this kind, supposing that there were other applications for agreements, and seeing that the colony is the principal shareholder in the bank, do you not think that the Government should be informed of them by you, as Auditor ?—I do not think that arrangements made by the board of the bank with its servants are matters with which I need trouble the Government.
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76. Would you not take that as coming under the head of management of the staff? Supposing you were going to increase the salaries of the staff all round, would that not be a matter which would affect the cost of management ?—I do not think it would affect it in such a way as to render it obligatory on me to report it to the Government. 77. Under section 15 of "The Bank of New Zealand Share Guarantee Act, 1894," it is provided : "If, upon the report of the auditors, or either of them, confirmed by the President of the bank, it shall appear to the Colonial Treasurer that the affairs and business of the bank are in any respect improperly or unsafely conducted, he shall call the attention of the directors thereto, and it shall be imperative upon the Directors to amend the management and conduct of the said affairs and business in such manner as the Colonial Treasurer may by any writing require." Do you not think that would cover the question of engaging officers ?—I do not think it would. If any outrageous agreement wore made, of course it would be my duty to call the attention of the Colonial Treasurer to it; but an ordinary agreement of this kind, contingent upon good behaviour, does not seem to me to be of sufficient importance to justify me in insisting upon the President calling the attention of the Government to it. You see, when I go to the Colonial Treasurer I, to a certain extent, challenge the conduct of the President, because the President sits at the board and is an executive officer of the bank ; and it is only when he and I fall out that I am to go to the Colonial Treasurer. 78. But the President is not an officer of the Government, and you are, are you not ? —Quite so. I suppose it is a moot point how far the President is an officer of the Government. He holds his appointment from the Government. 79. So does another director hold his appointment from the Government ?—Well, these are, I should think, in a sense, Government officers. 80. At all events, that is your view of their position?— Yes. 81. I cannot say that I coincide with it. You know the terms of appointment with the President—that he is only removable on the ground of bad behaviour ? —Yes ; but still if he did something which the Government of the day chose to disapprove I suppose they would remove him. I suppose anything that Parliament can do Parliament can undo. '82; But, if there was any difference as to advancing accounts and so on, that would not be bad behaviour ?—lf there was any difference about accounts that would be one of the things I would report to the Government; but if a clerk gets a rise of £10 in his salary, or an engagement for three years, is that a thing I should report to the Colonial Treasurer ? 83. Do you think that, in respect of the inspectors giving them an agreement for stated periods of three or four years, conduces to their efficiency and activity ?—lt might not be if these positions were tenable by idle men. If they were inefficient or idle, then they would have to go, agreement or no agreement. If I saw that the effect was that these men were not doing their duty, I should report it sharp enough. 84. Do you think there was any reason why fixed engagements should be given to these men ? Had they been many years in the bank prior to this ?—Yes ; they were both very old officers. 85. Do you know any reason why they got these engagements? —I do not know at first hand what reasons there were. The directors had some object in doing it, I have no doubt. 86. You know the General Manager of the bank, Mr. Mackenzie ?—Yes. 87. What is your opinion as to his capabilities, and as to the manner in which he is filling the position to which he has been appointed?—l think he is an extremely careful and cautious man, and a man who devotes unceasing attention to the business ; and I think he has not been there long enough to prove what he can do for the bank when it is going on in its ordinary course of business. Since he has been General Manager his time has been very much taken up with, first of all, gaining a grasp of the business—he is learning the business, in fact—seeing where exactly he stands, and therefore he has not had an opportunity yet of proving that he possesses the higher qualifications required in the General Manager of a large bank. 88. You have read, no doubt, an expression of opinion made by Mr. Booth and Mr. Macarthy with regard to Mr. Mackenzie. Do you concur in Mr. Booth's evidence :" My own opinion is that a very much stronger and more capable man than Mr. Mackenzie is urgently required as manager of the bank." Do you indorse that or otherwise ?—I am giving evidence here in this respect under some difficulty, because for many years Mr. Mackenzie and I opposed each other. He was fighting for his bank and I for mine, and it is very rough to call upon me for evidence as to his character. I have told you what I think of Mr. Mackenzie, and I cannot help what Mr. Booth says. I cannot say more. 89. But we have to inquire as to Mr. Mackenzie's fitness for the position. We have our duty to do, and you, as Government Auditor, have a duty to do. Do you think you or Mr. Booth would be better able to judge of Mr. Mackenzie's capabilities or strength of character?—l am brought more in contact with him, and I think I should be better able to judge of his capacity than Mr. Booth. 90. Then, you say it is premature at present to give such a decided opinion as has been expressed by Mr. Booth?— Yes. 91. You have said that Mr. Mackenzie is a very careful man?— Yes. 92. From your examination of the accounts of the Colonial Bank, and its position according to the cover you took for the "B " and "C" lists, do you think that is a proof of great care and great capability ? —I do not know how far he was responsible for the position in which the Colonial Bank was found. I can only judge of his caution and care as displayed in the discharge of his duties in the Bank of New Zealand. 93. But there would be a responsibility attaching to the general manager for the position in which you found the accounts of the Colonial Bank when you went through them ?—Yes, some responsibilities would attach to him. 94. And the same responsibility would attach to the General Manager or Managers of the Bank of New Zealand, seeing that was in a much worse position ? —Oh, yes, responsibility attaches to all
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senior officers concerned in a bank. They are all more or less responsible for the conduct of the bank. But in fairness to bank officers you have to remember there is a difference between the responsibility for the advances on accounts and being responsible for the loss that occurs on accounts. If you make an advance to a man on a stock mortgage you are responsible for the advance; but if dogs get in and the stock go over the cliff and are destroyed you are not responsible for that. 95. You know that directors, irrespective of advice tendered to them by officers of the bank, have given large advances ? —I could not say that to my own knowledge. 96. Do you think the advances given to the directors, as you stated yesterday, and which are given in the report of the shareholders' committee, would be approved of by the officers ?—I say that I cannot tell you that. One would have to have been present at the board meeting at which they were settled to be able to answer that question. 97. Have you known dividends in the Bank of New Zealand to be declared against the advice of officers of the bank to the effect that large losses had been made, and that there was nothing to pay them out of ?—I could not say that either. 98. I suppose you will say that dividends have been paid when there were losses in the bank— taking the accounts as you find them now, and which have been submitted to this Committee ? —I say that dividends have been paid which subsequent events have proved it would have been better not to pay. 99. Taking the Government accounts, is it possible to get a return showing each year the amount paid and the terms with the bank in respect to remittances and other Government business?— Transactions on Government account ? 100. Yes ? —lt would be possible to make up such a return, but it would take a long time to do it, I think. 101. From 1888 to the present time it is possible that a return could be given?— Yes. You mean a statement of Government accounts, showing the transactions upon them—payments to credit and debits, and so on ? 102. Yes? —Oh, yes, that could be got out. 103! I will ask for that ?—I would like to say that, of course, if the Government direct such a return to be prepared nobody can raise any objection; but if I had been asked I should have said the Government are entitled to the same confidential treatment with regard to their account as any other customers of the bank. 104. There have been agreements, have there not ?—Yes. That, however, is a confidential matter between the Government, as a customer of the bank, and the bank; and if you were to ask for agreements between the bank and general customers the bank would refuse to give them; and the bank would equally refuse, without the permission of the Government, to give up the bank agreements with the Government. 105. Very well, I will not trouble about it. Since your appointment have you visited any other parts of the colony, or have you remained in Wellington ?—I have been over to Australia. 106. Have you been to Auckland since you were appointed?— No. 107. To Christchurch?—No. 108. To Dunedin ?—No. 109. To Invercargill ?—No. 110. To Napier?— No. 111. Have you been to none of these large centres since you have been appointed?— No. 112. You have confined yourself to Wellington with the exception of the trip you made to Australia ? —Yes. 113. That being the case, you are dependent entirely upon the inspectors and officers of the bank placing the position of the bank before you ?—Yes. 114. Do you think to continue that is desirable ? —No. 115. It is owing to extraordinary circumstances that have detained you here ?—Yes. Since my appointment there has been the amalgamation with the Colonial Bank, and later on this inquiry, and I have not been able to get away. 116. Do you think that one auditor is sufficient to do justice to the colony and the institution itself?—l think so, under ordinary circumstances. 117. Is the bank in a position where the circumstances are ordinary? —They have not been. I mean that demands on my time have been out of the ordinary during the last twelve months or more. 118. Has there been any audit of the Fiji Account ?—Only by an inspector sent down for the purpose. 119. You made a visit to Australia?— Yes. 120. Did you find the state of things satisfactory, or in accordance with what had been reported prior to your visiting Australia ?—I found that a somewhat too sanguine view had been taken of the securities and accounts there, and, in my opinion, further provision was required than had been made up to that time. 121. Your visit to Australia was made at my wish, was it not ?—Yes. 122. And you found that a too sanguine view had been taken with regard to the securities and accounts ?—Yes. 123. The result of your visit, I presume, was to recommend that provision should be made for writings-off ?—Yes; for possible loss on realisation of securities and accounts. 124. There was a Contingency Fund of £200,000, was there not, to meet losses ?—Yes. 125. Last year you took from profit and loss £54,000 ? —Yes. 126. And left the £200,000 intact, with the exception of £29,000 ?—Yes. 127. What reasons were there for taking this £54,000 out of last year's Profit and Loss Account instead of taking it out of the Contingency Fund ?—I think in a business of the magnitude of ours that that Contingency Fund should be maintained for some time.
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128. Included in the £54,000 was a large portion for accounts upon which there were known losses at the time the Contingency Fund of £200,000 was set aside ?—I could not say that they were known losses. They were accounts upon which there was likely to be loss at the time the Contingency Fund was set up, and some of which, when I went over to Australia, had been brought to a settlement. 129. What would be the losses on current accounts from November, 1895, to 31st March last, and what would be on account of what were presumed to be losses prior to that time ? —I should say the increased provision for accounts partially provided for when the Contingency Fund was set up would amount to, I think, about £35,000 or £40,000. 130. According to that, then, you do not think that the £200,000 was sufficient for contingencies ?—I think, as a matter of policy, it is better in the meantime to carry on that Contingency Account. 131. Did you acquaint the Government before deciding that you would take that £54,000 from the Profit and Loss Account of this year that you proposed to do so ? —No. 132. As a question of policy and business management was involved, do you not think it would have been as well if the Government had been made acquainted with it ?—lt would be difficult to go into the merits of the case without discussing the items, and by my regulations I am debarred from mentioning any individual account to the Government. 133. That is your explanation for not acquainting the Government—that in explaining it it would have necessitated disclosing private business ? —To have made it intelligible it would have meant disclosing private accounts, in my opinion. 134. Are there any large losses anticipated by the bank, and will the £171,000 now remaining of the £200,000 Contingency Fund be sufficient to meet those losses ?—lt is believed it will be sufficient to meet them. 135. Then, generally, you say that the position of the bank is secure?— That is my opinion. 136. And with careful management you think there will be no loss to the colony ?—That is so ; that is my opinion. 137. In respect to the management of the bank—the directors—do you think that with four or five directory all resident here in Wellington the commercial and other industries and trade of the colony are sufficiently represented on the directorate ?—I think they are represented as far as you can represent them with advantage. 138. What has been the result ? When you had the management in one part of the colony— in Auckland —were there not heavy losses made in that part of the colony ?—Yes. 139. Were not the bulk of the losses made in the Auckland Provincial District when the directorate was wholly in Auckland?— There were heavy losses made, of course, all over the colony. Probably the losses in the Auckland District were heavier than in other districts, but I could get a statement as to that. I would much rather do that than trust to my memory. 140. You remember the shareholders' committee of 1888 ?—Yes. 141. Have they not stated that was so? —Yes, I believe so. I have not seen the report lately. 142. Have they not stated that as a ground for the removal of the head office from Auckland to London?— Yes. They say that, speaking of the North Island, " In Auckland we regret to find that, though the head office of the bank is there and its affairs under the immediate eye of the directors, the general character of much of the business carried on has been most objectionable, and the policy pursued open to grave censure. Inflated schemes or proposals coming from, or influenced by, certain persons appear to have met with ready support by lavish advances to companies and individuals without adequate security or warrantable prospect of advantage, or even safety to the bank. Such advances not only account for more than half the whole loss now disclosed, but the securities held, being more or less unproductive, curtailed the earning-power of the bank pending their realisation." Do you concur with that statement?—l have no doubt it was based upon information supplied to them. I was not in the colony when this was done ; I was in London. 143. That was one of the reasons given for shifting the bank to London?—lt was not done then; it was done much later than that. It was the reason for having a new directorate and management at that time. 144. Would it be an advantage or otherwise if you had capable men, and men who would devote time and attention, and who had a knowledge of the trade and commerce, say, in the four large centres, to have those centres represented on the board of directorate ?—lf you could get men resident in Wellington with the requisite knowledge, I say at once that it would be a decided advantage. 145. Men who have been in Wellington the whole of their time have not the knowledge, and are to some extent unable to deal with business coming from other centres ?—They have not the advantage of personal knowledge. 146. In other words, they are entirely dependent upon the bank officials?— They have their own powers of observation and common-sense. A good many points they have to decide upon are common to all business, whether it originates in the North or the South, and on these they exercise their discretion. If, in addition to that, they had local knowledge, that would be an advantage. 147. Has the legislation and its change of management been advantageous to the bank and the colony? —That is my opinion. 148. What has been the effect in respect of the shareholders and customers of the Colonial Bank ? Has it been to their advantage ? —No, Ido not see that it helped them at all. 149. Do you think that placing the Colonial Bank in liquidation under the Companies Act has been advantageous or otherwise? What, in your opinion as a banking expert, would have been the most profitable or advisable course to take in winding up the Colonial Bank? —I would have wound it up under its own deed of settlement if such a course were possible. I think the effect of winding it up under the Companies Act has been to limit the powers too much of those who have had to wind it up.
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150. With what result ?—With the result, of course, that some of the customers of the Colonial Bank must have suffered; and the Bank of New Zealand has also suffered, because business which if carefully handled might have been made profitable to it has been sacrificed, I think. 151. And I suppose that, correspondingly, the shareholders of the Colonial Bank have also suffered?—No doubt it has been at their expense. 152. Have the directors of the Bank of New Zealand harshly or unjustly pursued the shareholders in respect of the share-list ? Are you watching the share-list carefully in respect of the transfer of shares ?—Yes. 153. Are proposed transfers placed before you ? —They are not actually placed before me, but I see them all. I make it my business to see them all. 154. You are, at all events, watching that very carefully?— Yes. 155. Mr. Montgomery.] Have you the deed of settlement of the Bank of New Zealand ? —Yes. 156. Will you look at clause 121 ?—Yes. 157. Do you see that it says that, "If at any time hereafter it shall appear to the board of directors that losses have been sustained equal in amount of one-half of the then subscribed capital of the company, it shall be incumbent on the board of directors to submit a statement of such losses as soon as possible to a special general meeting of the proprietors . . . and the business of the company shall, from and after the date of such subsequent general meeting, be confined to the winding-up of its affairs, and converting into money all its funds and property, and distributing the same." Do you note that?— Yes. 158. What was the capital in 1888 ?—At the beginning the capital was a million. 159. And the loss in 1888 was £800,000 ?—Yes. 160. Should not the bank have been liquidated ? —lt had £500,000 of Reserve Fund towards meeting that. 161. More than half of its subscribed capital was lost, was it not? —No, they did not think so at the time. Their subscribed capital was a million, and they estimated their losses in excess of the Reserve Fund at £300,000. 162. The loss estimated by the shareholders' committee was £800,000 ?—Of which part was made' up by the Reserve Fund. 163. And besides the sum estimated by the shareholders' committee there was £300,000 more loss? —I do not think so at that time. 164. Did not Mr. George Buckley estimate that ?—That was subsequently. 165. Were not the estimates of Mr. Buckley formed at that time ?—No. 166. Were they not formed from the reports given in to the special committee of 1888 ? —No ; Mr. Buckley said, after the completion of the investigation of 1888, that £800,000 would be sufficient. 167. Do you suppose that he formed his estimates from anything after the committee sat?— I suppose, after the report which was presented under his authority, he became convinced that the amount provided was not sufficient, but in the meantime the capital of the bank had been reinforced by the new capital. 168. As an expert auditor, do you think the bank was justified in the face of that clause in the deed of settlement in carrying on ?—I do not think there is anything in the clause to necessitate their winding up. 169. Do you think they were entitled to include the Reserve Fund with the capital ?—Yes. 170. Would you go so far as to say they were entitled to pay dividends in 1888? —If they believed in 1888 they had written off and made sufficient provision for all the losses of the bank, I think that if the actual trading of the bank resulted in a profit sufficient to pay a dividend they were justified in paying it. 171. But they paid, the dividends before writing these off? —Yes. 172. When they knew of the losses ? —I suppose you may say when they knew the losses. The losses had not been ascertained and defined as they were by the shareholders' committee. 173. I think the reports were all in at the time of the meeting ? —The dividend was declared at the same meeting at which the committee's report was read. 174. No ; the dividend was declared at the same meeting at which the committee was appointed. lam referring to the meeting of the 26th April, 1888. They declared a dividend then, knowing the state of the bank? —It is difficult at this time to judge of the consideratious that prompted those men to declare that dividend. 175. If you had been told by the directors that there were losses of £800,000 unprovided for, would you have passed a declaration of dividends, as an auditor ?—Well, I am very glad I had not to pass it as an auditor. 176. Will you tell us whether you would pass a thing like that ? —I cannot tell you what I would have done eight years ago. 177. Would you be prepared to do so now if you were informed of losses in the bank amounting to £800,000 ?—For which it was possible to make provision ? 178. I am not saying anything about that. I am asking you a question. If the directors informed you that there were losses in the bank of £800,000 now, and stated that, notwithstanding, they were prepared to pay a dividend, would you, as Government Auditor, pass that by ?—Certainly not. 179. Do you make any distinction between the two cases ?-—The distinction is this : At that time they-saw their way to provide for these advances, and in the present case we should not see our way to provide for them. 180. Then, as an auditor, would you say directors are justified in paying dividends if they provided for their bad debts out of capital ? —I think that if one of the directors of the bank who did this were called before this Committee to give his reasons and considerations that weighed with them, that would be a fairer thing to do than to judge them behind their backs.
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181. I*am asking you as an expert auditor? —I have told you that if in my position as Government Auditor the same thing were to occur to-day I should not pass it. 182. Taking the balance-sheet of 1896, which you audited, you say that you verified so much of the assets of the bank as were at the date of the balance-sheet at the head office in Wellington. Does that refer merely to bullion, &c. ?—To coin, securities, and investments. 183. Would it refer to the Colonial Bank premises ?—They are shown in a separate account, of which I say specifically they are the book-value. It refers to the Bank of New Zealand premises proper. 184. Is it the duty of an auditor, if he knows that properties are put down at a fictitious value, to pass that, or to have it altered ?—I think the auditor is not entitled to interfere with the way in which a bank or company presents its figures to the public, so long as necessary explanations are given to prevent the public being deceived. 185. Was there any explanation given as to the actual value of the premises?—lt is stated to be book-value, not ascertained value. 186. Should there not be a statement of the actual value to give the public a correct idea of the correct position of the assets ?—I do not think it is necessary. 187. Could the public gain an idea of the assets from this balance-sheet ? —-They cannot tell from the balance-sheet what the actual value is. 188. Is it not the very essence of a balance-sheet that any one reading it should tell what the actual value is ?—Unless there are explanations to show that they are book-value and not actual value. 189. Anybody who wishes, then, to enter into transactions which have been based upon the balance-sheet is forced to make further inquiry. For instance, the next item is " Colonial Bank purchase, Good-will Account, £75,000 " ?—That is not a value that could be turned into cash. 190. Would you have objected if they had put the landed property at £150,000? —That would not have been book-value. 191. Supposing they had it in the books as that ?—Then I should have put it as it is here, with the foot-note. 192. Whatever was in the books ? —Yes. 193. Does that apply to other securities ?—ln regard to other securities, we endeavour to find, as far as we can, the real value. If a man owes you £50, you might regard it as perfectly safe, but it might be all bad. You put it at what you think is the value. 194. Then, the Colonial Bank properties was only an item the real value of which was not put down?— Yes ; that and the shares in the Estates Company. 195. The shares in the Estates Company are fixed by law?—l think the clause allowing the bank to carry them on at a fixed amount has been repealed. I think the Act of 1895 repealed that clause of the 1894 Act. 196. Supposing that clause is repealed, is this based on an estimate of the value of the shares or upon the figures of last year, less the amount written off?, — It is based on an estimate of value. 197. That is the estimate furnished to the Committee of last year? —Yes; it is an outcome of that—a subsequent adjustment between the Assets Board and the Estates Company. This share account has to stand in the books of the Bank of New Zealand, and it has been written down to the extent of the calls received. 198. That is not an estimate apart from the book-value at all ?—No. 199. When auditing the accounts for the future will you always be prepared to take the bookvalue for the landed premises ?—I shall probably require provision to be made for writing them down. I am not quite sure the law affecting auditors would even compel an auditor to insist upon an asset like good-will being written off, but as a matter of policy I should require the bank to gradually write down that amount, and also the landed property and premises. 200. Do you consider the two items of £125,000 and £75,000 together represent the good-will of the bank, or do you consider the £75,000 alone was the good-will ?—The £75,000 was the amount passed for payment for good-will. 201. You knew the actual amount was estimated at more than that?—-I knew there was a deficiency in the premises. 202. Would that account for you allowing the book-value to pass ?—No. 203. It had nothing to do with that ?—No. 204. Looking at these assets, will you tell me if there are any other amounts which have not been, examined into and put down at their actual value ? —There are those three—the bank premises, Good-will Account, and Share Account. 205. Is it part of the auditor's duty to insist on any debts being provided for out of profits before passing the balance-sheet ?—I think so. Generally, I think it is an auditor's duty to see that the terms of the deed of settlement are complied with. As you know, the law affecting auditors is very vague. 206. Is it part of an auditor's duty to make any examination into the value of assets which appear in the book ? —I should think so. 207. How far have they any right or duty to examine into values? —I think they have a right to inquire into the value of debts due to the company whose accounts they audit, and to get such information as will enable them to arrive at a conclusion as to the probable value. 208. You think, then, that when an auditor gives a certificate he is prepared to vouch for the correctness of his estimates ?—I think that is implied; yes. 209. Did the auditors for the last six or eight years of the Bank of New Zealand take up that position ? —That I could not tell you. Ido not know how they regarded their duties as auditors. 210. You, as an expert, consider that you have to satisfy yourself of the value of the assets and the amount of liabilities ? —Yes, to do your best to do so.
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211. Do you not think that some more details could be given of this large sum of £7,000,000 odd for advances and securities and debts due to the bank ?—I think it might be possible to devise a balance-sheet —the use of which should be compulsory upon all banks trading in the colony— which would be an improvement on the balance-sheet as it is ; but I think it would be unfair to ask one bank to give particulars that other bank's do not give. 212. Could you give us a form of balance-sheet such as you suggest prepared for next meeting ? —I could draw one up. 213. Would you suggest legislation in this respect ?—I hardly like to take the responsibility of doing that. 214. If you are asked the question, do you think it is desirable ?—Candidly, I do not think it matters a very great deal. You divide your headings, and, after all, the general public is not very much the wiser. 215. But should not the headings be so divided that the general public would be able to make themselves acquainted with the position ? —Well, we will take some of those items here on the assets side. First is " Coin and cash balances at the banker's." Would you be happier if you knew how much was coin and how much cash balances at the banker's ? 216. I should be much happier if I knew I could depend upon the assets and liabilities of every company as correct. If you could draw up that form of balance-sheet to-morrow, I think the Committee might be able to make use of it. Did you, in reply to the Premier, say that you did not require an assistant auditor ?—According to the regulations, I am entitled to ask the bank for any assistance I require; but in another part of the regulations, if I require to leave Wellington, I can appoint some one to send in the returns required on my behalf. It seems to me that that meets the difficulty. lam not prepared to say it might not be an advantage if some one were appointed to be a sort of permanent locum tenens to step into my shoes when Igo away. That might be useful, but the essence of an auditor's duty is to satisfy himself and take the responsibility; and, if he has an assistant, there is a sort of divided responsibility which I, for one, would be glad to avoid. 217. Mr. Booth told us there were occasions on which he thought the Auditor should make a special report to the Government. Have you had such occasions brought under your notice by any of the directors ? —My regulations provide, and the Act under which I am appointed provides, that when I consider it necessary lam to make a special report to the Government; but such an occasion has not arisen. 218. But not when the directors consider it necessary ?—There is nothing to that effect—that I am obliged to accept the views of directors. 219. Do you not think it desirable that the directors should have power to insist upon special reports being furnished to the Government ? —I do not think it is necessary. 220. Not if all the directors wished it ? —What sort of report could it be if all the directors wished it ? 221. Suppose there was a dispute as to a certain advance between the President and some of the directors —as to whether it should be made or not —and they thought that in the interests of the colony generally the Auditor should make a special report upon that. In a case like that, would you not think the Auditor should make the report, and that they should be able to make suggestions ? —I think not. That would be, practically, to make the Colonial Treasurer a judge as regards that particular account, and I hold the opinion very strongly that the less the hand of the Government appears in the management of this bank the better will be its chances of success. 222. Then you differ from Mr. Macarthy? —That is my opinion. 223. Mr. Macarthy said he thought the Colonial Treasurer and the Premier should be bound over by an oath of secrecy, so that they could have further information, not with regard to private accounts, but further information ?—I am not of that opinion. 224. You think that the State and the bank should be kept entirely separate ?—Yes. I think the Government should have people in the bank upon whom they can rely, and depend upon them to see that everything was done to safeguard the interests of the colony, and that, as regards the management, they should keep as much aloof as possible from the bank. 225. Do you think that reports should be sent to the Government ? —I think that reports of a general nature, showing how the business of the bank as a whole was progressing, and showing the movements of the larger items of account and deposits, and so on—l think they are entitled to that information, which they might very well have, and that information they get. They are entitled, of course, to all the information they ask for. 226. Do you think they are entitled to have all the information they ask for ?—A shareholder is entitled to all information, and the Government is the largest shareholder in the bank. 227. Do you think they are entitled to information with regard to private accounts ?—I do not think they are entitled to information about private accounts. That is where the confidence between the customers of the bank must be respected if the bank is to continue to exist. 228. Do you think the Government in any way meddled with the bank ?—No; very much the reverse. ■ 229. Am I right in saying that they have been very careful and cicumspect in that respect ? — Extremely so. 230. And all the members of the Government ?—All the members of the Government, as far as 1 know. 231. And your suggestion that the Government should keep away from the bank is not in any way based upon what has been done ? —Certainly not. 232. But is perfectly general? —I may say, for my part, feeling as Ido so strongly that the less the Government control of the bank appears the better, I myself have carefully kept away from the Government. I have, as it were, avoided them, so that there should be nothing in my conduct to lead people to suppose that the Government interfered in the bank, or knew more about the bank than they should; and there have been no interferences, to my knowledge, and no suggestions
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made ; and I think the Government have been most careful to avoid any appearance of interference with the bank. 233. Do you think the Government should be consulted as to the appointment of any officer other than those provided for by legislation ? —I do not think the Government should be consulted about the appointment of any except, perhaps, the chief officers. I think a change of general management, for example, should not be made without the Government being afforded an opportunity of expressing an opinion if they wished to do so. 234. But you do not think the directors are bound in any way to value the opinion of the Government in the matter ? —I do not think they are bound to, but they ought. 235. With respect to the President and General Manager, you have read Mr. Macarthy's evidence ?—I have read the newspaper report. 236. Do you note that he said that the separation of Mr. Watson and Mr. Mackenzie was desirable in the interests of the bank? —Yes. 237. Do you agree with him?—l do not go so far as Mr. Macarthy. I think, as I have already said, it is premature to express an opinion upon this ground. I think Mr. Watson does influence Mr. Mackenzie to a certain extent. 238. You made a cursory examination of the Colonial Bank accounts for the purpose of amalgamation? —It was, perhaps, scarcely for the purpose of amalgamation. It was more with a viewto my being able to give a general opinion whether it was worth while to go on with the proposals for the amalgamation. It was done at the request of the Colonial Bank people. 239. Had you to examine the Colonial Bank balance-sheet ? —I did not examine the Colonial Bank balance-sheet so much as the lists of accounts forming the debts to the bank. 240. Did you form any opinion as to the dividends which had been paid ?—No, 1 did not occupy my mind with that. 241. Have you formed any opinion since, subsequent to the disclosures?—l have formed the same opinion that I have with regard to the Bank of New Zealand—that subsequent events have shown that it would be better if these dividends had been stored up to meet possible losses, which we see now have to be provided for otherwise. • 242. If that had been done there could not have been any dividends paid for the last six or seven years in the Colonial Bank?—l have not sufficient knowledge to enable me to say that. 243. Just a word or two about the alleged hardship in the "B " list. Mr. Macarthy told us that, if the amalgamation had not come about, the Colonial Bank could not, probably, have carried on without calls. Do you agree with him ?—I do not think it could have been carried on without a call. 244. If they had been obliged to liquidate without the amalgamation, would not the accounts now in the " B " list have been in a much worse position than they are ?—They would have been quite as bad, at all events, and probably worse. 245. All of them would have had to be liquidated?—l do not know that. The majority of them would, no doubt. They would not be in the "B " list unless there was a measure of doubt attached to them. Still, there might have been accounts in the "B" list which might seem sufficiently good to another bank to take them over. As a matter of fact, some of the accounts were later on considered sufficiently good to be taken over by the Bank of New Zealand, and were taken over. 246. It is practically those accounts which were insolvent, or practically so, which the liquidators are insisting upon being wound up ?—Not altogether. There are some accounts, which, in my opinion, only require a little careful and judicious handling to become good accounts, which the liquidators wish to clear up. 247. Why would not some other bank take these over? —Because there is a certain amount of doubt about them. 248. It would not be worth any other bank's while to do it ?—They would probably not do it now. 249. Would you suggest that the Bank of New Zealand should place itself in the position to take up accounts which no other bank would?— Certainly not. 250. Well, you would not suggest that the Bank of New Zealand should take over the "B " accounts with the present cover ?—No ; although I think it is possible the present cover with the accounts may work out. Still, I would not suggest that the Bank of New Zealand should take the risk involved in the consideration. 251. You know that, as far as the two years for taking over the accounts are concerned, that is purely a matter of agreement between the parties —that it may be extended?—lt may be extended; yes. 252. And that the accounts are not necessarily to be wound up at the end of two years ? —Yes. 253. Therefore any responsibility that there is in winding up these accounts, and hardship, had nothing to do with the Bank of New Zealand ? That is a matter for the liquidators to consider ?— Yes ; the hardship arises out of the action of the liquidators, but whether that action is voluntary or whether they are compelled under the conditions of their winding-up I cannot say. But what I do say is that the action of the liquidators is pressing severely on those people. 254. Would you be prepared to suggest any other course for the liquidators ?—I think, perhaps, that the liquidators might be given extended powers if their powers at present are not sufficient. 255. In what way?—As I said before, I do not know how far they are compelled. They cannot do anything without the sanction of the Court at present in each individual case. I think that is rather to be regretted. 256. Do you suggest that they should be able to nurse the accounts ? —I think they should be allowed a certain amount of discretion. 257. Without the sanction of the Court?—l think so. *34—1. 6.
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258. To compound debts ?—Yes. 259. It is rather a dangerous power, is it not ?—Well, all power is dangerous. The shareholders are represented in the liquidation. The liquidators can have no object in view other than to obtain the best possible results for the shareholders. 260. I just have to ask you whether you have any suggestions which may be, made with respect to the management of the bank or the need for legislation on any point coming within the order of reference ? —The only point on which it has occurred to me is that more legislation might be desirable with regard to the payment of dividends on the preference shares held by the Crown. 261. You think that is not sufficiently clear?—l think the directors of the bank should have power to pay a dividend on these shares without referring to the shareholders of the bank. 262. Do you not think they have power now ?—I have heard it questioned. 263. Have you taken legal opinion upon it? —No, I have not. 264. Have you examined into it yourself?— Not particularly. The need, you see, has not arisen. 255. It will not arise until the dividend is due. You suggest that it should be set at rest. Are there any suggestions to make with regard to the bank?— No. 266. Do you think its business is now carried on on safe lines ? —Yes. 267. Would you say they are too cautious or strict?— No. 268. Mr. G. Hutchison.] You went into the subject of the Colonial Bank affairs some months before the purchase was concluded?— Yes. 269. How many months before ?—I could not say without referring to my records; but it might have been July or August. 270. Two or three months before ?—Yes, to the best of my recollection. 271. And that was at the instance of the Colonial Bank? —Yes. 272. By the directors?—lt came, about in this way: I was told by the president that the Colonial Bank people wished me to look into their affairs, and I consented, to do so, and the balance-sheet and accounts were laid before me. 273. You could fix the date of that ?—Yes, by reference. 274. Mr. Maslin.] I think you told us that in carrying on a large business like the Bank of New Zealand a loss of £40,000 or £50,000 a year was almost inseparable?— Yes. 275. What was the amount of losses made last year, roughly speaking, on the business of the bank for the year ?—That is an extremely difficult question to answer. I tried very hard to get that information for the President. You see, an account goes on from year to year, and you become dissatisfied with it after a time, and then later on it becomes a bad debt. But to what year does this bad debt pertain ? 276. What amount did you ascertain to be bad debts last year?—l would like to get that for you. 277. Was provision made for bad debts independent of the sum of £54,000 written off last year ? It has been repeatedly stated that, in addition to the sum shown to the credit of profit and loss, there was a sum of £54,000 written off out of profits. I want to know whether this amount written- off was the average amount written off in connection with the current business of the bank, or whether it was writings-off in addition to what would be done in carrying on so large a business ?—Part of that £54,000 represented debts ascertained to be bad last year, and part formed further provision for previous debts. 278. Then, it would be right to say that the profits would be over £100,000 ? —lt would come to about that, because it was ascertained that the debts of that year were very small. 279. Still, it would be a considerable portion written off out of the earnings of the bank?— The amount was very small, as it happened. 280. Would you let us know the amount, so that we may get at the actual net earnings of the bank for the year ?—I will see if I can get the figures. 281. Mr. Guinness.] You said that when you went over to Australia to examine into the bank's business you found the management had taken too sanguine a view of the value of the assets, and that further provision had to be made ? —Yes. 282. Will you tell us the amount of further provision required, in your opinion ?—I think I said it was £40,000 or £50,000. 283. There is a Pension Fund in connection with the Bank of New Zealand, is there not ? —Yes. 284. Do you know how that was started?— The directors of the bank drew up a scheme for this Pension Fund by which certain annual contributions were to be made compulsory upon the officers, and they endowed the fund with a sum of £20,000 or £25,000, and rules were drawn up and made binding on all the officers. That was the beginning of it. 285. The original endowment was £20,000 or £25,000?— I think it was. 286. Is there any other contribution by the bank ?—There is no annual contribution by the bank. 287. Are all the officers of the bank compelled to contribute towards that fund from the time they enter the employ ?—The trustees have power to reject an officer if he does not provide a satisfactory medical certificate; otherwise, up to the time of the amalgamation of the Colonial Bank, it was compulsory on all officers to subscribe to that fund. When portions of the staff of the Colonial Bank were taken over the directors did not see their way to make the joining compulsory upon them, and they are not members of the fund. 288. Then, all officers who are now appointed, or to be appointed in the future, will have to be compelled to contribute and participate in the benefits of that fund ?—They should be, but it rests with the directors to compel an officer to become a member of the fund. If they do not compel him to become a member he does not become a member.
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289. How long after his joining is he entitled to receive a pension ? —I think it is fifteen years. 290. Supposing, then, an officer who has contributed for fourteen years is discharged, does he forfeit his right to the pension?—He forfeits all right to it. 291. Do you think that is fair? —I do. The fund was formed with the object of tying the staff to the bank. The object was this : The bank would say to a man, "We want you to serve your life in this bank. We will take care that in your old age you shall not be turned adrift to starve. Give us your time, and your energies, and your thoughts. If you leave us before you have served a lengthened time you receive no parts of the benefits. If you remain with us, and give us your life's work, we will take care of you in the end." So that there is a sort of tontine element in the fund, without which it could not be administered. It could not offer to its members the benefits it does except on that principle. And on this ground there is no hardship in a man receiving nothing from the bank before he has acquired the pension interest. 292. That is only after he has served for fifteen years?—l think that is the time. 293. What entitles a person to the pension after he has arrived at the fifteenth year, service or illness ? —After he has served fifteen years he has what is called a pension interest; that is to say, if he becomes disabled from sickness he is thereupon entitled to a pension, either for the rest of his life or while the disability exists. That state of things exists until he arrives at the age of fifty-five, when, if he has served fifteen years, the directors may say to him, " You are getting past work now ; you take your pension and retire." He remains subject to that until he arrives at the age of sixty, when he can go to the bank and say, " I want to go." 294. He can demand his pension ? —Yes. 295. Are there any officers employed by the bank to audit the different branches and agencies ? —Yes. 296. How many are there ? —There have been, until lately, four. I believe there are now six, or, at all events, they are making arrangements to have six. These men work in pairs. They go round in pairs to the branches, and go over everything themselves without the aid of any of the staff, so that they get their own view of things uncoloured by any one. 297. When are they supposed to go?— Once in twelve months. 298. Do they report to you ? —They report to me through the General Manager. 299. Do they supply estimates of the value of securities held?— No. 300. You were asked by the Premier with regard to the appointment of additional directors in Wellington. I want to know whether you think it would be any advantage to the bank to have set up, say, in Auckland, Christchurch, and Dunedin, Advisory Boards of, say, two or three persons selected by the directors to advise the directors on the state of the bank's position at each of these large centres?—l do not think that could be found to work well. It gives rise to jealousy and suspicion on the part of the customers if advisers are competitors or local people. They would think they would know more about their accounts than they ought to know. 301. Does not the same objection apply to local directors in Wellington? —It does to some extent, but you cannot help that. You have to narrow the difficulties as much as you can. 302. Mr. Tanner.] You have answered some questions by Mr. Guinness with regard to the Pension Fund of the Bank of New Zealand. The staff of the Colonial Bank has been amalgamated with the staff of the Bank of New Zealand ?—No; the Bank of New Zealand has taken over a certain number. 303. What became of the rest ? —The others have been dispensed with. 304. Can you give us an idea of how many ? —I could get the information. I think, roughly speaking, we have taken over about a hundred. 305. And how many remained ?—Speaking from memory, I think it was thirty or forty. I would like to get the exact number, if it is important. 306. They were dispensed with ?—They were dispensed with. 307. We had a statement the other day that the total amount saved in the management is £20,000 or £30,000 per annum on the combined banks. Would the salaries of these thirty or forty officers dispensed with account for that saving?— Partly. 308. In what way would it be made up?—ln similar ways to all businesses which are converted into one business. There is less expense for lighting, cleaning, and so on. 309. Were those highly-salaried officials in the Colonial Bank that were dispensed with? —No. 310. They were thirty or forty subordinate individuals?— Yes. 311. Could you tell me what the combined salaries amounted to? —I could get them for you. 312. You answered a question by Mr. Montgomery with regard to the balance-sheet and the various entries it consisted of. Can you tell us what the object of the balance-sheet is?—To disclose the business of the company or individual who presents it. 313. Did you ever know a balance-sheet that actually did that ? —Of course, you have to allow for human error, but I think that most balance-sheets that I have to deal with are honest attempts to put the position squarely and fairly. A balance-sheet must always be largely a matter of estimate, as I told you a little while ago. If a man owes you £100 you may think it is a good debt, but you cannot be certain of it. 314. You say that the balance-sheets you have had to do with have been honest attempts to put the position before the public. Have you any reason to believe that they have been successful attempts ?—I think so, in the balance-sheets I have had anything to do with. 315. Had you to do with the balance-sheets of the Bank of New Zealand in 1892 and 1893 ?— I was not responsible for the balance-sheets. 316. They were compiled in London ?—They were compiled in London. 317. With regard to the balance-sheet of 1896 : Is there any entry in it showing the general public of the colony, or the Committee, or the shareholders the actual value of the trading concerns now held by the bank?— Well, the bank proper does not hold any trading concerns. The
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trading concerns are really part of the property which is represented by the shares in the Estates Company. 317 a. Is there anything in the balance-sheet to lead the public to know that ?—No. 318. Is that an honest and successful attempt to exhibit the state of affairs to the public ?— I said the bank proper. 319. Are you aware whether the public can draw such fine distinctions ?—They know about the existence of the Estates Company—that it is a separate entity. 320. Are they such—the Bank of New Zealand Estates Company and the Estates Company proper?— They are separate entities. 321. Take the item in the balance-sheet with regard to investments, there is a line there set down as " Municipal securities, £8,827 12s. 6d." Are they municipal securities of the colony?— Yes, to the best of my belief. 322. Is there anything there to lead the public to know that they are New Zealand securities ?—No. 323. They might be municipal securities of Liverpool for all the information that is given? —Yes. 324. What is included in the term " Other securities, £378,061 12s. sd."?—l could not go into that without disclosing private matters. 325. Would it not be possible to divide these things in some other way without giving the particulars you speak of ?—lt would be possible to subdivide the amount, but I do not think it would be greater information than it is now. 326. Would the same remarks apply to the seven millions " Other advances and securities and debts due to the bank " ? —Yes. 327. Would that come under your statement of defining the bank's position —to give a lumpsum of seven millions in a single line without any further information regarding it, although it might be made up of a great mass of securities? — I do not think that splitting it up and showing so much for overdrafts, so much for bills, and so on would be of very great advantage to any one. 328. Are you aware that every one of the banks that came down in Australia had been presenting balance-sheets which were considered satisfactory, and had been certified to by Government auditors ?—I was not aware of it. 329. Would it be surprising ?—I do not think there was any provision for Government auditing. 330. You are not prepared to give us any further information with regard to the securities set down in the assets column on the balance-sheet ? —lf I were asked to give some definite information I would see how far I could give it without disclosing matters which, in the interests of the bank's customers and the bank itself, should not be given. 331. I will ask you to give it without disclosing what you take exception to?—lt would be practically the amended form of balance-sheet that I have suggested I should draw up. Mr. Tanner: On that understanding I will not ask any more questions.
Wednesday, 16th September, 1896. Examination of John Marten Butt, Colonial Auditor of the Bank of New Zealand, continued. 1. The Chairman.] Have you any of the papers you were asked for ready to hand in this morning, Mr. Butt ?—I was asked yesterday whether any circular had been sent round to the customers of the Colonial Bank at the time of the purchase of the bank's business by the Bank of New Zealand. I find that the Bank of New Zealand did not send out any circular, but that the Colonial Bank did. It was, merely to the effect that the business had been transferred to the Bank of New Zealand, and that the customer's balance was so much. I have not been able to get the circular. 2. That was a circular simply intimating to the customers of the Colonial Bank that it had transferred its business, and asking the customers to extend their patronage to the Bank of New Zealand; but there was no circular referring to the accounts in the different lists ?—No. The next thing I was asked for was a statement showing the proportionate losses in relation to the different districts in the colony. That is being prepared by the bank's officers. Then I was asked to bring a model form of balance-sheet which I thought might be made applicable to all banks trading in the colony. When I came to think over that afterwards, of course I remembered at once that all the other banks trading in the colony had their head offices beyond the jurisdiction of New Zealand, so that they could not be compelled to make up their half-yearly balance-sheets to meet the views of New Zealand. We are the only New Zealand bank whose balance-sheets, it seems to me, can be regulated by Act of Parliament in New Zealand ; and in the legislation of 1895 it provides that the balance-sheet shall be in the form—or may be in the form—decided upon by the Governor in Council; so I think Parliament has already power to have that balance-sheet in any shape it thinks fit. Under these circumstances, I have not prepared the model form of balance-sheet. I think it will be found that the balance-sheet of 1896 gives a little more information, if anything, than the balance-sheets of any of the other banks that have offices here. A member of the Committee asked me for the date on which I made my preliminary examination into the business of the Colonial Bank. That was between the 24th and 26th of July, 1895. lam not quite sure on which day I commenced, but it was about that time. Then, another member asked me what losses accrued from current business in 1896. I find that the writings-off included about £3,000. That sum might be said to represent losses made in 1896. The balance of the £54,000 was by way of increased provision for accounts which had been thought doubtful before, but which it had been thought had been sufficiently provided for previously. Of the £3,000, some hundreds have been recovered since, and
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it is possible that more may be recovered. Then I was asked how many Colonial Bank officers were dispensed with, and the amount of the salaries of those officers. Well, I have got the information up to date. On the 31st August, 1895, the date on which the business of the Colonial Bank practically became the property of the Bank of New Zealand, the staff of the Colonial Bank numbered 169. Since then 131 of these men have been taken on by the Bank of New Zealand, leaving thirty-eight men not taken on. The aggregate annual salary of these thirty-eight men was £8,950. 3. Is that the whole of the information you have to supply ?—I think that is all. 4. With reference to the £54,000 writings-off for 1896,1 understand you that only a small sum of about £3,000 was for losses on the current business for that half-year ? —Yes. 5. The other £50,000 was to make additional provision for previous losses not sufficiently provided for ? Do you think that sufficient provision for bad debts has now been made ?—I think that, taken with the £171,000 Contingency Fund, all the accounts in the bank are sufficiently provided for. 6. Would it be impossible to get the model balance-sheet you suggested. Mr. Montgomery would like it, and it would be useful and instructive to the Committee, and possibly to the country ? —I would much rather not, because I think, later on, the executive of the bank, and probably the Colonial Treasurer, will consider as to the form of balance-sheet they will recommend His Excellency the Governor to approve; and I think anything I were to put in now of my own motion would be superfluous, and perhaps tend to make their task more difficult. The executive of the bank, who have to run the bank and are responsible for it, I think are entitled to great consideration when the question of the form of balance-sheet is under discussion. There is a temptation to an auditor to make a balance-sheet to suit himself. He is not troubled with considerations which affect the executive officers. For these reasons I would ask the Committee not to press that point. 7. The Committee would still like to have such a statement from a gentleman of your banking position if it is possible for you to give it. The Committee do not desire to unduly press it, but if you could see your way to carry out what I think was practically an offer on your part they will be glad?— Very well, I will try to do so. 8. Did you take a note of Mr. Tanner's question yesterday? —I understand Mr. Tanner's question to refer to one line in the balance-sheet, " Other securities, £378,065 12s. 5d." 9. Mr. Tanner.] No, that was not it ?—I am sorry if I misunderstood Mr. Tanner, but I thought it was that line he referred to. I can say of the " Other securities," that with the exception of about £17,000 they have since been disposed of. I cannot give further information about that without disclosing private affairs. 10. The Chairman.] You cannot produce the statement ? —I am sorry there has been any misapprehension, but it was not my intention to promise to produce information about private business. 11. Do you decline to give the information which was understood to be asked yesterday and is asked for now? —I do not see my way to give that information. 12. On what ground?— That I think it would be detrimental to the interests of the bank. 13. Mr. Tanner.] Would it be detrimental to the interests of the bank to separate the securities without exactly indicating what they are? —I think it would be giving information to other banks which they do not give to us, and might be made use of to the detriment of the Bank of New Zealand. I have no other object in declining to give the information asked for. 14. What, then, shall we know as to the accuracy and fulness of the balance-sheet ? —Well, you have the certificate of the officers of the bank, and the certificate of the Auditor. 15. The Chairman.] Balance-sheets, as you stated yesterday, are at all times only more or less accurate estimates?— They cannot be anything else in the nature of things. You can only estimate these debts, whether they are good or bad. 16. The question is entirely one for your own consideration, but I think you will see that it is desirable, if it is possible without injury to the bank, to give as much information as is possible to the Committee. 17. Mr. Cooper: Might I say that the injury to the bank is caused by the publication of this information. If this information as to the £7,000,000 for other advances and securities and debts due to the bank is divided into classes, it at once discloses the internal business to other banks and cognate institutions. If it could be given without publication it would be quite a different thing. 18. Major Steward.] I think on the first day of your evidence you gave us some rather interesting information with regard to the balance-sheets of stations. Do you recollect doing so ?—I do not know quite what you refer to. 19. Did you not mention that a circular had been sent to the station-managers asking them to return their sheep at a fixed value ?—After the minute of which I spoke was passed in May, 1894, the Estates Company sent a circular round to their different stations stating that this minute had been passed, and that the basis of the standard price at which sheep were to be valued was the four years ending 1893 —the previous year. That was roughly, I suppose, the four years of the Estates Company's existence. The circular went on to say that on this basis the value of their sheep would be so-and-so and so-and-so. That is the circular I refer to. 20. Have you got that circular? —No, I have not. 21. Could you obtain one ?—Mr. Foster could produce it. 22. Then, I understand that in making the returns of the assets from the different stations the managers, under the instructions of that circular, returned their sheep at a fixed average value, that value having been ascertained from the prices of the four previous years ?—That, I believe, is so. 23. I suppose you are aware that the value of sheep fluctuates frequently ?—Yes.
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24. And sometimes in a very short time ?—Yes. 25. I suppose it is also within your general knowledge that not many years ago sheep were absolutely given away in some districts because there was not keep for them, and they had to cut their throats, as it was called ?—I have been told so. 26. And that within a couple of years the price of sheep went up to tolerably high figures —I think as much as 15s. a head ?—I have no doubt. 27. Then, would it be a safe thing to take the value of sheep over a period of four years, strike an average, and return them in a balance-sheet as assets at a price then fixed? Would it be a safe calculation ?—I have made inquiries of other companies who deal in stations and stock in New Zealand, and they tell me that, in order to avoid the dislocation of balance-sheets which would result from the fluctuations just mentioned, they carry their sheep forward from year to year at an average price, which is fixed after due consideration, and is not altered unless they think they are faced up with some permanent cause which affects the value of stock one way or another. 28. Now, with regard to these particular stations in which the colony is interested, do you know what actually was the figure set down as the value of sheep at the date of this balance-sheet ? What was the arbitrary figure, do you know ?—I have not the figures with me. They can be obtained. 29. Will you find out and give to the Committee a memorandum stating what was the figure per head at which these sheep were calculated for value?— Yes, I will endeavour to get that. 30. Not knowing what the figure was, I suppose you are not now able to say what relation that figure bore to the value of the sheep at the time ? —No, I certainly could not say that, and I am doubtful whether I could ascertain it ; but I will ask the Estates Company for the information. 31. But supposing that the arbitrary value fixed for the reasons you have stated was higher than the market value, that would affect the accuracy of the balance-sheets to that extent, of course ? —lt would affect the value of course. The balance-sheets might be accurate extracts from the books of the company in New Zealand, but the value would be affected. 32. You say that the sheep had been put, for reasons stated, at an average value, say, of 10s. per head ; supposing the realisable value in the market was 55., it would follow that there would be a'los's on'every sheep, and to that extent the balance-sheet would be inaccurate? —If the sheep had to be realised. 33. Then, the object of this balance-sheet was to show, I presume, what was the realisable assets as against pending liabilities ; that was the intention ?—The object of these balance-sheets was to show the position of the company in the books of the company, which were kept in accordance with the instructions and wishes of the directors of the company. 34. Then, the balance-sheet is only of this value : that it shows what were the book-values and book-entries, and was made up on those ?—Yes. 35. Then, you cannot say, as regards actual values, that it is in any sense accurate ? —No. 36. Hon. Mr. McKenzie.] In reply to Mr. Montgomery yesterday you made a statement to the effect that you found it advisable and necessary to avoid the Government since you became Auditor of the bank? —If I conveyed that impression I am very sorry. 37. What did you say ? —I meant to say that in order that the public might not suppose that there was any interference on the part of the Government with the bank I thought it advisable to be seen as little as possible about the offices of different members of the Government —that I rather made it a point to keep away from them, so that people might not suppose that I was in the habit of going to them and giving them information, and cause harm to be done to the bank. 38. The words I have down are that you found it advisable and necessary to avoid the Government ?—I am very sorry if I have conveyed that impression. 39. Are you a member of the Wellington Club?— Yes. 40. Did you ever express yourself to this effect in the Wellington Club : That the Government was a contemptible, disreputable crowd that you did not care to be associated with? — Never. 41. That is not the reason you wanted to avoid the Government ?—Certainly not. 42. I put that question to you because I heard that you said so, and to give you an opportunity of stating if that was your reason for avoiding the Government ? —I am very glad, because I give it an emphatic denial. 43. Do you consider yourself such a weak vessel that you can be talked over by the Government and " pumped " in connection with the bank?—No, sir. 44. Why, then, did you use the words " avoid the Government " ?—ln using the words " avoid the Government " I perhaps used a strong term, but I was anxious to show that busy-bodies might say, " Here is an auditor who runs to the Colonial Treasurer with everything," and that use might be made of that to injure the business of the bank; but if it was necessary to see members of the Government, of course I would do so. 45. Your reply would amount to this : that you created an impression here yesterday, and also to people outside when they read it, that the members of the Government had been annoying you by bringing pressure to bear upon you ?—No. I am very sorry if it is so, and I shall try and put that right. 46. Have members of the Government annoyed you?— Certainly not. I have met with every consideration since I have been connected with the Government. 47. Who are those busy-bodies who accuse you? —You know how these things are said by the man in the street, and how these things get about. 48. The Government's political opponents?— Very likely. 49. What experience have you had as a banker?—l have been nearly thirty-four years in the Bank of New Zealand. 50. Have you been in any other bank ?— No.
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51. You have always been in the Bank of New Zealand? —Yes. 52. You made a statement yesterday to the effect that the Bank of New Zealand was the bestmanaged bank in the world, or in the Australasian Colonies ?—I said it was the most strictly managed bank I had had experience of. 53. How could you say that without any other experience?— Perhaps it was rather a rash expression. I ought to have said it was more strictly managed than ever it was before, in my opinion. 54. I have an important question to put to you, and I am in a position to test the accuracy of your reply. Are you prepared to tell this Committee that the whole truth in connection with the Bank of New Zealand is now known to the Government, the Parliament, and the people of New Zealand ?—I think the true position of the bank is now before Parliament. 55. The whole truth is known to them ?—The whole truth as affecting the position as known is now before them. 56. You think you have arrived at bed-rock ? —I think so, in my opinion. 57. The other day you gave us a statement that you calculated an account was a bad account when it ceased to pay interest ?—I do not think I put it in that way. You may be able to recover the whole of an account after it has ceased to pay interest if the securities are good. 58. Are there any accounts in the Bank of New Zealand at the present time not paying interest ? —I think I ought not to answer questions like that. 59. Mr. Watson answered a question at the bar of the House. He said there were?—l am not prepared to deny it. 60. Are you prepared to admit it? I am not asking for any special account?—There are securities which have fallen into the bank's hands, the original debtors having been released by bankruptcy or otherwise, that are not paying interest. 61. Have you made provision for these accounts?— Yes. 62. Good provision ? —I think so. 63. And that is the way you arrive at your conclusion that you have reached bed-rock, and that the position of the bank is now known ?—Yes. 64.' When Mr. Murray arrived in 1894, what position did you hold in the bank?—l was inspector. 65. Then, the whole position of the bank would be known to you at the time?—l was in a position to ascertain it. 66. Did you get any information from London to the effect that Mr. Murray was to assume charge of the bank? —No. 67. What was the first information you got about it?—At that time Mr. Holmes was the general manager, and he was in communication with London, and I believe he was told that the London board wished the position of affairs to be laid before the Government, and that Mr. Murray was to do it. 68. Was Mr. Holmes told that before he left ?—I believe so. 69. You are quite sure of that ?—I could not swear to it. I could turn up the letters, but I believe that to be so. 70. Was not Mr. Holmes on his way Home before Mr. Murray assumed charge?— Mr. Murray did not assume charge. He had this particular business to see to. Mr. Murray came down to Wellington. 71. Were you asked to see him on this business? —No. 72. At that time you were in possession of information as inspector that the bank was in trouble ?—Yes. 73. lam going to read to you the copy of a document here. Perhaps you may recognise it: "We believe there are two courses open—first, to obtain assistance from the Government; second, to reconstruct. If negotiations with Government are successful suspension would be averted, and that, to our mind, is the chief thing in favour of Government aid. Under reconstruction stoppage is, of course, inevitable, and loss of prestige would follow. The banks would also suffer to an alarming extent, because, no matter how speedily reconstruction was carried through, everything would be dislocated, credit destroyed, serious shrinkage in the colony's securities all round would, of course, follow. On the whole, we are strongly in favour of Government aid, providing (1) that the Ministry will, on the position being put to them, say outright that they will or will not support the bank ; if they will not support the bank, steps should be taken forthwith to suspend, and thus avoid the harmful effects of the position becoming known, and a consequent ' run.' I doubt very much if the Cabinet, as a whole, would observe absolute secrecy." Have you ever seen that document ?—I do not recognise it for the moment. 74. Do you say you have or have not signed such a document ?—I could not say. 75. Is it possible you have lent such a document as that to Mr. Murray or any one else ?—I could not say. 76. Is that about the facts of the case at the time Mr. Murray came ? Is it a true statement of the position ?—I think it about represents the position. If I had it in my hand I could tell better. 77. Then, you are not prepared to say that you, as an officer of the bank, in company with another officer, have not signed a document to that effect ?—No ; I would like to see that. 78. And you admit that it is about the true position of the case at the time ? —I think so, from your reading of it. 79. Then, if the Government had not come to the aid of the bank and the Legislature of the colony, it would have had to close ?—I think so. 80. If the Government had point-blank refused to come to the rescue you would have had to suspend payment ?—I think so.
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81. In reply to a question yesterday, you made a statement to the effect that the Government should control and interfere as little as possible with the management of the bank: Is that so, in your opinion ?—I said that I thought the less the interference was apparent—the less it appeared— the better it would be for the welfare of the bank. 82. You thought it quite a proper thing for the colony—the taxpayers of the colony—to assist the bank, and at the same time you say they should not interfere ?—I say that the fact of their inteference should be given as little prominence as possible. 83. Where would you draw the line ? —I think I also said that, in my opinion, the Government should appoint people to manage the bank in whom they had confidence, and then to a considerable extent leave it to them to manage it. I know that our managers in different places had some trouble to retain good business owing to our rivals having said to our customers that their business would now be open to the perusal of Government, and so on. That is the only object I had in making that observation. 84. That would amount to this : The sooner the Government cut adrift from the Bank of NewZealand, and the Bank of New Zealand from the Government, it would be all the better for both?— I do not say I am prepared to say that. 85. Do you think it proper for you, as a practical man, to say that the taxpayers of the colony are to keep on assisting the Bank of New Zealand without having full control of it ?—I think they ought to have control, but I think they ought not to make that more evident than is necessary. 86. In 1894 you assisted, I suppose, Mr. Murray in coming to a decision as to what amount of money was necessary to strengthen the bank ?—I do not recall going into that question with Mr. Murray. 87. You were inspector at the time? —Yes. 88. You would know the position of the bank ? —Yes, I was in a position to ascertain it. 89. Do you think Mr. Murray of his own accord would say that £2,000,000 were necessary without reference to you ? —Mr. Murray asked me if I thought that, if the bank had two millions of fresh capital, that would enable us to carry on, and I told him that I thought it would. 90. The Government, owing to representations made at that time, guaranteed the £2,000,000 ? —Yes. ' 91. And then within twelve months the bank had again to come back to them : Is that not so ? —Yes. 92. Do you not think the people of the colony will have considerable doubts about the management of people who in 1894 were prepared to say definitely that two millions would be enough to put the bank right, and who then in twelve months' time came to the colony for further assistance? Would it not occur to the taxpayers of the colony that the men who in 1894 said that two millions were sufficient, and in 1895 came for another and larger sum of money, were either not aware of the position of the bank themselves or were endeavouring to deceive the colony ? — I think, if you put it in that way, they would arrive at that conclusion. Mr. Murray's question to me was as to the financial assistance to be given to the bank itself, and my answer had reference to the bank itself. It had no reference to the Estates Company. 93. When did you go into the position of the Estates Company?—l went into the position of the Estates Company in 1895. 94. Not sooner ?—No. 95. Have you any recollection that you made any statement in 1895 with regard to the position of the Estates Company ? —Do you mean to the joint parliamentary Committee ? 96. It might be to the Colonial Treasurer, or it might be to the bank officials ?—I remember writing a letter to the President. 97. Was that the first time you discovered that the Estates Company was in such a position that it endangered the position of the bank?—l had been told, after the legislation of 1894, that the position of the Estates Company was precarious. 98. Were you not aware of that before the two millions was fixed upon ?—I did not know enough of the affairs of the Estates Company to offer any decided opinion about it prior to that. 99. Who was it that gave information to Mr. Murray with regard to the Estates Company?— It was probably Mr. Hanna. He would be the most likely man. 100. You had nothing to do with it ?—No, I had nothing to do with it. 101. You had nothing to do with the Estates Company at that time?—l was one of the attorneys of the Estates Company for the purpose of signing deeds, but the affairs of the bank kept me fully occupied, and Mr. Murray was there, and Mr. Hanna was general manager, and I did not occupy my time in going into their management. 102. In accordance with the Act of 1895 you were called on to give a certificate as to the amount of debentures which would be paid by the Government to the Bank of New Zealand on behalf of the assets now in the hands of the Assets Realisation Board ?—Yes. 103. You made that certificate?— Yes. 104. And the Colonial Treasurer declined to accept it ?—Yes. 105. You have since then made another certificate?— No. 106. You have not finished it yet?— No. 107. Have you gone into the accounts since? —Yes. 108. And have you altered your amount with regard to the first certificate ?—With regard to some items I have. 109. What do you make it now? —With regard to other items, although 110. Do you consider there is a difference of £130,000? —I was going to say, with regard to other items, although I did not really consider that my first dealing with them was wrong, still, it does not appear to me to be sufficiently serious to insist upon them, and so delay the issue of debentures which it is important the bank should get.
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111. It would make a difference of £130,000 to the bank ?—lt practically makes no difference. 112. How do you make that out? —It was a matter of adjustment, and the position remains practically the same. In one of the items 113. It is not necessary to explain the items. I want to get the facts. Your first certificate was for £2,810,496 7s. 2d. ; what is it now ?—lf on the basis of the adjustment proposed now, it will be £2,680,000 odd. 114. Is not the colony therefore responsible for £130,000 less debentures ?—No, because the colony is not responsible for the debentures themselves, but only for any deficiency there may be after the assets which secure the debentures have been realised. 115. Does not that £130,000 increase the liabilities if there is any deficiency?—On the other hand, it increases the assets. 116. How does it do that ? —lf you take the first adjustment proposed, the Assets Board has produce worth £90,000 in hand. If you take the second adjustment, it has not. Thus, the assets are so much less. 117. Did you intend to hand over the proceeds of the produce in hand to the Realisation Board when you made the first adjustment ?—Yes. 118. Was that set forth in the certificate ?—No ; that would come as a matter of course. It was the property of the Assets Realisation Board. 119. Is it not possible that the Bank of New Zealand might stick to it ? —I do not think so. 120. They did such things in other days ?—Not to my knowledge; and you must remember who the men on the Assets Board are now. 121. With regard to the sheep valuation: The value of the sheep was written down by Mr. Foster, and then put up again. That was part of the adjustment, was it not ?—No, that was done before I came to consider my adjustment. 122. Did not Messrs. Kember and Smith, who were appointed by the Government, find that the value of the sheep had been first written down on the 31st March, 1895, and then written up ?—Yes. 123. And was that the true value of the sheep ?—lt was not the market value of the sheep at that time. 124. But'still you were prepared to take a value that was not the market value of the sheep? —It was their book-value. 125. Were you bound to take the book-value ?—I considered that under the Act I was to take the book-value. 126. The book-value of the shares in the Bank of New Zealand, not the sheep ?—Yes ; what was on the estates. 127. Where can you find that?—l thought that was the effect of the Act. It is not described in the Act. 128. Did you find an entry in the journals of the company to the effect that the sheep that had been written down had afterwards to be written up again ? —That is so. 129. On whose authority was that done ?—The explanation given to me is this: Mr. Foster, the newly-appointed manager, when he came to settle the figures for his balance-sheet of March, 1896, wrote the sheep down. Upon the attorneys becoming aware of that, they said it had not been their intention to write the sheep down, and they did not think it should be done. Mr. Foster thereupon had to reverse his entries and write them up again. 130. You have a copy of Messrs. Kember and Smith's report ? —Yes. 131. Do you see their reference to this transaction? They have referred to it as a fraudulent entry ?—Yes. 132. Do you consider that that was a fraudulent entry?— No. 133. Then, you prefer to give a false value as to these sheep, and you say that an incorrect value was not a fraudulent entry ?—I say the value shown in the first instance was the book-value, and that there was nothing fraudulent in what Mr. Foster did. 134. But Mr. Foster did it by instructions?—He did it without instructions. 135. Was he not instructed by the board to put back the values to what they were ?—No; I think Mr. Watson has already stated that. He was one of the attorneys. 136. Would you produce the document showing the minute passed for the purpose of writing these sheep up again ?—I do not think there is any minute to that effect. 137. You mean to say there is no minute of any kind in the office of the Estates Company showing that instructions had been given to put these values back again ?—I am not aware of any such minute. 138. Will you search and see ? —Yes. 139. Now, how can you reconcile this certificate that you had given, knowing, as you must have done, that the entries about these sheep were false ?—I do not think I have admitted that I considered they were false. 140. I will put the case of one estate. You must have seen and known it. It refers to the Carnarvon Station : " On the 31st March, 1895, the books of the Estates Company show that they had 17,019 sheep, valued at £5,668 14s. 6d. The value of these 17,019 sheep was written up to £9,025 2s. 9d. During the financial year 1895-96 they bought 9,138 sheep, and bred 4,804. Add the sheep on station at the 31st March, 1895, 17,019. Total, 30,961. Now, although by the altered valuation in the price of the sheep they value 17,019 at £9,025 2s. 9d., during the year 1895-96 they sold 27,932 sheep for £8,606 Is. 6d." Do you think you could certify to such entries as these as being correct ? —I do not think what I said in the certificate was that these entries were correct. 141. Do you say it is a proper thing to do, as Government Auditor, to put the book-value on these sheep, knowing that the 27,932 sheep had all been sold for less money than the 17,000 were valued at in 1895 ?—I had nothing to do with putting them back. *35—1. 6.
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142. I did not accuse you of putting them back, but I say, do you not consider it was your duty as Government Auditor to point that out to the Colonial Treasurer before the certificate was given in connection with the amount of debentures to be paid by the colony to the Estates Company? — No, it did not occur to me that it was my duty to do that. 143. Do you not think the general run of people in the colony will think there was an attempt made by fraud to get these debentures ?—No. 144. Can you give an explanation of such conduct ? You must have had the Carnarvon sheep account before you ?—I did not audit the accounts of the Estates Company. What I think of it is this : I thought the intention of the legislation of 1895 was to give the Estates Company the book-value of certain assets, in order that they might be placed in a sound position ; that these assets at their book-value were to be administered by the Assets Realisation Board set up for the purpose ; and that the admitted deficiency, which there was no attempt to conceal, was to be secured, as provided in the Act, upon the profits of the bank for all time ; and it was because I thought that was the intention of the Legislature that I gave the certificate I did. I did not think it was part of my duty—if it was so, and I am. in error, I am very sorry—but I did not think it was part of my duty to interfere with the book-values of the items that had been submitted to the parliamentary Committee. I knew, as regards the debentures, that Mr. Foster had been examined by that Committee, and had stated what, in his opinion, was the actual value of these sheep, and I thought as the Committee, knowing what the book-value and the real value was, had decided that they should be taken at the book-value in ascertaining the price they recommended that it was not for me to alter that. That was done in all good faith and honesty. 145. You knew at the time of giving the certificate that it was not the correct value ? —I knew that the figures on which the certificate was based were more than the actual value. 146. Still, you gave the certificate ? —Yes. 147. And you never thought it your duty to point out to the Colonial Treasurer the true position ?—No. All that was public property, and was published in the report of the Committee. 148. Now, with regard to the books of the company. In making up the accounts, how do you place the expenditure ? Do you place it in one amount ?—I have nothing to do, of course, with the book-keeping of the Estates Company. 149. As Auditor you see them ?—No ; I do not audit the Estates Company. My duty is to audit the bank accounts and the accounts of the Assets Board. 150. But in preparing the certificate and the amount to be paid for debentures, did you not examine the Estates Company's books?— For the reason I have stated I took the book-values. 151. For the twelve months of 1895-96 there was a readjustment of accounts, was there not? —Everything that had come in on one side, and everything paid out on the other, had to be reckoned up. These payments out were called "outgoings," and the receipts " incomings," and lists were made out and checked ; and, as far as I know, Messrs. Kember and Smith had no fault to find with them. 152. Did they not find fault with part of the expenditure being charged to Capital Account? ■ —No, not as regards the expenditure between 1895 and 1896. I should say, though, they took exception to the omission from the incomings of a sum of £27,000, as I have already explained to this Committee, which the Estates Company had received on account of sales of land. They said that should be included. No doubt it should have been included. As I have already said, I admit that that should not have been left out. 153. The company for the year have prepared a balance-sheet which we have here before us, and in that balance-sheet they show a profit in some cases. Do you not consider it was your duty to find out how they arrived at those profits ?—I was not Auditor at that time, and have not gone into that at all. 154. You have not gone into it to see what was charged to Capital Account and working-ex-penses of the stations before they arrived at what the profit was? —No. 155. You could not see they had charged to Capital Account the sowing of turnips, and took credit for their value as profit for the year ?—I could not say of my own knowledge that they charged turnips to capital. 156. Do you think it is a proper thing to charge certain crops on a station to Capital Account ? —Not as a permanent charge. I should say that was wrong. 157. Has that not been done?—For'the reasons I gave, I did not inquire into that. 158. You did not consider it your duty to inquire into these small things ?—I was not auditing the Estates Company. 159. Did you not audit the accounts when you gave the certificate?—l took the book-values. 160. You admit that you took exactly what was given to you ?—I took trouble to see that the book-values were correctly stated. 161. You did not think you were required by law to have a statement made of the accounts of 1895 and 1896?— Yes; with the exception of £27,000, I did, to the best of my belief, what the law prescribed. 162. How can you say that when you admit that you have not gone into the accounts ? — have gone into the accounts for 1895 and 1896. 163. Did you not find there that the cost of producing turnips was charged to Capital Account ? —No. 164. Are you sure ?—I do not remember finding that. I will look it up again if you wish. 165. I think you will find that their production was put down to permanent charges, while they had been turned into wool and mutton ?—ls that 1895 ? 166. Yes?—l will make a note of that, and look into it. 167. With regard to the proceedings of the " A," " B," and " C " lists purchased by the Bank of New Zealand from the Colonial Bank, are you giving the customers of the bank notice that they are liable to have their accounts closed at the end of the two years?— No.
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168. Do you not think it would be a fair thing to do that ?—I do not think so. 169. Do you not think it would be a fair thing to report to the Government, as Auditor, that these people in the " B " list should be informed of their position?—lt has not occured to me to be a proper thing. 170. Do you consider it a fair thing for the customers ? You must remember that a great number of these customers are shareholders of the Bank of New Zealand, that they are taxpayers, and are responsible for the losses which the bank makes, and which the colony has had to come to the rescue of. Do you not think it would be more manly and more straightforward to inform these people of their position ? —lt has not occurred to me that it was necessary or expedient to inform them. 171. Do you not think that deception of that sort always leads to more trouble?—l am not prepared to admit that there is deception. 172. How would you describe it if a man is in the " B " list and you do not inform him?—l do not think the bank was under any obligation to tell men that their accounts were in the " B " list. The accounts were put in the "B " list to see if they were of value or not, with the result that several have been taken over, and with regard to others it was thought that they were not sufficiently good accounts to continue working, and they have been terminated. That is the fate that every customer is exposed to who has the assistance of a bank. The bank does not tell him a year beforehand that his account will be called up in such a time; he has to take the risk, and knows that he is liable to have the assistance withdrawn at any moment. 173. That might be so with respect to the customers of the Bank of New Zealand, but you must remember that this is a different thing with the buying-over of the Colonial Bank. Supposing the same rule had been applied to the Bank of New Zealand that has been applied to the Colonial Bank, and you were called upon to put the whole of your customers into the " A," " B," and " C " lists —if the same drastic measures had been taken with the various accounts ?—We should have had to divide the acounts into the same categories. 174. And you have such accounts now ? —Oh, yes. 175. You have accounts now in the Bank of New Zealand not paying interest that were never in the Colonial Bank ?—W T e have assets that fell into our hands that are not paying interest. 176. Are you aware that a considerable amount of injury is being done to the Bank of New Zealand by the course now being pursued by the directors ?—I would not like to say that. 177. Do you think it part of your duty as Government Auditor to inquire?—lf I thought it was the case I should report it to the Government. If I have any suspicion that that is the case I shall deem it my duty to inquire. 178. Is it not a fact that the Bank of New Zealand has lost some of these accounts? —Yes. 179. Why ?—Some of the people are no doubt dissatisfied. Men do not always like their accounts being handed over from one bank to another without being consulted at all; and in one case that I have in my mind the directors thought it necessary to make some inquiries as to the position of a customer having a large unsecured account, and whether the inquiries were injudiciously made or not I cannot tell, but this man took offence and removed his account. But it would have been wrong, in my opinion, for the directors to have taken over that account without making those inquiries : in fact, if they had done so I should probably have protested, and informed the Colonial Treasurer that, in my opinion, it should not be done. It did not go so far, and the directors without knowing the means of this particular individual did not give the advance without security. 180. Is it not a fact that you have lost business in your branches in Otago ? —We have lost some. 181. And your managers are reporting to you to tbat effect? —Yes. 182. Have they not reported to you that they are likely to lose more? —They have reported that the progress of this inquiry has caused unrest among the customers. 183. Do you believe that it is the progress of this inquiry which is the cause of it ? —I only know what is said by the customers; they tell us that it is so. 184. But do your branches in Central Otago tell you that it is this inquiry which is doing injury to the bank, or is it the action of the directors in dealing with the " B " accounts? —They say it is the progress of this inquiry. 185. If I produce letters to show that it is quite the contrary, would you believe that?— Well, it would depend upon the writers of the letters to some extent. 186. You would sooner believe the managers ?—I do not think the managers have reason to deceive me, and I have seen copies of letters from customers in which they state point blank that that is the reason. There may be other accounts which are lost owing to the manner in which the "B" accounts are dealt with; but I should like to repeat what I have already said in reference to this matter, that it is the liquidators of the Colonial Bank who are forcing the hands of the directors of the Bank of New Zealand. The directors say that the Act contemplates two years in which to work the "B" accounts and decide whether they will take them or not, and even after two years, if their minds are not made up in some points, there is provision, with the consent of the liquidators, for extending the time ; and the directors contend, and with great show of reason, that it is the liquidators who are responsible for the way in which the " B " accounts are dealt with. 187. It is a very good thing, I suppose, for the directors of the Bank of New Zealand to have the liquidators of the Colonial Bank to act as a buffer?—l do not think they view it in that light. 188. And this Committee as buffers. Is it not the case that the officials of the Bank of New Zealand have always found some one else to act as a butt for themselves?—l am not prepared to admit that. 189. Do you think, in your great and long experience as a banker, that the Bank of New Zealand is going to work out all right ?—I think, with good management and fairly-prosperous times in the colony, the bank will work out all right,
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190. Do you think the first thing to do is to establish confidence with the people who are responsible for the bank and with the bank itself?—l think it. is very desirable. 191. Is that done now ?—I think that everything is being done with that in view. lam not aware of anything to the contrary. 192. Take the course you are pursuing yourself. You find it convenient to answer questions which suit you and the bank, and other information which does not suit the bank that the public ought to know about you do not give. Do you think that is going to establish confidence between the people and the bank?—l do not know that anything I have to state to the Committee will make much difference. 193. Do you think that the political element is going to hurt the bank in any way ?—I am not quite sure that I understand your question. I think that the more the bank can be kept clear from politics the better it will be for the bank. 194. Do you think it is possible to do so, so long as the colony has to find the means to back up the bank ?—I think it is possible to have a question which is a colonial question kept apart from the politics of the day. 195. Do you think it would be advisable now for the colony to dispose of the Bank of New Zealand and cut its connection with it? —I would not like to express an opinion upon that point without giving it considerable thought. It would depend very much upon the conditions on which it could be done. 196. It is nearly two years since the colony came to the rescue of the Bank of New Zealand; there are only eight years to go. Do you think there is any prospect of the Bank of New Zealand getting over the load ?—No ; because they cannot in eight years pay off the deficiency in the cover for the Assets Board's debentures. 197. What will be the position at the end of the eight years ?—I think at the end of the eight years the two millions of guaranteed stock will have to be arranged for in some way. It will have to be renewed or converted in some way. 198. Renewed by the people of the colony?— Renewed, perhaps, on the same conditions as at present, or with a reduced rate of interest perhaps. 199. Do you think the people of the colony are going to agree to that if the present style of management is to go on ?—I think they would judge by what they find at the time. 200. You think the bank at the present time is perfect ?—I think the bank at the present time is carefully managed. 201. As Auditor of the bank, do you find that there is any preference given to any part of the colony by the directors in the advances they are making ? —I do not think there is any conscious preference. 202. Do you say there is not preference given to the District of Wellington?—l would say that conscious preference is not given to any one district over another. What I mean by that is that one district may get a preference owing to its affairs being better known. A man who knows the value of property, which is admitted to be good security and knows it himself, naturally feels more confidence in giving an advance if there is an application for it than he would feel if dealing with the reports of other people. That there is a conscious preference on the part of the directors for one part over another I do not believe for a moment. 203. Do you not think that the preference might be owing to the directors residing here ?— I say I think there is a prospect of that happening ; but I do not see how you can help it. 204. Would it not be helped by having the directorate enlarged from other parts of the colony? —If you could get a director residing in Wellington with a knowledge of other parts of the colony, so that he could attend the Board and take his share of the responsibility, it would be a decided advantage ; but if you could not get a man resident here, so that he could attend the meetings of the Board, I do not see how it could work. 205. A man who could not attend meetings would be of no use at all. But would it not be possible to get such men as you speak of ?—I think it is very well worth trying. 206. We have it in evidence before us that the Bank of New Zealand has written off, one way and another, since 1888 something like four millions of money. I suppose you are aware of that ?— Yes. That includes, of course, the estimated deficiency in cover for the Assets Board's debentures. 207. In one way or another the bank has lost four millions ?—That money has not been lost since 1888. 208. Part was lost before that ?—Yes. 209. It has been written off since 1888 ?—Yes. 210. You would not be prepared to tell the Committee who has got that plunder ?—I could not tell the Committee anything involving a disclosure of names. 211. Some of the names have been disclosed, have they not ?—There was a general reference to accounts in the report of the Committee in 1888. Ido not know whether they disclosed names. 212. Did you ever read the report of the Committee ?—Yes. 213. Are not the names mentioned there ?—I am not aware that they are. I have not seen it for some time. 214. You do not remember that the names of Owen and Graham appear there ?—There do not appear to be any names in the report. 215. I have a copy of Mr. Buckley's report, in which he said, with regard to Owen and Graham, that the estimate of loss was stated to be £20,000, but he was sure the bank would not get out of this account without a loss of £62,000. Other accounts he mentioned were Henderson and Macfarlane, estimate £20,000, but he put down £20,000 more ; A. Buckland, deficiency in excess, estimated at £25,000; Morrin and Co., whose business was valued to the bank at £40,000, and which he would say was at that time not worth 40s. ; J. C. Firth, estimated excess, £20,000, but it would be £25,000; J. Buchanan, the loss was supposed to be £6,000, but it would be £26,000;
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Thomas Russell (two accounts), on which they would lose altogether £20,000 ; P. M'Comisky, loss of £10,000; C. W. Turner, loss, £28,000; Paisley Company, excess, £12,000; Larkworthy, excess, £10,000; Coster, loss in excess, £20,000. Several other names are given here. Were you not aware of this ? —I was aware that they were in Mr. Buckley's speech at one of the shareholders' meetings. 216. There was no secrecy there. Do you not think it is possible that all these names will have to be given some day to the people of the colony ? —I could not say. 217. Are you bound to any oath of secrecy —Yes. 218. As the Government Auditor?— Yes. 219 Have you made an oath of secrecy as Government Auditor ?—I believe I have signed a declaration as Government Auditor. Whether or not, the questions you are putting to me now relate to information which was obtained by me in my position as an officer of the bank, which my position now will not relieve me from. 220. You are not prepared to give the names of the people who got these four millions ? —No. 221. Have I given you names which you are prepared to give ?—No. 222. Is it not a fact that there are two members of the Legislative Council now sitting in another place who had writings-off?—l decline to answer that. 223. The Chairman.] You decline to answer that question on the ground that it is trenching on the private business of the bank ?—That is so, sir. 224. Hon. Mr. McKenzie.] You do not consider that it is your duty as a servant of the people of this colony to.give information for their benefit ?—No, not to the injury of the bank. 225. The Chairman.] I think you said that, in your opinion, no injustice is being done to the late customers of the Colonial Bank whose names appear on the "B " and "0 " lists?— What I meant to say was that I do not think it is an injustice to them not to acquaint them with the position of their accounts ; nor do I think that anything the directors of the Bank of New Zealand have done or are doing is an injustice to them. I would not like to say that the liquidators of the Colonial Bank are doing injustice either, but what they are doing is undoubtedly pressing hard upon some of the customers. - 226. There is a considerable number of customers against whose accounts you hold a large amount of cover for possible losses ?—Yes. 227. Has not the Bank of New Zealand power to prevent the sacrifice of a good many of these customers ? —Only with the consent of the liquidators. 228. The customers whose accounts are in the "B" and "C" lists have no power to make arrangements with any other bank to take over their accounts with less cover than the Bank of New Zealand holds against them, except by permission of the Supreme Court, which exposure might mean ruin to them ?—That is so. 229. The bank has two years in which to decide as to the taking-over of these accounts? — Yes. 230. Are they exercising proper discretion with a view to taking the accounts over, or are they simply carrying them on knowing that they are safe, having got the cover against them ? — —They are managing them with a view to bring them into such a position as will enable them to take them over. 231. They have taken over some of these accounts ?—Yes. 232. They have been waiting to discover how they would work out, and you think there are good accounts in the " B " list, such as any bank would take over ?—Yes. 233. That is the only reason they have not taken them over?— Yes, that is the only reason. 234. Have they not declined to take over some of the accounts in the "B " list because the customers were not in a position to say that another bank would take them over without any cover at all? —They would not take them over solely on those grounds. They would require to know the accounts for themselves. 235. As a matter of fact, some banks have taken over, or offered to take over, accounts in the "B " list, and you have thereupon taken them over rather than lose them?-—I do not know that is so. 236. For what you know it may be true ?—I hardly think it would be true, because I see all that is being done. 237. Hon. Mr. Seddon.] You heard those names read out in respect of what Mr. Buckley said at the meeting of shareholders. I find here the following : " However, there is one item of £20,000 full of all demands." Do you know anything of that transaction ? Is this a fair statement of the position ? —I am afraid I must decline to answer that. 238. Have there been any demands made for this money ? Mr. Russell is now a millionaire, and a number of these people are in a good position. Are these amounts beyond legal recovery ?— I am afraid I cannot give any information with regard to private accounts. 239. Could you get a copy of that deed which is referred to here ?—lt may be in the custody of the bank ; I have not it. 240. Do you not think it is your duty as Auditor, if moneys like these are recoverable, they should be recovered ? —I intend to do my duty as Auditor. 241. Your attention having being called to this, will you look the matter up?—l will acquaint the bank authorities with what you wish. 242. When were the sheep on the Carnarvon Estate sold?—I could not tell you. 243. If they were sold between March, 1895, and March, 1896, should not that cash be taken into the accounts as incomings ?—Yes, that would be part of the incomings. 244. Then, if you have put down the sheep on the Carnarvon Estate at their book-value, is it not very likely there is a mistake there ? If you have given a certificate on the book-values and in the interim the sheep have been sold, the cash ought to have been entered and not the value of the
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sheep on the station. Would you give a certificate according to the standard value of the sheep when those sheep in the interim had been sold? —I thought, in making the adjustment at the 31st March, I was acting in accordance with the spirit of the Act in taking the sheep at their book-value. Subsequently to March, 1895, the sheep were sold, and, of course, only so much as they realised was allowed for in the incomings. 245. If you have taken the sheep at their standard value shown by the books of the Estates Company, and those sheep have been realised in the interim, you have given a certificate for the sheep as an asset while the cash is in for the sale of the same sheep. Would that not be wrong; would that not be the true position ?—I would not say that it upsets the position. You first of all have to ascertain what the price to be paid by the Assets Board is. Having ascertained that and paid it, the sheep become the property of the Realisation Board. Then, for the twelve months, 31st March, 1895-96, the Estates Company administer the sheep on behalf of the Realisation Board, and all they sell are incomings ; the one transaction, as it were, paying for the sheep ; the other transaction is receiving cash for those that are sold subsequently. 246. Take Carnarvon Estate. At the beginning of the year the stock are put down at £10.959. At the end of the year the live-stock of the same estate is put down at £1,063 17s. 6d.—an absolute loss of over £9,000. How can you explain that discrepancy?— Probably sales took place during the twelve months, and the sheep that remained would be taken at a lower value than at March, 1895. 247.- Then, according to your adjustment, your certificate would be for the £10,959 at March, 1895 ?—Yes. 248. You do not know whether there is any incoming credited in respect to Carnarvon ?—There are some incomings. 249. That is only for the land ? —I could not say that without turning up the account, but apart from the land there are incomings, I think, from the Carvarvon Estate. 250. You say that there are some accounts in the " B " list which have been taken over by the Bank of New Zealand. When you take over an account do you notify the liquidators of the Colonial Bank ? —Yes. 251. You do not notify the customers at all?— No. 252.' They do not know where they are ? —No. 253. You have said that, in your opinion, there will not be a £1,000 either way between the accounts and the cover you have -taken ?—Yes. 254. In that case, why does not the bank take over the accounts bodily and put an end to the trouble ?—I doubt whether the liquidators would agree with that to begin with. 255. Has there been any attempt made to do so ? You have said that it is merely a system of working the accounts, and there is a loss to all concerned, and an injustice to the customer. Has any attempt been made by you and the liquidators to wind the thing up ? —I do not think any definite attempt has been made. 256. Do you not think it advisable to do so? I suppose the longer it continues the worse it will get ? —I think it would be advisable to get a settlement. 257. You think that if the Colonial Bank liquidators were to sell and wind up the whole thing that would be an advantage ?—Yes ; I think so. Before passing it as Auditor I should require to look .into it. But, speaking at large, I should say it would be a very good thing if it could be done. 258. You are speaking as Auditor when giving evidence on oath ? —Yes. 259. You are not divested of your right to express an opinion ?—No. 260. Are you still of opinion that £1,000 either way is the only difference with regard to the accounts in the " B " list and the cover? —Yes. 261. If that is the case, what objection would you have to consider?— When it comes to a question of bargain, you naturally go into things more than when merely expressing an opinion. That is all I meant. 262. I suppose you admit that every account you lose or have lost since taking over the Colonial Bank has affected the value given by the Bank of New Zealand for good-will?— Yes. 263. Every account that is lost ?—Yes. 264. Have you lost many accounts ?—Well, I would not call it many in relation to the whole number. I could find out, no doubt, exactly how many there were. 265. You have lost some accounts ?—Yes. 266. And good accounts ? —Yes. 267. If it has been stated here that it was owing to the inquiries in connection with the Bank of New Zealand accounts, is that correct ?—I have seen letters from customers withdrawing their deposits, who stated that alarm had been caused by the setting-up of this Committee. 267 a. I am not alluding to the withdrawal of the deposits; I am alluding to clients of the Colonial Bank in respect of advance accounts ?—Some accounts have been lost. 268. Were some lost before the Committee was set up at all ?—Yes. 269. Were some lost owing to the pressure brought to bear by the bank ?—There was one account lost owing to inquiries being made as to the position of the debtor, which were considered necessary by the directors of the Bank of New Zealand because there was no security for the account. 270. Mr. Montgomery.] As an expert book-keeper, what, in your opinion, is the right way to keep turnips and growing crops ?—I have not enough knowledge of station accounts to render my opinion of much value ; but I think, if I had to keep station accounts, I would charge expenditure of that kind to the year in which it would be exhausted. For instance, if turnips were grown to be fed off in 1895, I think the cost should be charged to 1895. 271. You see the turnips would be grown, say, at the 31st March, but would not be fit for feeding off at the time. What would be the right way to treat them?— The right way would be to spread them over 1895-96.
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272. We will say that 100 acres of turnips were grown, and that the cost of ploughing and putting them in was 10s. an acre. How would you make those entries ?—I have not been accustomed to keep station-books, but I think a fair way would be to charge the cost to a suspense account, to be written off as the turnips were used. 273. And you would credit the suspense account for balance purposes with the value of the turnips?—l would charge the expenditure on the turnips to the suspense account, and then as the crop was utilised I should recredit the suspense account with the amount. 274. On the 31st March turnips are not fed off, but they are nearly ready for it. You would have to debit the suspense account with the cost—£so for 100 acres at 10s. an acre. Would you also credit the suspense account for the value of the turnips or not ?—lt would be an outstanding amount. There is no question of crediting anybody. The money would actually have been laid out, and you would have charged the amount to the suspense account. 275. I want to know how you get your credit in for balance purposes. How are you going to show you got value for your money, because it looks as if you simply paid the money ? Do you put the turnips in the Profit and Loss Account as an asset ? —I suppose the effect of it would be that in your balance-sheet you would have your Suspense Account, and on the other side there would be so much less cash or so much more overdraft at the bank to represent the money you had spent. 276. Can you show me how it has been done? —I am afraid I cannot. 277. Have you looked at the station accounts for 1896? —No. 278. Can you not tell me what has been done in the account for 1896 ?—I do not profess to be an expert in station accounts. I profess to know something about bank accounts, but I never had to audit station accounts, and am therefore diffident about expressing an opinion. 279. I will take the Awamate Estate. You see that turnips are put down there as a credit ?— Yes, it is included here as an asset. 280. Do you think that is right ? —I think so; for book-keeping purposes I think that is right. 281. In looking at this account, can you say how it has been arranged and on what system it is done in this balance-sheet ?—Well, they appear to have expended money on these turnips, and to have, I suppose, opened an account to which they have credited it. - 282. How much have they expended?—£36B Is. Bd. 283. Look at the profit and loss : Does it not show £126 os. 6d. as far as the turnips go?— There is a debit there. I suppose that is the proportion of the turnip-crop they suppose has been eaten off. 284. Eaten off at the 31st March ? Is it not the cost of putting them in ?—-I do not thing so. 285. Mr. Maslin.] In respect to the annual losses made in the working of the bank, you stated that, in carrying on as heretofore, there would be £40,000 or £50,000 lost in the business of the bank on ordinary account, and then you said it could be reduced to £20,000 or £30,000. Am I correct ? —Yes. 286. What data had you to go upon ?—lt is difficult to say ; there is no particular basis. It is more the result of experience and knowledge of the class of accounts with which I have had to deal. It is only an estimate; so Ido not profess to say that it is to be relied upon very much. 287. Do you think the estimate an excessive one?—l think it is a reasonable one. 288. How was it shown that for the last half-year only £3,000 arose on the losses ?—lt happened to be particularly small in that half-year. Sometimes your losses come in with a rush, and at other times they are very small. 289. It is not due to keeping bad accounts, and not making provision for them, is it ?—No. 290. You think you have made ample cover for doubtful debts ?—They were ascertained bad debts last year, and we have made provision for £50,000 for older accounts which we thought had not been sufficiently provided for up to that date. 291. As to the cause of the bank's troubles : Do you think the public-works policy had anything to do with bringing the bank into its position?—l do not think the public-works policy per se had anything to do with it. 292. Did that not put millions of money into the coffers of the bank?—l have been told that considerable sums had been placed in the hands of the bank, but it was before my time. 293. Would not the placing of large sums of money in the hands of the bank for which they would have to pay interest lead to somewhat reckless management ? —lt need not have done so. 294. As a matter of fact, do you think it did? —I think it is probable. 295. And large advances were made to customers to enable them to purchase land ?—That I do not know. That probably was so to some extent. I could not say of my own knowledge. It has been said, and it it stated so in the shareholders', committee's report, I think. There is no doubt that that was so to some extent. 296. What arrangement did the Bank of New Zealand make with the Colonial Bank for the purpose of getting customers transferred to the Bank of New Zealand ? Was there any arrangement made with the Colonial Bank to give notice to their customers that the business had been transferred, and that their accounts would be handed over to the Bank of New Zealand ?—I do not remember anything of the kind, but there may have been. We did not issue any circular about it, and the Colonial Bank people did. I think the circular was partly with a view of defining the position. They stated what the customer's account was. 297. You think the customers did get notice that the balance of their accounts was taken over by the Bank of New Zealand ?—Yes. 298. Hon. Mr. J. McKenzie.] I have received a letter from a man, and will read an extract from it: "We cannot tell what accounts, nor with what cover, were, on the dictum of this person, placed on the ' B ' list, but each customer who was has been able to tell by the attitude of the branch manager towards him what list he is on. He is continually pestered to reduce ;he is not told
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exactly what reductions or alterations are wanted. If he complies with one suggestion, he has no sooner done so than another is made ; he is refused all further accommodation, no matter what the security, until at last he is goaded, if he is well enough off, into leaving the bank —into getting the accommodation he wants elsewhere, leaving the bank with anger at the Government that permits its (the bank's) affairs to be conducted as they are." Will you find out if there is any truth in that?—lt would simplify it very much if we knew where it applied. 299. If I were to give you the name of the writer of this it would be placed in the hands of the bank, and it is my opinion that they might make bad use of it ?—I do not want that. I could ask for information about it. 300. You would get a circular sent to the managers asking them if that is their attitude ?— Yes; I will inquire about that. 301. Hon. Mr. Seddon.] Could you not answer this yourself? If a man has an account and brings it down, and then he wants further accommodation, would that be refused to him?— Not necessarily. You see when these "B" accounts were settled there was a limit fixed. The liquidators of the Colonial Bank said this : " This is to be the limit of assistance to this customer." We will suppose a customer wished to go beyond this limit. The bank would say to the liquidators, " Will you agree with that " ? And if the liquidators said " No," it would end the matter, and if they said " Yes," the thing would be done, if otherwise satisfactory. 302. Suppose the limit is £20,000, and a customer brings it down to £15,000. Would you have to fly to the liquidators if you wanted to take that account ? You could work it within these two margins ; but if this has been going on, is it not against the interests and policy of the bank ? —lf the limits have not been exceeded, and nothing has happened to make the account unsafe, it could be done. 303. I may say that I have had communications on the same lines as this, and from men of good position, and there is this feeling, that there is a rivalry and bitterness in some respects as between the managers of the two banks. For instance, say there were branches of the Colonial Bank and the Bank of New Zealand in a small township, and that there had been a desire to increase the custom and get trade. Now that the Colonial Bank is closed, and the Colonial Bank's customers are compelled to go to the Bank of New Zealand, the managers of the Bank of New Zealand are somewhat hostile to them, and do not treat them as they treat the regular customers of the Bank of New Zealand. That has come under my notice, and I want that to be inquired into ? —Yes. 304. If that state of things exists, do you not think it would be advisable to send a circular to the managers, instructing them to make no distinction, but to treat all fairly ?—lf any suspicion has arisen that anything of the kind is happening, I certainly think a circular should be sent. 305. There is just one question, I think, it would be advisable to get your evidence upon. How many years banking experience have you had ?—About thirty-four. 306. You have during that time, in different capacities in the bank, had balance-sheets submitted to you from corporations and individuals ?—Yes. , 307. Mr. Watson has stated that if a balance-sheet did not disclose bills under discount as liabilities he would not consider that a fraudulent balance-sheet, falsification of accounts, or dishonest.. Do you concur in his views on that subject ? —Yes. I may say that in my experience it has been the custom in a very large mojority of cases not to put in the bills discounted amongst the liabilities. I see a great many balance-sheets of different persons and different companies, and know that it is not the custom among many. Some companies do and some companies do not. 308. You yourself know some of the best companies in the colony who are not in the habit of putting their bills under discount down as liabilities ? —I do not know about the best companies. It would be difficult to say whether the omission to show bills under discount was because there were none, or simply because it was not thought desirable to put them in if there were any; but, speaking in a general way, the balance-sheets of customers of the bank that have come under my notice more often than not leave out all reference to bills discounted. 309. Mr. G. Hutchison.] Do you think this case is one which you consider improper : The sum placed among the assets of a company is arrived at by deducting from an undisclosed amount of bills receivable the undisclosed amount of bills under discount ? That would amount, would it not, to showing as bills receivable in hand the bills that had not been discounted ? lam reading an extract now ? —Well, if that was so, I should not think that was an unusual practice—at all events, from my own knowledge of the way in which companies' balance-sheets are made up. I put it in this way : From what you have read, the impression on my mind is that the bills under discount are left out on the one side, and the same bills under the head of receivable on the other, and that there are again a certain amount of bills on hand that are not discounted, and are shown as bills receivable. 310. I will read it again : "In their balance-sheet the sum of £6,830, appearing among the assets of the association, was arrived at by deducting from an undisclosed amount of bills receivable an undisclosed amount of bills under discount." Would that be a legitimate or illegitimate process? —The effect would be just as I have stated. 311. Bills receivable are assets, of course? —Yes. 312. And bills discounted?— They are only a contingent liability. The company who discounts a bill has parted with the right to demand payment from the acceptor. That rests with the people who have discounted the bill. In other balance-sheets I have seen, bills discounted are shown, not as a liability, but as a contingent liability for that reason, that the discounting company has practically parted with the property in those bills. 313. Should not a balance-sheet show the bills receivable on one side and bills payable on the other, and bills under discount—as you say —as a contingent liability ?—They should show bills receivable, if not parted with, as an asset. If they had discounted other bills they should show
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the contingent liability, and on the other side they should show that particular part of bills receivable as a contingent asset—the same amounts on the two sides of the account. That is the way I should do it if I were doing it. Lots of people do not do that. 314. Hon. Mr. Seddon.] But even in such a case as that put by Mr. Hutchison, you would not consider it a falsification of accounts or dishonest ?—I should be sorry to call it the one or the other. 315. It is a common practice?— Quite a common practice, in my opinion.
Thursday, 17th September, 1896. Walter George Foster, Colonial Manager of the Bank of New Zealand Estates Company, sworn and examined. Hon. Mr. Seddon.] What are you Mr. Foster ?—lt is very difficult to say. I have one or two posts, which will you take first? lam general manager of the Assets Realisation Board. 2. Do you hold any other positions?— Colonial manager of the Estates Company. 3. And adviser generally of the Bank of New Zealand with respect to estates?— Yes. 4. When were you first appointed Colonial manager of the Estates Company? —The 18th March, I think it was, 1895. 5. What were you doing prior to that ?—I was manager of the Loan and Mercantile Agency Company, Wellington. 6. You have had considerable experience in stock and station properties ?—Ever since 1862. 7. Who was colonial manager of the Estates Company prior to your being appointed?— Mr. J. C. Hanna. 8. On being appointed it goes without saying, I presume, that you. went carefully into the position of the estates and properties you were called upon to manage ?—Yes, that is so. 9. What did you find, taking it first of all from the financial point of view ? —Well, I found that the properties were not being worked to the best pecuniary advantage. 10. Was the Estates Company in a position to pay its way and meet its engagements?— Relying upon the bank only it was, but from its own resources certainly not. 11. Was it able to pay anything on its shares? —No. 12. How long had it been in that position ? —I should say from the time the Estates Company was formed. 13. From its formation to the time you took charge in March, 1895, it had not been in a position to pay anything to the Bank of New Zealand ?—I should not say that. It was not in a position to meet its engagements fully. 14. From the time of its formation to the time you took charge, can you say what the deficiencies, if any, would be per annum ? Have you gone into that ? —I do not think I should be able to give any reliable information on that point, because I should naturally only have the book entries to rely upon. 15. Do you think the book entries are reliable enough to be taken as a guide upon which to form a conclusion ? —I should not base any valuation of my own on those figures. 16. In other words, the valuations you have made since you have been colonial manager do not agree with the valuations found when you took office ?—I do not think there would be any comparison, because the valuations made now would not compare with the valuations of a few years ago when the markets were different. 17. Were the properties of higher or lower value? Has the real value increased or decreased since you took office ?—lt has slightly increased with the course of markets in relation to produce. 18. Although there has been an increase of value since you took office as compared with what it was before, what is the value of the Estates Company's properties as compared with that time and this ?—I have not made any valuations since, but I can give a general opinion from the fact that produce is worth more and the cheapening of money has an upward effect on the value of land. 19. Notwithstanding the increase of value on stock and real estate, taking the book-vaiue and the real value, what is the difference ?—I could not say from memory, but I do not think my valuation would need to be reduced, but possibly enhanced. 20. What was that ?—My total valuation was £1,839,024. 21. You think if anything that it had been overestimated?—l should not think that an overestimate on my part; I should not need to reduce it. The valuation I made last year was based on the carrying-capacity of all the properties I had been able, up to that time, to inspect. Some I had not seen, and on these perhaps the carrying-capacity of my estimate was somewhat high, but I think that was compensated, for by enhancement of the others last year. 22. From the experience yon have had you think the estimate was pretty near the mark?— ;Yes, I think my estimate would be. 23. Who have been the attorneys since you have been in office? —Mr. Johnston (chairman), Mr. Booth, and Mr. Watson. 24. Have you visited the estates yourself, or do you rely upon the managers in charge ?—I visited them myself. 25. It is from that visit and inspection you have sworn that, in your opinion, they were not well managed at the time you took charge. They had not been well managed?—l hardly meant to convey the impression that they had not been well managed, but I say without hesitation that they could be made to pay very much better, and that I am able to prove by last year's figures. 26. Have any of the attorneys visited the estates?— Yes. 27. Who?— Mr. Johnston and Mr. Booth. *36—1, 6.
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28. As a result of their visits have they confirmed your estimates ?—I do not know that they have said anything about it. Ido not suppose 'they would consider their visits were made with a view to valuation. 29. We will say as to the question of management ? —I do not think they would consider themselves competent to judge. 30. Have your recommendations been approved by them ?—Entirely. 31. Whatever their object may have been, they have acquiesced in what you have submitted? —Yes. 32. The assets of the Estates Company were sold to the Assets Realisation Board, were they not?— Yes. 33. Not the whole of them; but some were sold?— The estates were sold. 34. The trading concerns were left to the Estates Company ?—Exactly. 35. When were the estates handed over to the Realisation Board ? —On the 31st March of this year. 36. Prior to that time, and after the passing of the Act, had there been an attempt made to get them passed over at an earlier date? —Yes. 37. Were difficulties met with that prevented that being done?— Yes. 38. Will you state the nature of the difficulties?— The main difficulty was to bring the accounts up to the point necessary to enable the Estates Company to transfer the properties to the Assets Board simultaneously with, the payment. 39. Was the balance-sheet prepared by the Ist January ?—Yes, as at 30th September. I think lam right in saying also as at the 31st December, and again as on the Ist March. There were several balance-sheets prepared, each one of which we could avail ourselves of. 40. With these balance-sheets for the year before you, what was the Profit and Loss Account of the estates for 1895-96 ? —£58,000 on stations, I think, was the net surplus of revenue over expenditure. I speak subject to correction and from memory ; plus £4,094, from sundry properties. 41. What was the earning-power required to be to meet the interest on debentures ; and, on the other hand, the payment to the Bank of New Zealand on account of the debentures? Take the Profit and Loss Account, there was £58,000 to the good last year?— Yes. 42. What would the Assets Board be required to earn to pay their way?—£9s,ooo would be the interest on the debentures. 43. Then there would be the deficit between £58,000 and £95,000 ?—Yes. 44. Are you in a position to prepare a balance-sheet for submission to Parliament showing the working of the estates during the year ?—You have the balance-sheet handed in already up to the 31st March. 45. There would be no objection to laying that balance-sheet on the table of the House ?—No, I think not. I see no reason why it should not be. 46. You are aware that the law says the Realisation Board must lay its balance-sheets on the table ?—Yes. 47. As the Realisation Board was not in charge they have no balance-sheet?— But, notwithstanding, I prepared a balance-sheet which shows the business for the year. 48. Now, take the trading concerns, of which you are colonial manager : What has been the business in respect to them ? Has it paid ?—Yes ; very well, indeed. 49. What interest has it paid upon book-value ?—Well, I could not-say without reference. 50. Can you give the total ?—I could not say without reference, but I fancy it is about 9or 10 per cent, on latest estimate. 51. Do you think there is a likelihood of these trading concerns continuing to pay? —Yes, I think so, bar ill-luck and bad markets. 52. Under ordinary circumstances you think there would be no loss or deficiency in respect of interest, at all events, upon the capital-value of the trading concerns?— Yes. I should explain that the trading concerns now are not grouped in the same way as they were when before the House last year. For instance, some so-called trading concerns were shares in other companies, and I have taken them out of that group. lam speaking of what are companies. The others are shares, and there has, I believe, been ample provision made for them. 53. Have you endeavoured to realise the trading concerns? —Yes. 54. Are you still doing so? —Still doing so. 55. Have you disposed of some ? —Yes, to a considerable amount—about £80,000. 56. Have they sold very well, and near book-value ?—ln excess of expectation with regard to the chief one. 57. What has been received on account of the shares ? Has interest been paid ?—Not in all cases, but provision was made for such items as these. 58. Do you get from each station a balance-sheet from the manager each year ?—No; we get monthly copies of the accounts that are kept there. For instance, wages-sheet, and expenditure, and stock returns. 59. The stock returns, I presume, show the value of the sheep, cattle, horses, and stock on each station ?—The annual returns do. 60. Did that system of having these returns obtain prior to your assuming charge ?—Yes ; but in a much more voluminous form than now. 61. Did they give much more information prior to your taking charge than now?—l think I get more information of the estates now. The accounts and returns are simpler. You do not get fogged, at any rate. 62. Would any one taking up the returns prior to your assuming charge be able to obtain the the value of the sheep on the stations ?—They would have the managers returns before them, which specify the value of the sheep, but they were not always so entered in the books.
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63. You would have other values ?—There were other figures in the books. 64. There was a difference between the managers' returns, which, I presume, gave the marketvalue, and those figures in the books ?—I assume that that question has reference to the writing-down and w-riting-up of sheep. If that is so, I have the particulars which I think you asked Mr. Butt for. In relation to the valuation of stock I have here a copy of a minute from the minute-book in which the attorneys decided upon fixing a standard-value. The memorandum which was put before the attorneys was as follows : " Valuation of live-stock on stations : At present sheep, cattle, horses, and pigs are valued and taken into our balance-sheet at current market rates as fixed by our various managers at the close of each year—3lst March. It is suggested that, in order to bring out the actual results of the year's operations, we should adopt a system of fixed values— i.e., put a value on live-stock under all headings, such value not to change with the markets. It will remain fixed whether prices go up or down, except, perhaps, in cattle (which are higher). Prices ruling at 31st March, 1893, would pretty well represent the average for the past five years : — North Island. Sheep. Stud Sheep. Cattle. s. d. £ s. d. £ s. d. " Prices at March, 1894 ... ...89 225 3 15 4 "Average for four years ending March, 1893 90 247 2 19 7" 65. Hon. Mr. J. McKenzie.] Whose memorandum was that ? —Mr. Hanna's, who was colonial manager before my time. The date is sth May, 1894 : " Resolution : The attorneys resolved that an average of four years seems reasonable, and be taken." I said the figures were not always taken according to standard-values, and it has relation to this fixing of standard-value. The South Island average was for some reason altered. The average of sheep came out at 95., but the standard-value was fixed at 10s. The attorneys referred to were not Messrs. Johnston, Booth, and Watson, but I could ascertain the names later on. The circular issued to the managers in connection with this resolution was dated July, 1894, as follows : " Sheep valuations : It was decided here to adopt the average valuation at March, 1894, for flock sheep. It is desirable, however, to have the sheep valued under their respective classes. The standard-valuations for next year will therefore be These valuations are to remain fixed, unless you are advised to the contrary." These were -the instructions to the station-managers, and the head office fixed the values. A letter was written to the superintendent of the North Island, and this is a copy of it: "Enclosed herein I hand you press-copies of letters written to the various estates in your circle regarding the valuation of sheep, &c. You will readily understand that the heavy drop in value of sheep this year would, if adopted, mean our making a provision for a loss that had not actually taken place. It was therefore decided that the valuations of sheep were to remain at a fixed figure from year to year, unless subsequently advised to the contrary. Any profit or loss in sheep cannot be shown until the sheep are sold, and it is considered unfair to make a loss by reducing the values of sheep still on hand. (Side note : The values of the different classes remain fixed, whether the prices go up or down. This is what you advocated some time ago.)" That was a letter to Mr. Lyons. This is a a copy of a letter to Mr. A. M. Clark, who was superintendent of the South Island: " You will readily understand that the heavy drop in value of sheep this year would, if adopted, mean our making provision for a loss that had not actually taken place. It was therefore arranged that the valuations of sheep were to remain at a fixed figure from year to year, unless subsequently advised to the contrary. Any profit or loss in sheep cannot be shown until the sheep are sold, and it is considered undesirable to make a loss by reducing the values of sheep still on hand. It was accordingly decided here that the average valuations at the 31st March, 1893 (for the four years ending), at each estate should be adopted as a standard-value." That is dated 19th July, 1894. It is in regard to southern values that they did not adhere to the value of 9s. They wrote them up a shilling. 66. Hon. Mr. Seddon.] Does that include the whole of the sheep—merino as well ?—Everything. On my taking charge I was on one of the stations, and in going over the valuations with the manager this came under my notice—that they were consenting to valuations immensely over current rates, and I told them that in doing this it amounted to what was absolute misrepresentation, and I subsequently wrote to them as follows : " Referring to our E.C.E. Circular No. 5/10 of 28th February last, and two returns sent in thereunder. The disparity between the values shown therein and actual current rates requires a revaluation, which we shall be glad to have from you at the earliest possible moment. This revaluation we wish you to base on full market prices prevailing, of course taking into consideration the extra value that breeding and young stock have to the property on which they are grazing." That was the circular in which I recalled the previous instructions, and on which my writing-down was based. 67. What did you find the difference the attorneys had fixed as the standard-value and what you believed was the real value?— Some £94,063. 68. Do you think it is the usual practice to take, say four years, and upon that basis to fix a standard in respect to stock and stations ?—Where you are not distributing dividends, I think the proper course is to value every year, in order to know what your position is. If you are distributing profits, then I think it would be improper to take for the purpose of division any increased value on stock you are not selling. 69. Would you deem it desirable to make a note showing how the difference in value affected the position in the Profit and Loss Account ? Supposing you were making a value for the year, and the value of the stock had gone up, you would not declare a dividend on the increased value, but you would make a note ? —Yes; I should not distribute it. 70. In other words, you would show how far the increased value was due to the increased value of stock ? —Exactly. As a matter of fact, on the 31st March this year our Profit and Loss Account is reduced £3,000 odd, owing to a slightly lower valuation of our sheep this year. I thought it best not to swell our profits, as I expected our balance-sheet would be well overhauled. Otherwise, I should have been able to show between £3,000 and £4,000 more profit.
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71. What is the value of the sheep per head? —All over, the average value is 7s. Id., as compared with 7s. 3d. last year. 72. And compared with the standard value fixed by the attorneys?— Only about 2s. 6d. per head lower. 73. Then, there has been a fictitious value of 2s. 6d. per head ? —Yes. Stock has never represented the value shown in the books the last two years. 74. You wrote down the £94,000 to how much?—l wrote it down by £94,000? I wrote it down to £147,984. I should like to explain what appears a discrepancy : These valuations are on sheep only, not on cattle. 75. In respect of cattle, horses, and pigs, was there not a writing-down?—No; I was not able to pick that so well to pieces, and it is not an important item. 76. You only wrote down the sheep?— Yes, as the only important item. 77. What occurred after you had done this ? —I was not authorised to write them down, and in the discussion as to the balance-sheet to be framed later on the attorneys only authorised me to write off such accounts as were not represented by assets. 78. Did you inform the attorneys that you had written down these sheep ? —We had a good deal of discussion as to the principle, and in that the chairman did not support me. 79. Did you notify them of your intention to write them down, or that you had written them down ? —Not as to writing them down. As they had decided that only accounts not represented by assets were to be reduced, I had to restore the entry. 80. Were you directed to restore the entry ? —They did not know that it was written down, so could not direct me to restore it. 81. Have you got the minute you refer to? —It was not a minute; it was a mere general instruction as to the manner in which the balance-sheet was to be made up. It was for my guidance, but not a written instruction. 82. Summed up, that would mean that you were not to put in the balance-sheet any account not represented by assets ?—Yes. For instance, there were accounts such as the turniping account. Well, the turnips were eaten off years ago and that was written off. 83. It had been the practice to charge turnips to Capital Account ?—I can hardly say what was the origin of that entry. It was a good time back. It had been in the books several years, and there was nothing to represent it, and the attorney said it was to be written out, and it accordingly was. 84. Are you entering turnips under the head of " Permanent improvements " ?—We are entering them to mutton. 85. You have discarded this turniping of the past?— Yes; turnips are ultimately charged to sheep, as a matter of fact. 86. Then, in preparing the adjustment account, if an item has been omitted under the head "Permanent improvements for growing turnips," you would consider that to be an improper omission ? —Most certainly. I cannot conceive that that has ever been. It has never appeared in our books that lam aware of. Do you refer to that £40,000 in the adjustment ? 87. Yes? —The turnips appeared there as charged against stations, but it stood to the debit of the Station Account in the bank. It was in no way looked upon as an improvement. The cost would have been discharged in this way : that the proceeds of the sales of sheep would have gone to credit of the account in the bank, and so discharged the cost of putting in the turnips. 88. On investigation Messrs. Kember and Smith say, "A portion of the result arrived at— namely, £42,492 ss. Id.—is composed of such items as growing turnips, sown grass-seed, used implements, and doubtful improvements " ?—I do not know about doubtful improvements, but turnips are distinctly a general charge for working, and has always been so except in regard to that one particular account that I spoke of. 89. Would you distinguish as between assets and permanent improvements?— Certainly ; but I look upon a permanent improvement as an asset. 90. Turniping you do not look upon as a permanent improvement ?—No ; we get that back in mutton an wool. 91. Then you have entirely altered the system of accounts as regards turniping ? —Entirely. 92. You remember what took place in respect to last year ; there was an inquiry, and you appeared and gave evidence at that inquiry ?—Yes. 93. Was anything brought out before the Committee in respect of this £42,000? — Not that I am aware of. 94. Were you yourself aware of its existence at that time ?—Yes ; I was aware of the existence of the bank overdraft, but the accounts that led up to the balance-sheet of 1895 I was not in any way responsible for. There was an understanding when I took office that I was not to be called upon to prepare that balance-sheet, or to be in any way responsible for it. 95. You were to have one of the old-fashioned balance-sheets ?—Yes ; and the system of bookkeeping was not to my mind satisfactory, because it left out this £42,000 odd. The reason assigned by the accountant was that he considered the expenditure there was represented by an asset which had not been taken into account in the head office books, so that one balanced the other. It is somewhat on a par with the bill business. 96. What did the assets consist of in the expenditure here ?—The balance of the working-ex-pense at that year, which was carried forward to the following year. 97. It was down as an asset? —No ; but it was represented by assets that were paid for—grassseed, fencing, draining, and anything of that kind—by the manager. 98. There were several balance-sheets prepared for the Committee last year, were there not ?—Yes.
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99. I suppose at that time you would get a balance-sheet made out just as you wanted it— to order? —I had nothing to do with the accounts presented to the Committee last year. 100. You have seen a number of them, have you not ?—Yes. 101. I presume you have a full knowledge of the situation? What term would you apply to the balance-sheet presented to the Committee last year ? Did it put the true position of affairs at that time ?—lt was a correct statement of our accounts as shown by the books. 102. Did they show a correct position of affairs ?—As from our books, yes. 103. Leave out the books. Did they show the position? —I have never gone back over the old history of the thing. It has taken all my time to work the present concern, and I should not like to express an opinion. 104. You were there in March, 1895 ?—Yes. 105. That was some months before the balance-sheet was prepared ?—Yes. 106. Well, from what you knew at that time, would you say the balance-sheet disclosed a true position of affairs? —As taken from our books, certainly. 107. As they existed ? —Only in the matter of the valuations being in excess of what I considered the true value. 108. Then, if you had valued the sheep and had found they were overvalued by over £94,000, and the balance-sheet submitted to the Committee showed the sheep with that £94,000 in excess, that did not show the correct position ?—No, not in my opinion ; but that valuation of mine is open to a deal of argument. 109. But there have been realisations of sheep? —At the 31st March, 1895, those valuations on paper could not have been sustained. 110. There have been realisations taking place on sheep?— Yes. 111. Have your values been realised? Which have been correct, the values in the book or your values ?—Mine are very much nearer the mark, but my valuations were at the 31st March, and the subsequent sales were at dates when the value from growth of wool was higher, and so on. 112. You were in a position to know the value of sheep and stock at the 31st March?—l thought I did. - 113. And it was from that fact that you valued and wrote them down?— Yes. 114. Can you tell how many balance-sheets were prepared for the Committee last year, and whether they agreed ?—The balance-sheet prepared for the Committee last year agreed with the balance-sheet we had. It was our balance-sheet —a copy of it. But all the statements submitted to the Committee last year were prepared by the bank, and not by the Estates Company at all. There was some little friction subsequent to that between the bank and myself, because they tried to saddle a few mistakes on to me, and I declined responsibility. They came to my officers for information without reference to me. This suited me to some extent, but when they tried to put the responsibility on me \1 disclaimed it in respect to those statements. 115. The persons responsible for them are the Bank of New Zealand authorities ?—Yes. 116. You have seen Messrs. Kember and Smith's report?— Yes. 117. Do you know anything in respect of the £54,507 for which there is no asset against it ?— I know it appears in a separate account of the Estates Company's book as at the 15th August, 1890, when the Estates Company was formed, but I know nothing as to the origin of it or the reason for it. 118. At the time you took charge was that in the books simply as a separate item ?—As a separate item. 119. Does it appear in the books now as a separate item ? —lt appeared in the books of the Estates Company in the first instance, and on the 31st March, 1895. Subsequent to the legislation we opened the Assets Realisation Board's books, and in them this amount was intended to have been kept as before, as a separate item. Subsequently, without my knowledge or authority, the Auditor was asked what should be done with this, and he suggested that if an entry was passed distributing it over the whole of the estates pro ratd he would not consider it an improper entry. I knew nothing about it until my attention was drawn to it in the report of Messrs. Kember and Smith. 120. At what date did this distribution of £54,000 as against the estates take place ?—About September or October last year. 121. About the time of the banking legislation?—lt was after that. 122. Do you think that was fair to the stations ?—I should not have sanctioned its distribution in that way. I should have kept it in the way it was started, because I should have considered its distribution would show larger deficiencies on realisation of stations than we had reason to expect. It was never brought under the notice of the attorneys or sanctioned. 123. Who was the auditor who did this ? —Mr. Butt. I would like to make it clear that he did not instruct this to be done; but the ledger-keeper understood him as having instructed that it was a proper entry. 124. And that if done he would pass it ? —As a proper entry. 125. You do not think it is a proper entry ?—Well, it is not one I would approve. I prefer it the other way. 126. Was any of this entry against the Auckland Agricultural Company—£l6,ooo?—l remember there was £16,000. I ignored it, because it had not been authorised by the attorneys. I showed balance-sheets showing both the positions, and you have them as exhibits. 127. You wrote down the sheep by £94,000, and when subsequently you wrote them up again you wrote them back by only £83,380 ?—Yes. 128. Will you explain to the Committee the difference ?—lt was by mistake that the original of £94,000 was not restored. My instructions were to reverse the entries, and that would convey, of course, that the full amount was to be reversed, but by mistake only £83,000 was reversed, and* the
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items comprising the shortage were the Auckland Agricultural Company's stock, which was short written back £6,500; the Retreat Station, £20; and Awatere, £4,500. The writing-back of these amounts was altogether overlooked. It was a mistake that they were not written back. 129. Your instructions were to reverse the entry ?—Yes, to reverse the entry. 130. There is an item of £6,758; was that disclosed to the Government last session?— That was a call subsequent to March, 1895, on the Thames Valley Land Company. We had to pay that, of course. 131. When was that call made ?—I think it was about the time of the banking legislation, or after. 132. Was that placed before the Banking Committee last year?— The call had not been made at the time. If it had been made it would have appeared, because it would have been charged against the Thames Valley Land Company. I will ascertain. 133. Yes, and also ascertain whether it was before or after the report of the Banking Committee. £34,476 19s. 4d., sales of property, I presume that is ? —Yes, chiefly. 134. That was not included in the first adjustment made by the auditor, and for that he said you are responsible ?—There were sales made since the 31st March, 1895, and the statements submitted to the House were the basis of the balance-sheet of 1895. 135. But if the assets had been realised which existed on the 31st March, 1895, you would expect what they brought to appear on the other side as incomings ?—I proposed to carry all the proceeds of sales to a realisation account, in order practically to ear-mark the money. There were no definite instructions in the regulations issued to the Board, but I considered that was the best way to treat proceeds of sales of property—viz., as cash received to a special account. 136. And to what purpose would you apply that account —to the redemption of the debentures ?—To the redemption of debentures so long as we did not need to finance otherwise. If we got the full £2,810,000 debentures and the £68,000 cash from the Assets Realisation Board I consider we should not need bank assistance. Proceeds would stand in special account in the bank, and would go into adjustment in current account. 137. That was the reason you informed the Government Auditor that that should not appear in the incomings?— Yes ; that was the reason. 138. By section 24 of the Act your idea was that you could use that for financing?— The Realisation Board can. 139. That is for finance generally ?—Yes. 140. The words used in the Act are, " for payment of interest only " ? —Well, if you pay interest with that you go short in something else, and you must finance otherwise. 141. Now, in respect to the £90,000 for the produce shipped to England : During the year there had been a certain amount of produce shipped ?—Yes. 142. There are no liabilities on account of that ?—No ; it was a free consignment. 143. It was in London at the time the adjustment took place, and there was nothing against it ? —Yes ; and there is nothing against it yet. 144. All the working-expenses and charges were brought to book as outgoings in the adjustment, but this particular asset was not taken into consideration ?—Yes, it was taken into consideration when adjusting debenture amount, but was intended to be used in payment of debenture interest. It simply means this : that if you have a larger amount of debentures you have a smaller amount of cash settlement, and vice versa. But the special object I wished to attain in the matter was to get a larger amount of debentures at 3-J- per cent., otherwise we must have created a bank overdraft for which we should have been charged 5 per cent., and a saving of \\ per cent, on such overdraft is a great consideration, and to me the adjustment seemed perfectly satisfactory. I recommended it to Mr. Butt, and he did not seem to have any objection. 145. Well, Parliament said there were only to be £2,700,000 of debentures guaranteed by the colony, and this was £2,800,000 ?—Mr. Cooper draws my attention to clause 19 of the Act, which says it shall be so much, subject to the adjustment. 146. But in the adjustment you take incomings and outgoings ?—Yes ; but we had advice as to what were to be looked upon as incomings, and our instructions were that we were only to take to account actual receipts. That is the way we understood it. But I think, had the question been put directly to our solicitor as to this special £90,000, my impression is that in all probability he would have said it should, be taken in the adjustment as you mention, but in our anxiety to benefit the institution we perhaps went too far. 147. I suppose in a large transaction it is not impossible to get accommodation at three and a half?—l do not know that you have any security to offer. 148. I suppose you could have got the money immediately to redeem the debentures, could you not?—lt was a verbal understanding I had with the bank that if we did not require so large an amount in the debentures they would allow us to redeem any quantity we wished without notice. There was no necessity why the Estates Company should get £2,810,000 in debentures, and, if it was so wished, the bank would probably be glad to have cash instead. 149. In making arrangements for these debentures, did you not think it would be advisable to have that condition ?—The bank would, I believe, be very pleased to meet the Board in that. The bank would rather have cash than the debentures. 150. Are not three-and-a-half debentures worth more than cash itself to the bank?— That might be the case if, in relation to the Assets Board, there should be less debentures and more overdrafts, because they would charge us 5 per cent, on the latter. 151. Are you aware that £81,649 was paid for a half interest in the Matamata Estate?— Yes. 152. Did the half interest represent that value at the time the transaction took place ?—Not quite. My valuation of the land was £120,000, and with stock would bring it up to £154,000,
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153. That would show a difference of about £11,000 for the half. You make it out £150,000, as against £172,000?— Yes. 154. Are there any special circumstances in connection with this transaction?— The smash-up of the Loan and Mercantile Company. 155. It was then between the Loana nd Mercantile Company and the bank ?—Yes ; they were partners in it originally —joint owners. 156. And to square accounts the bank took this ?—Yes. 157. Under certain circumstances there is a preference given to certain creditors, and in this case a preference was given to the Bank of New Zealand?—l do not know what the arrangement was, but believe the bank were mortgagees of the Loan Company's moiety. 158. And that from that standpoint you think the transaction was defensible?—l think there is no doubt about that. 159. Take the Thames Valley Company : The Realisation Board has an interest in that company ? —Yes, as shareholders. 160. What is the interest it holds ?— We have, I think, about 25,000 out of 40,000 £10 shares. 161. Last year you had to pay a call of £6,000 odd ?—Yes. 162. What have you received—have you received anything?—We have received nothing yet. 163. How many years has that been going on?—I could not tell you. I have no knowledge of that. I can perhaps find that out. It has been on for over ten years, Mr. Cooper tells me. I will find out the date of the incorporation of the company. 164. And there have been no returns ?—No returns. 165. What is the amount spent on these shares up to the present time?—£l37,l42. 166. And these 25,000 £10 shares now stand at about £5 10s. ?—Yes. 167. What is their market value? —I have no knowledge; but we were asked some time since if we would accept £2 for them, but I do not know that business would have resulted. 168. In your opinion, they are property well worth getting rid of ?—Yes ; I should take the £2 if I could get it. 169. Has the Realisation Board now any control in respect of the company ?—None whatever. We are only shareholders, with, of course, a large voting-power. 170. You have a voting-power? —Yes, as shareholders. 171. Are you sure there is not a special limit in respect of this ? —I am not sure. I shall have to look that up. 172. How many shares are there in the Thames Valley Company altogether?—l have no record of that. I can supply you with the information. 173. Find out what tbe 25,000 shares are in proportion to the total number of shares ?—Yes; I think, from memory, it is about half, but I am not sure. 174. Have you or the Realisation Board exercised any functions in connection with these shares ?—When in Waikato I declined to go over the property unless we had some control. 175. Have you been consulted in any way with respect to the management of the property ?— I declined to have anything to do with it, or take any part in it, unless I had control. I did not want responsibility unless I had control. 176. Who is conducting the business in the colony in respect to this property ? —I think Mr. James Hume, manager of the bank at Hamilton. 177. Do you think it would be advisable, in the interests of the colony, that Parliament should give the Realisation Board power and control in respect of such a large amount as £137,000 in respect of this estate ?—I would rather not have any more to look after, if you mean that the Assets Board should take it over. 178. You stand to lose £137,000?— Yes. 179. And it seems there is a call of £6,000 which was not taken into consideration when the Committee sat last year. That is £6,000 to the bad on the year's transaction which was not taken into account; and you are not sure you will not have to pay another call this year ?—I could hardly say with the knowledge I have of it. As far as I can say, the management may be as good as it could be made under any circumstances. 180. How do you account for the call being made?—lt would be for further improvements, I assume. 181. What is the amount of the shares? —They are £10 shares. 182. Are they paid up?— They are nearly paid up. 183. What is the call for if they are paid up?— They are nearly paid up, I think. 184. But if they have cost you £137,000 and there are only 40,000 shares, they must be more than £1 shares? —I would rather look the matter up and refresh my memory in regard to it. 185. We wanted to find out what the liability is. If they are £5 shares it makes all the difference ?—Yes ; I will look that up. 186. The Estates Company owned 25,128 ; those held outside were 17,825 : total shares of the company, 42,953. According to that no call could have been made without your consent ? —Of course. The Estates Company was represented on the Board by one of the London directors. 187. Will you look to see if the Realisation Board has appointed them ?—I do not think the Assets Board has any power to appoint. As a matter of fact, these shares are still vested in the Estates Company until paid for. It is scarcely a sale and purchase until you have paid for what you get. 188. 1 think they are vested? —They may be in that way. There has been no transfer. A certificate is necessary under the Act.
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189. That certificate has been issued, has it not? —No. The amount of the purchase has not yet been adjusted. The Thames Valley shares would be on that company's register in the name of the Estates Company. 190. There is the Waikato Coal Company's property. That is a separate property away from the Thames Valley Land Company? —Yes. 191. In respect of the Thames Valley Company you stand to lose £137,000? —Yes. 192. Was that taken, into consideration at the time of the valuation given by you ? —I did not value that at all. 193. You put down the book-value—£l37,ooo?—Yes. 194. According to that, you made that a total loss ?—No, I did not deal with the value of that at all. I had never seen it, and I represented that I had not seen it. 195. Still, if you say it was put down at nil, or charged on one side as £137,000, it must either be a loss of £2 a share or the reverse? —I did not value it at nil. It was after provided for at £50,256, as latest valuation. 196. Then, have you the £2 per share ?—We hold 25,000 shares. 197. That would just about cover it?— Yes. Of course, to that £50,000 would have to be added the call we have paid since. 198. There was not an estimated deficiency after providing for debentures ?—Of course, the Thames Valley property was taken for the Assets Board at what it appears in the books of the Estates Company ; but the bank has made provision for deficiencies on these properties. 199. Outside the £2,700,000 this would be, of course?— Yes. 200. This was set down at £137,000?— Yes. 201. Fifty thousand pounds was given as its value, but it appeared in the transaction as £137,000?— Yes. 202. There is estimated to be a deficiency of £87,000 in addition to what was covered by the £50,000. Whatever losses there were would be included in that £87,000? —Yes. 203. That is without reckoning that call that was made?— Yes; the call being made would not reduce the estimated loss. It would be taken into account, and would not be considered as an additional loss. 204. What companies have you done your business with ? You freeze your beef and mutton and ship it Home ? —Not in all cases. 205. Are there cases in which you have done that ?—Yes. 206. What companies have done that business ?—ln the Wellington District the Wellington Meat Export Company, in Auckland the Auckland Freezing Company. 207. Are the terms arranged privately or by competition?— They are at a fixed rate. 208. Are the rates all the same with each company ? —Precisely the same. 209. Has there been any other transaction between the Meat Company and the Assets Board ? —No, except in regard to any rejected carcases, which they take over at a fixed price. 210. Who supplied the manures principally?— Principally Shirley, Clayton, and Co., Sydney. 211. In respect now to the methods adopted with regard to the managers at the different stations. Have they any discretion with regard to incurring liabilities ?—Only on the lines agreed upon with me. 212. And practically everything is directed from the centre here ? —Yes, after conference with the managers. 213. What is the outlook this year compared with the last year?—l anticipate equally good results, and I hope better, but, of course, we shall be at some disadvantage this year, from the fact that two or three of our best paying properties are sold. 214. What properties were sold ? —Arowhenua, Albury, and Carnarvon. 215. Did you come out much ahead last year with the Arowhenua property ?—Yes. On my valuation it made 10-38 per cent. The previous year there was a loss of £1,534. 216. And Albury?—On my valuation the profit was 12-34 per cent. Last year it was about 278 per cent, profit. 217. Who was the original owner of Albury? —I would rather not be pressed on that point. 218. Do you mean to say that if I ask a question as to whom an estate was originally bought from you cannot answer it ? — I am advised that the answers would be in the direction of giving private information such as might lead to inference of writings-off. 219. Then, whoever were the original owners of Albury, they have had writings-off ? —I have no knowledge of that. 220. What does the Albury property stand at ? What losses have been made in realising it, taking the book-value ?—There is about £16,000 deficiency. 221. Whoever was the original owner from whom it came to the bank, there was a loss to the Estates Company of £16,000 ?—I am not able to say so, because the figures I have as to book-cost are on Mr. Hean's valuation. Ido not know what it cost the bank. 1 know at what it appeared in the books of the Estates Company on Mr. Hean's valuation. 222. What is the deficiency on your own valuation ?—On Albury there is an excess on my valuation ; on Arowhenua there is a slight deficiency on my valuation. 223. By what was handed in by you the cost of Arowhenua was £41,621 ?—Yes. 224. The latest valuation is £41,125. Approximately the sale price was £29,000. There is a deficiency there of £6,621 ?—Yes, but I thought you asked for the deficiency on my valuation. On book-cost the figures you mention are correct. The book-valuation is not my valuation. 225. What did you sell it for ?—Approximately, £29,000. 226. Then, that would be the difference between £29,000 and £41,000—£12,000 ?—Yes, less sale of 360 acres.
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227. Under this head the latest valuation is put down ?—That was the land-tax value of 1892, plus 10 per cent, and plus improvements. 228. What was your valuation ?—My valuation was £31,000. 229. The sale then realised within £2,000 of your valuation ?—Yes. 230. Now, take Albury. The sale price was £65,778. Is that your valuation ?—No, it is above my valuation. 231. But you have sold it for that ?—Yes. 232. What is the deficiency between the book-value and the amount realised ? —From £11,000 to £12,000. 233. At all events, taking the book-value since coming from the Estates Company, there is a loss on one of £12,000, and altogether of £23,000 or £24,000?— Yes. 234. Taking the three properties—Albury, Arowhenua, and Middleton — have your expectations or valuations been realised taken in the aggregate?—ln the aggregate, yes. 235. You have been pretty close ? —Yes. 236. Now, there are other properties which have been disposed of as well as these ?—Yes. 237. What properties are there that have been disposed of?— There has only been one large station disposed of, and that is Carnarvon; but there have been a number of town properties disposed of. 238. How did Carnarvon—using a Colonial term —" pan out " ?—£l 2s. or £1 3s. better than the Government offered per acre for cutting up. The Government offered £5 10s. I think. 239. And, as compared with your valuation given to the Committee last year, how did it "pan out " ?—-It came out lOs. an acre better. 240. Did you get the cash ?—Almost all of it. Ido not think there is any instance where we have not got 50 per cent, cash down. I can get an offer for what is owing at any moment the Assets Board likes to take the money ; it is a good investment. 241. What is the difference in the aggregate amounts for realisations to the 31st March and your valuations for the same properties ? —I think you have that handed in already. 242. We have the land-tax valuations, not yours?—l have not my valuations with me, but I will send them in. 243. The Board refused to give the details on account of injury to the properties, but there will be no objection to giving the aggregate ?—No. 244. In your opinion, if the bank is able to pay the £50,000 a year, and pays it, and under ordinary circumstances with the profits you are making, do you think the Realisation Board will be able to meet its calls ?—I think so. 245. Has there been a rise or fall in land-values since last year ?—-A rise, but only in the direction of the better class of property. There is no very great increase. 246. Hon. Mr. McKenzie.] Is there any rise in value in the merino sheep-country?—No, rather the reverse. 247. Hon. Mr. Seddon.] You have some properties in the Waikato, I believe?— Yes. 248. How are those properties doing?— They are doing fairly well. 249. What are the properties ? — There is Fencourt and the Agricultural Company's properties. 250. Are they a class of property that could be cut up and sold as dairy-farms ?—Some portions are very good country. In the past they tinkered about the pumice-flats, while they had good downcountry to work. We do not work the pumice-country now. 251. Have there been any offers made for any of these large estates outside the Government ?— No definite offers. I think it is quite on the cards that the whole concern could be sold—of course, I do not know at what figure—to a syndicate of capitalists, for the purpose of putting money into the estates and working and settling tbem. That is, for the whole of the assets of the Assets Realisation Board, including town properties and everything. That is to say, I believe the Assets Board could transfer its position to a syndicate with the securities it posseses. 252. Holding the bank to pay the £50,000 per annum? —Of course, that security would then be held by the syndicate. I think that is likely to be done if desired. 253. But, in case the syndicate did not make money, at the end of the term the colony would have to make it up ?—No; I could not conceive that the colony would negotiate unless it was relieved of liability. 254. Do you think the syndicate could be got to take it with the liabilities?— Subject to price, I think it could be done. I think there is a gentleman in the colony representing a syndicate of capitalists who is proposing to approach the Board. 255. And to relieve the colony altogether ? —And to relieve the Board altogether. Of course, it would be negotiated for. I do not say that, from what I understand, they would be willing to plank their money down without inquiry ; but, from what I have heard, they are willing to negotiate for the properties. 256. The colony has only to make up any deficiency at the end of ten years after the realisation, and so forth?— Precisely. 257. If the syndicate are willing to take over the whole thing, that is a matter between the bank and the syndicate ?—Clearly between the bank and the syndicate, and the colony might be relieved of the whole guarantee. 258. You think there is a probability of that being done?— There is a little bit of skirmishing going on now. 259. Do you think the contingent liabilities we have heard about are vanishing ?—I do not think the couutry need be very anxious about having anything to stump up in the end. 260. Mr. Montgomery.] I asked you yesterday for a statement?— Yes; it is the combined statement of the whole of the stations' balance-eheets. *37—1. 6.
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261. With regard to the adjustment of accounts in reference to that £54,000 in excess of Mr. Hean's valuation. That was disclosed to the Committee last year?— Yes; it was added to the cost of the stations. It was £54,507. 262. It appears in the aggregate balance-sheet ?—lt makes up the sum of £1,976,498 for the stations. 263. Will it make any difference to the colony by being put into the whole of the stations?-— Not a scrap of difference. 264. It is a matter of book-keeping, is it ? —A matter of book-keeping. 265. With regard to sheep. What is the proportion of crossbred to merino?— There is a smaller proportion of merino ; probably 80,000 out of a total of 400,000. 266. The sheep are culled out every year properly, I suppose?— Yes. 267. Has that always been done? —I should say so, fairly well, because we have very fair flocks. 268. They are a good class on the whole? —Yes. It is rather difficult to fix a cause for it, but the sheep were not as good before as they are now. The reason for it perhaps was that the excessively low prices tempted the managers to carry more sheep than the country should, and the properties were overstocked. We have reduced the number during last year by 60,000. We have got more wool, and the sheep have realised a better price in consequence. 269. Have you grown more turnips ? —No. 270. Have you sold any sheep in the South ?—Yes. We have just sold between six and seven thousand at 18s. 4d. a head in Canterbury, delivery at station-yards. 271. How far are the properties, as a whole, suited for fattening sheep, and how far for store sheep ?—ln most cases they are well suited for fattening. 272. The Canterbury properties ?—Yes. 273. Bushy Park ?—Yes, Bushy Park is a good property. It is a bit dry, but it is a good property. 274. What prices do you get for frozen mutton here?— North Island prices are not so good. We made -a sale recently in Wellington at 2fd. f.o.b. 275. You sold at a fixed price?— Yes, with delivery for the next vessel leaving here. 276. Are all the sheep sold before they leave the colony, or do you take the risk in the London market ?—We have taken no such risk since I have taken charge. 277. There have been losses? —In Auckland I held and froze them. Some few were shipped m error, and the return we got for them left us little but the price of the offal. I hold still some in the works that are worth at least 2fd. f.o.b. I think the history of the frozen meat business has been disastrous for years past. 278. There is a curious expression I would like you to explain. You said that a man is justified in valuing breeding and young stock at a higher value on the property on which they are grazing. Do you mean breeding or young stock per head of value?-—The meaning is this: that where you have a standing flock on a property it is worth more to you than it would be worth in the market. They are worth more to you on the property because they have been bred on the property, and have an additional value to you above the market-value. "279. Is it not more accurate to put the saleable value down ? —No, because they are of that value on the property. For instance, the market-value would be a price at which, if in the yards, you would buy them for. You would then have to incur the cost of driving them to your property, loss in transit, check in condition, &c. 280. On the 31st March you would not have much fat stock on hand, would you? —No; we should be selling then, or, if there was a considerable flush of grass, we might be holding for turniping. We had frozen a good many prior to that, but we had not on the 31st March anything actually ready for the market. 281. Do you buy store sheep for the turnips?— When necessary. 282. What acreage of turnips have you?—l shall have to supply you with that information ; I have not got it here. 283. You put the sheep down at 7s. Id. this year, and I understand that you are taking an allround price each year for the purpose of your valuations ?—No ; we are valuing on the basis of the market-value, plus any additional value stock might have—that is, the average per head of the total value of the whole of our sheep. 284. Was it in 1892 that they fixed the average price?—No ; in 1894. 285. That was a low year?— Yes; but they had taken the valuation of the previous three or four years, which were high, and then fixed the price. 286. It was very high in 1891 and 1892?— Yes. 287. Then, that estimate they made was based on high years?—Of course it was. That was the object. 288. If they took the last three or four years it would be much lower?—Of course it would. It would be no use fixing a value when the price was dropping. 289. Do you think it unnecessary to have a fixed value?— Yes. I show values, as far as we can get them when making up our balance-sheets, as the current value of the day.
Friday, 18th September, 1896. Examination of Walter George Foster, Manager of the Estates Company, continued. 1. The Chairman.] Mr. Foster, I will just ask you to hand in the papers you were requested yesterday to supply. One was the Profit and Loss Account of the Estates Company for the year ending the 31st March, 1896?— Yes. I have also the particulars of the Thames Valley Land Company, and our holding as to that.
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2. I think we have have had this Profit and Loss Account before, have we not?— Yes. 3. Mr. Montgomery.] Have you Exhibit 15? —Yes. 4. I want to point out a mistake in the printing, and call your attention to the Matamata Estate accounts. The profit is £4,944, is it not ? —Yes. 5. The printed copy shows it as a loss. That is a mistake, I suppose ?—Yes. The wording is "to" instead of "by," but it is really a credit. It is a printer's error; it is not really our mistake. 6. That is a profit ? —Yes. 7. Take the Rangiuru Estate, on page 144, Exhibit 15. Is that profit and loss shown correctly ? —lt shows a balance of profit. 8. It is shown correctly in the printed copy ? —With the exception of being in wrong column. 9. Is it not on the wrong side ?—Yes. 10. Is that your mistake or the printer's mistake ? —lt is a printer's error. 11. I noticed these two errors by accident; there may be others?— Yes ; I will go through the exhibit. 12. The statement of the Profit and Loss Account of the Assets Realisation Board for 1895-96 shows that you have made a larger increase of profit for the year?— Yes. 13. The increase is about £51,000, is it not ?—Yes. 14. To what do you attribute this large increase? —Without being egotistical, I think it is due to improved management. I think £17,000 of it is purely due to economies effected. 15. Will you point out where the changes have been effected, and where they affect the Profit and Loss Account ?—lf you will allow me to put in a copy of my report to the attorneys I think you will see that it covers the ground. It is fairly exhaustive, and I think sets out the position. [Report put in : Exhibit No. 68.] That report accompanied the balance-sheet. 16. Taking somewhat specific instances, I will take the Awatere Estate. There was a loss of £5,603, and you have turned that into a profit of £6,700 ?—Yes. 17. A difference of £12,000?— Yes. 18. How was that done?— That is very largely attributable to the advance in merino wool. It is a merino-flock station. 19. What is the value of the wool-clip at Awatere'?— I shall be glad to give you the information, but I cannot from memory. 20. What is the flock ? —There were nearly forty thousand sheep there. 21. There are about a hundred fleeces to the bale ?—Hardly that; I should think an average of about eighty or eighty-five, at the outside. 22. Roughly, your profit on the year's wool could not come to more than £3,000 or £4,000? — Then, the sheep are valued higher than they were last year ; that would contribute a proportion of the amount. 23. I take this station as a more or less typical one. I want to show how the profit arises. I take it that it partly arises from the increased value of wool, which, roughly, is £1 a bale. Was there any increase in the value of store stock ?—Yes ; and there is an increased value in the sheep on hand. There was a difference of Is. 3d. a head. That is £2,000 odd of the amount. That and probably the Clarence Station, which is a merino station, are two stations on which the stock show an increased valuation. 24. Of course merinos went up ?—Yes. 25. Did you effect any economies at Awatere ?—Yes; but I cannot give you any figures of that now. 26. Could you give me a statement showing how the increased profit from the Awatere Station has been arrived at ?—Yes, I shall be glad to give you an analysis. Everything has been analysed, and I think I have the figures in the office. 27. Do you think any of those stations in which you have had losses in the past can be turned into profits ? —Yes ; I think those estates on which losses have occurred, in almost every instance, can be made to show a profit, I have not been able to visit ail. 29. Take the Waimana Estate ?—I think that is about the worst we have. That is a property 1 have made two attempts to get to, and have been stopped each time by floods. I think we can improve the position and prevent loss. 30. You will be able to turn all those losses into profits ?—lt is very difficult to say to what extent. lam not acquainted with the country. 31. And if you find that you cannot? —I should drop the estate. 32. Would you not advise the Board to sell right out of it ?—lf we cannot do better I should certainly advise the Board to stop working it and sell off the stock. 33. I see you have been successful in turning Bushy Park into a profit ?—Yes. 34. Through economy and better management, I presume ? —Yes, better management. 35. You have a larger total in this return you gave us of Fencourt, &c. Does that represent the Auckland Agricultural Company's property?— Yes; the loss on that in 1895 was £4,000: that is, on the valuation of £500,000. 36. What is the reason for the loss in 1895, could you say?—l may say I looked upon my appointment more for the purpose of seeing what I could do better than fossicking out what happened in the past, and I have not given attention to that. 37. Can you say what increased the profits on the Auckland Agricultural Company's properties ? —Well, I can only, again, say the improved management throughout. 38. Have you kept up the pasture as before? —Yes; that can be proved by the fact that we have grown more sheep and wool. 39. Do not the pastures up there run out very quickly ?—Not in all cases. Some of the pumice flats do run out quickly; but we do not now carry on work on lands not worth working.
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40. You have been carrying on the annual improvements ?—Yes. 41. But have you carried on the annual improvements as before—in the way of renewing them ?—Just the same. We have had a smaller area of turnips, but not to a very great extent. 42. What is the nature of the economies you mentioned?— One of the economies, and perhaps one of the largest, was the working in one big block what was originally nine or ten stations. They were altogether, and we shut them up as homesteads worked separately, and worked from one centre. 43. Was that recommended by Mr. Hanna ? —I do not know that it was. 44. Do you not know that he recommended a number of economies ? —They have not come under my notice ; and Mr. Watson is in error in stating that. 45. Do you know that Mr. Watson is in error? —They never came under my notice. 46. Have you seen Mr. Hanna's reports ?—Yes. 47. Then, you could have seen then if they were there ? —There were none in the reports. 48. Have you any objection to give us Mr. Hanna's reports ?—We should have to look through them first. 49. Will you look through them ?—Yes. 50. Do you think, all things being equal—the price of wool and stock being the same—that the properties will show increased profits ? —Taking the present outlook, and providing that the best properties are not sold, we will. 51. You are selling the pick of the properties ?—Well, no one goes for the worst. 52. Do you not think it is advisable to sell the worst first ?—You have to get your buyers. 53. Are the worst so hopelessly bad that you cannot get a higher value ?—No; but we have to get buyers. . 54. There are the Auckland Agricultural Company's properties, for instance ?—There is a rise in those properties. 55. Has the mining boom had an effect on the value of properties?—lt is very difficult to say, because any increase of value is the result of an enhancement in the price of products. You could not put it into figures. 56. But do you think the mining boom is likely to increase the value of property ?—Certainly. 57. Has the Board town properties in those districts ?—Yes; in Auckland. 58. Have you sold many of them ?—We have sold a good many lately. 59. At increased values ? —Yes ; considerably over the written-down values : that is, the latest ascertained value. 60. Have you any mining properties on your stations besides the Waikato Coal-mine, or which are likely to be used for mining purposes?—l understand there are the Kaimai lands, which are supposed to be gold-bearing. 61. Have you any bush-country ? —Not much. 62. Are you felling the bush ?—Where the land promises to pay us for it. 63. Have you a prospect of an increase in the realisations next year ?—I should say so. From the fact that from time to time there has been a good deal of delay, owing to the change in proprietorship from the banking legislation until the estates were put into the hands of the Realisation Board, there was no desire on the part of the attorneys to accept the responsibility of selling below book-cost ; the properties were not pushed. 64. Have there been any realisations since the 31st March last ? —Yes. 65. Can you give them to us ? —I think you have the statement. 66. Have there been any large realisations since, besides the Government one ?—No very large amount. I can send you in a further statement up to date. 67. You mentioned about the properties not being pushed?— Yes. 68. Do I understand that the present policy of the Board is to realise as fast as possible if the prices are reasonable ?—I take it so. I have had no instructions to the contrary, and we are pushing them. 69. You are inviting offers?— Yes. 70. Can you say that any have been refused which you considered reasonable offers ?—No. 71. There have been a number refused, have there not? —Yes ; but I do not think in any case a fair price has been refused. 72. Turning to the Profit and Loss Account of the Bank of New Zealand Estates Company Exhibit 30 ?—Yes. 73. Do you not think it is a little condensed ? —lt is in the ordinary form. 74. It is very much shorter than that of March, 1895? —I dare say it may be. It is very much condensed, but there are a good many accounts which had to be set down in the other that have now disappeared. In regard to the Profit and Loss Account and the balance-sheet generally, you will notice that the various items have letters opposite to them. Each of those letters represents a detailed statement in support of each account. My view was to condense the Profit and Loss Account, supplying very full details in the other statements. Those statements I have not put in, but will do so. 75. For instance, I see in the Profit and Loss Account of 1895 the cost of management in New Zealand ? —Yes. 76. Could you give us that in that statement ?—Yes, I can amplify this to such extent as we may think prudent. 77. I ask you what is the cost of management in New Zealand ?—I cannot tell you from memory. 78. I would like to have the cost of management in New Zealand, the cost of management in London, the revenue from stations, and the revenue from other assets?— The revenue from stations you have in that statement prepared for you. The net revenue of what appears there is profit.
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79. The revenue from sundry properties is £15,000. That is net revenue ?—Yes. 80. I want the gross revenue in a connected form? —Very well. 81. With regard to Exhibit 30, what is the account "T"? —1 should have to look it up. I could not give you the particulars from memory. 82. Will you also explain the item £16,842?—Ye5. 83. What does the account "V " represent'?— Profits on trading concerns. I shall not be at liberty to give you any explanation of that. 84. I am alluding to balance of general revenue. Is that only stations? —No; it is everything. 85. Could you not itemize it ?—Yes. 86. What is the balance of interest account " W " ?—They are adjustment accounts, of which I could not give you any explanation from memory. 87. Will you put in an explanation of that?— Yes. 88. You have introduced considerable changes in your system of book-keeping ?—Some changes. 89. What is the nature of the changes ? —Well, they are all in the direction of simplification and reducing labour. 90. Will you explain how you treat the Turnip Account. I will take a specific instance. You put in 100 acres, and they are not fed off on the 31st March; the cost of putting them in is 10s. an acre. How do you enter that ?—lt shows in the general working accounts, and is charged in profit and loss later as against Sheep Account. 91. It is debited to general expenses?—lt is paid for by the manager of the station, and is included in the bank account until it is allocated to its proper debit. 92. I want the entry. There is £50, the cost of putting them in. Where is the entry made ? — To a working-expenses account. 93. Then, for the purposes of your balance-sheet you show a credit in some form. How is that done on the 31st March ? What account do you credit, and how much ? —We do not credit anything in particular. It is charged up to working-expenses, and the account is carried on to next year. 94. But it does not appear as working-expenses, and it does not appear as an asset in your balance-sheet ?—The amount is carried on to the year in which the asset is consumed. 95. But surely it appears as an asset on the 31st March ?—You mean in the valuation of the crop, Yes ; it would appear as an asset. 96. Am I right in saying you debit the working-expenses with the cost, and credit the same account with the crop? —With the cost of the crop. 97. You debit it with the cost of the crop?— Yes. We take no credit for the use of the land for the time it is growing. 9g. Take the Awatere Station Turnip Account :On hand, £350. What would you do in taking credit for the crop ? It is a cross-entry. On the other side you have £350. What does that mean ? —That is the cost of turnip- and stock-feed on hand. 99. And you credit the account equally on the other side ?—Yes. 100. So you do not take credit for value at the end of the year ?—No. 101. Do you not think you are entitled to claim, as part of the profits of the year, the value of a growing crop ?—Yes; but I do not think it is necessary, because we are not distributing. I think it is better not to do so. 102. If you had kept the land in grass you would have been able to grow more sheep?—-If I had taken it to credit I should have been able to show a great deal more profit than I have ; but I did not want to pile it on. 103. It would have been quite legitimate to credit the value of the crop at the time ?—lt is fair to. 104. If you made a balance-sheet at the cropping you would do that, I suppose ?—Yes ; but it is not the practice. 105. In the list of stations of 1895 which you gave us I think you missed out some, did you not ?—I do not think so. 106. It is Exhibit 15. Have you the Waharoa Station ? —That belongs to Matamata. 107. You kept a summary of them? —1 preferred to keep them separate. 108. And you have separated the Auckland Agricultural Company's properties ? —We keep them as separate accounts in our books for the purpose of showing what they are doing. 109. The total amount of book-cost is £1,922,911. Was that the amount for the stations which have been taken over ?—No; the amount of the stations that were taken over was £1,976,498. 110. What is the discrepancy?— The excess over Mr. Hean's valuation. 111. That accounts for the discrepancy. Do you think there are further economies likely to be made in the management ?—lf possible, I shall bring them to bear. I mean to say there will be some, of course. 112. Can you say whether ten years will be sufficient to realise all these estates ?—They might be realised at any time, but it is impossible to say. 113. Mr. Macarthy said he doubted it ?—lf you mean that the whole of the assets will be realised, of course, they may not be ; but we shall have made a very big hole in the amount at that time. The town properties are very hard to sell. I should expect very little on hand in ten years. 114. You think the town lots are going to be difficult to get rid of ? —There is a certain class of property which you cannot sell without forcing on buyers and without an absolute sacrifice. 115. Do you manage the trading concerns ?—Yes.
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116. What is the prospect of getting rid of them ?—lt is very difficult to say what the prospect is. If there is any inquiry for that class of property they will certainly sell up to the recent estimated value. 117. I see you hold £351,222 in shares ?—Yes. 118. What is the nature of those shares ?—They are of all descriptions. 119. Are they mining companies shares ?—ln some cases, but these we are reducing very rapidly. We have shares in mining companies, and in some case industrial companies. They are being sold as rapidly as possible. 120. It is your policy to get rid of them ? —Yes. 121. What is the liability on the shares?—l can supply that. 122. Are the trading concerns which you have sold, like the freehold properties, the best paying ones ?—No, they were not the best paying ones. 123. And you are likely to make some profit next year out of your trading concerns?— That entirely depends upon the course of the markets; but, from the fact that we have been very successful during the last few years, the profits being very good, I am very sanguine of the results. They are very carefully and capably managed by the respective officers, and I have no reason to believe we shall not do as well in the future. 124. You are manager of both the Estates Company and Realisation Board ? —Yes. 125. Do you stay in Wellington, or are you continually travelling?—l am moving about a good deal. 126. Do you do the book-keeping work? —No; I supervise it. It is under my direction and instruction, but I do not attend to details. 127. Do you think one man has sufficient time to attend to such a vast number of stations and trading concerns, and everything else ? —I had to do it before the Assets Board was set up; we have no additional properties. 128. Do you think there is sufficient supervision of station-managers ?—As far as I can see, yes. 129. You have no inspectors like banking inspectors?— No. 130. You'do it all yourself ?—Yes. 131. Have you been able to visit all the properties?— No. I have mentioned Waimana and Clarence, and I have not been able to see all the town properties. 132. Have you visited all the other stations ? —Yes. 133. Has your time permitted you to visit them more than once a year ? —Yes. 134. Do you inspect the trading concerns ? —Yes, but not the books. I supervise the management. 135. And the stock is valued every year I presume ?—Yes. 136. Is depreciation allowed for ? —Yes. 137. Mr. Maslin.]. I think you mentioned that you had some frozen mutton in Auckland? —Yes. 138. About how many carcases?— About thirteen thousand. 139. How long had these frozen sheep been in the works in Auckland ?—I prefer not to reply to that, as it might affect values possibly. There is a notion that the time of storage affects values, but that is not so in my opinion. Ido not think it is wise to give an answer to that. 140. Do you think the value set upon that meat will be realised by actual sale ?—Yes, certainly. 141. Have you been selling any sheep lately in the Waikato?—Not quite lately. 142. But some months ago ?—Yes, but not since we started freezing. We have been holding for a rise in the market, and I think we have got it. 143. Did you sell a line of sheep you had been trying to fatten at a merely nominal figure ?— No, certainly not. If we had tried we should have fattened them, because we had plenty of feed. 144. Do you insure the properties under your charge?— Yes, to 50 per cent, of their insurable value. 145. Has there been any change in the insurance business of the Assets Board ?—Yes. 146. Have there been any special concessions made by any company, in respect to rates, that have led to the change ?—Not exactly a concession, but what amounts to a concession. 147. Most of the business is now being transacted with the Royal Insurance Company?— Yes, the fire insurance. 148. And the Royal are offering you advantages ?—Only advantages that can be extended to any sub-agents. 149. Do they treat the company as sub-agents ?—Yes. 150. And allow the company full benefit of the commission that is allowed to sub-agents ?— Exactly. 151. The commission does not go into the pockets of the servants of the company?—As subagents the profits go to the company. 152. Did you try to get the sub-agency of the company with which you formerly insured?—l asked them to give us the same terms, but they were not able to do it, and so I closed with the Royal. 153. You are unable to say what the probable deficit in the realisation of the Estates Company and Realisation Board's properties will be on book-valuations ?—No ; I have not gone into that in that form, but my valuation as to the Assets Board is, of course, before you. I understand the bank provided some £770,000 for deficiencies in the Estates Company and Assets Board's properties, and my impression is that that will not be required to the full extent. 154. You mentioned yesterday there was likely to be some offer from a syndicate of capitalists to take over the whole of the properties from the Estates Company and Realisation Board and
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release the colony from the guarantee ?—I said there was a certain amount of skirmishing going on ; there is not a definite offer. 155. Do you think there has been anything disclosed which is likely to have led capitalists to form an idea of getting the properties cheap ? —The business disclosed so far is not know to foreign capitalists. 156. But what has been previously made known ?—lt may not come to an offer from these capitalists; but, if so, they would form their own estimate of value. 157. But at a very considerable discount on present or ascertained values?—l think that the properties should sell at latest ascertained value at least. 158. Not the latest valuations as disclosed by the land-tax ?—That is the valuation I referred to. I think there is very little doubt that the properties are worth that. 159. Take the Arowhenua and Albury Stations. There is a considerable loss on actual values and sale?— But there is a very considerable increase on Matamata, which compensates for more than that. I think that was a very fair estimate, and not very far from my own estimate last year. 160. You mentioned that you were trying to sell the trading concerns and would not refuse any reasonable offer ? —Yes. 161. Has any definite offer been made for the milling properties?—No definite offer has been made. 162. Did not the millers of Canterbury approach you ?—Yes; but they never made an offer. 163. Did they not ask you if you were willing to sell at values after investigation of the business ? —They, apparently, came to us with a preconceived notion of their values, but there was no suggestion that the valuations should be arrived at in any special manner. 164. How do you think the values should be arrived at —on the interest returned to capital ? —Partially. 165. Do you think the company is willing to sell at the capitalised value of the interest? —The Estates Company would put its own value on the properties. 166. Then you would not sell at the capitalised value of interest ?—At 5 per cent ? 167. Take it even higher—6 per cent.? —I am not able to say very much about that. The Board would decide what prices they would accept ; but they are desirous of selling the properties, and selling them at their intrinsic value. 168. There has been some dissatisfaction expressed as to the way in which the business has been carried on —not that I have to complain of that?— There has been dissatisfaction, perhaps, because we have made profits where others have made losses. 169. Did the Board make any agreement to sell flour at a fixed price, with an understanding that no increased price should be charged if wheat went up, but if there was a fall in price the buyers should get the full benefit of it ?—I am not able to say there has been an agreement of that nature, but there has been at times an understanding that there should not be an unfair competition, and where that has been so I have no reason to think that we have failed to observe our promises. 170. You cannot say whether the Board would now be willing, if an offer was made to purchase the whole of the flour-mills at their commercial value, to accept that offer ?—They would be willing to accept the commercial value as estimated by themselves. 171. Do you think it desirable that they should be disposed of as soon as possible ?—Yes, at their fair value. 172. If you cannot get a fair value for them, would you keep them on ?—I assume that would be the intention of the attorneys. 173. Would not the capitalised value at 6 per cent, amount to the book-values of these properties ?—I am unable to say as to that. 174. If it did, do you think it desirable that the properties should be disposed of ?—I am not prepared to answer that question at the moment. There are various surrounding circumstances that require to be taken into consideration. 175. If the general public get an idea that the Board is not willing to sell them you will not get offers ?—I think the Board is willing to sell at fair values. 176. You know that the millers of the colony are desirous of acquiring these properties ?—Yes. 177. Do you think the Board would accept the book-cost of the properties?— Yes; they are prepared to sell them at any moment. 178. That would be the capitalised value at 6 per cent. ?—I have not worked it out. 179. That is about it ?—Then, in that case we would accept it. 180. Hon. Mr. J. McKenzie.] I have one or two questions of the writing-up and writing-down of the sheep. We have had some evidence from Mr. Butt about the matter, and also the report of Messrs. Kember and Smith. You told us that you wrote down the value of the sheep to what was considered the value on the stations at the 31st March, 1895 ?—Yes. 181. And afterwards these values were written up?— They were partially restored only. 182. How were they restored?— They were written down £94,063, but by mistake they were only written up to the extent of £83,381. 183. What made you alter the valuation, first having decided to have them valued on the 31st March at their real value ?—The reason I altered them was that the total sheep account stood at an amount immensely above what it could possibly realise at the time. 184. How did you come to write them up again?—l wrote them up again because I found that in all these matters the authorisation of the Board was required. 185. They would not authorise you ?—They would not authorise writing down anything but what was not represented by assets. 186. Were they not represented in the books at your valuation—entered in the journals at the valuation you put on them ?—Yes, an entry was passed.
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187. And then that was ruled out, and another entry put in?— The entry was reversed. 188. What was the difference in the date between those two times ?—That I could not tell you. 189. That first entry of your own values and your manager's was on the 31st March, or as soon as you could get the returns in after that?— Yes. 190. Was not the other entry made during the sitting of the Committee here?— No. I think it was the 16th May, but I cau get that for you. 191. Did you put a minute of any description in the book in connection with this transaction ? — None whatever. 192. Then, if it is reported that you put a minute there to put yourself in a proper position in regard to this matter it is not correct?—lt is incorrect. 193. Was there no entry of any description ?—None whatever ; but in the margin of the ledger I recorded a memorandum showing the reason for the reversal. 194. That was in your own handwriting ? —No ; in the handwriting of the accountant by my instructions. 195. And you considered it to be your duty to put that there ?—Yes ; to record my view of the transaction. 196. So that if any row afterwards occurred you could show your reason why it was done ?— That is so. 197. Do you consider that to keep the sheep at book-value was the correct thing?—My opinion is that it was not a correct thing. 198. Can you tell us what was the foundation of the original valuations in the books ?—The first valuations in the books were supposed to be the station-manager's valuations at the time —the actual value on the property. 199. Was that Mr. Hean's valuation?—l think so. 200. Was Mr. Hean's valuation made with the assistance of the managers? —I assume so, but the Estates Company have no record of that. They started with certain amounts in the books, the basis of which I have no knowledge of. 201. These properties were taken over, at the value stated, from the Bank of New Zealand?— All that' we know is that Mr. Hean valued them at a certain price for the freehold and a certain value for stock. 202. And that was the value at which they were taken over by the Globo Assets Company ? —Exactly. 203. And there is nothing to show what the bank paid for them or lost ? —Nothing whatever. 204. You started with them taking as the basis Mr. Hean's valuation? —Yes. 205. Has that valuation been altered at any time ? —Not on the properties. The stock has been altered up and down. 206. When did you start writing the stock up and down ?—On the sth May, 1894, the Board decided on a standard valuation based on a four years' average. 207. Was that the year when sheep and everything else were very low?— They were low ; in 1893 they were very high. 208. And came down with a run in 1894 ? —They dropped about that time, I think. 209. Between 1894 and 1895 there was the biggest drop in sheep, was there not ?—Yes. 210. And I suppose that was about the time the Board came to a conclusion to keep them at a standard value ?—lt was about that time. 211. You know perfectly well—you were managing the Loan and Mercantile at that time, and were conversant with the price of sheep at that time —that there was a big drop at that time ?—Yes. 211 a. From the business you were engaged in, you must have known that the value of all sorts of produce and land went down—for instance, wheat, oats, wool, and mutton—in fact, everything—to almost unprecedented prices? —Yes. 212. I suppose that must have had a good deal to do with the losses on these stations? —Yes ; but our only produce is wool. 213. And mutton? —Yes; but, while the mutton-sales did not compare favourably with the years before, the increased value of wool has helped us this year by about £8,000; that is the increased return from wool. 214. In 1895 the stations were growing a good deal of wheat, were they not ?—No, very little. 215. That was before your time ?—Yes; but I have no recollection of them growing much wheat; they went in chiefly for oat-growing and stock-feed. 216. There would be some wheat ?—Yes ; but it would not make much difference. 217. I have an estimate here showing that in 1891 and 1892 a wheat-crop was worth £4 7s. 9d. an acre, and in 1894 it was only worth £1 10s., making a difference of £2 17s. 9d. an acre. That would not affect the sheep value? —Not to any considerable extent. 218. In any other way was there any reason for the estates not paying?— Anything I could say would be a reflection on the past management. I have not devoted much attention to anything in the past, and I hardly like to express any opinion. 219. Take, for instance, the Arowhenua. The account for 1894 showed a loss ?—Yes. 220. And this year there is a profit ?—Yes ;at Arowhenua the management was not good before. There is no question about it that they attempted to carry far more stock than the country was fit for, and the natural result was a short clip and smaller increase. If you have insufficient feed for your sheep you cannot get good returns. 221. You were asked a question yesterday with regard to the value of sheep, and you said that sheep on stations were of more value than sheep in the saleyard. I would like you to explain that. Supposing you wanted to restock your run at Clarence River you would consider that sheep on the station would be to you of more value ?—Yes, a standing flock is worth probably 2s. or over a head more than sheep in the market.
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222. Would that be because they were acclimatised to the country?— Yes, and because they were bred in the country. 223. In answer to the question you said you allowed a little for the fact that the sheep were on station, and that was how the question arose ?—Yes, exactly. 224. Sheep in the saleyards would be for that reason so much less ?—Yes. 225. Will you give us some explanation with regard to the Awatere country—how much freehold is there and how much leasehold ? —57,213 acres freehold and 51,436 acres of leasehold. 226. The leasehold all belongs to the Crown ? —Yes. 227. Could you work the leasehold satisfactorily without the freehold?— Not very well. 228. Then, I suppose it is almost necessary that the freehold and leasehold together should be disposed of in one block ?—There is no doubt about that. 229. Is any of the country suitable for cutting up into small areas ?—Yes, some of it on the south side of the Awatere. 230. How much is there on the south side —approximately ?—I should think there would be, freehold and leasehold together, about ninety thousand acres, but a very large proportion of it is very high country. 231. Have you ever had any offer for that country ?—Not an offer for the whole, but we have had inquiries for one of the blocks. 232. They are all merino sheep there ?—Yes. 233. What do you do with your stores'? —Hitherto they have been sold on the stations. 234. You do not carry on boiling-down works? —No. 235. The original owner of the station did, though?— Yes. 236. With regard to the Clarence Station. That is the next high country, is it not ?—Yes. 237. What sort of country is that? —I have not been able to visit it since my appointment, but I knew it a long time ago. It is very good country in the inner Clarence. 238. Would that be any good to cut up ?—Yes. 239. To cut up into small runs ? —Yes. '240. To do that you would have to get roads made ?—Yes. 241. You have to take the wool to Kaikoura, do you not, because there is no access to take it any other way?— Yes. 242. It is very expensive to do that, is it not?— Yes, everything has to be packed. 243. Do you think the board would co-operate with the Government to get a road put in there ? —Yes; provided the Government did not get the best of the bargain. 244. You have another estate called Glentui ?—Yes. 245. The bulk of that is merino country? —Yes; there is very good land on the Wharfdale portion, but it is inaccessible. 246. You have some Crown lands there too ?—Yes. 247. Would freehold there be necessary to work the Crown lands ?—Not altogether. 248. It is in a different position to the other two estates?— Yes. 249. Have you got the same manager at Glentui ?—Yes. 250. Are you satisfied with his management ?—Yes; he is a good, careful, economical man. 251. With regard to the Waihaorunga Estate, have you got any Crown land there ?—Avery small area ; I think there are 50 or 60 acres. We have only 327 acres of leasehold altogether. 252. The Waihaorunga would cut up ?—Yes ; it would cut up into fair farms, but it is a little far back. 253. Taking all the estates in the South Island, your properties will all cut up with the Crown leaseholds —that is, Glentui, Clarence, and Awatere? —Yes. 254. So that there would be no great difficulty of disposing of the South Island properties?— I do not think so. 255. With regard to the Waikato properties, there is a considerable amount of land attached to them which has not been improved yet?—A considerable amount. 256. Do you think it advisable to have those lands improved ?—I should not recommend any large sum to be expended for improvements, but simply by degrees to bring in the good land that would be suitable for settlement. 257. It is necessary to keep up the improvements and renew the grass in that country ?—Yes ; but on the pumicy country, where it costs so much for manure, we never see the money back on the light country. What lam doing in some cases is using the cultivator instead of the plough. 258. Do you find that to answer ?—Yes; very well. We keep the pastures fresh at the very lowest cost. 259. Have you visited all the North Island properties ?—-Yes, with the exception of Waimana. 260. Where is the Waimana Estate ?—lt is near Tauranga. 261. You have a property at Wairoa ?—Yes. 262. Do you think that is suitable for settlement? —Yes. 263. What do you call that ?—Awamate. 264. We have had a good deal of discussion about turnips being charged as permanent improvements. Did you find that system in vogue when you took possession ?—No; but there was a large sum stated in what was called the " Turnip Account." The London board gave instructions that instead of being charged to working-expenses it should be charged to " Turnip Account." Had that been set down to working-expenses there would have been reduced profits. 265. Then it was not a fair return for the year?—l have the figures showing the returns from stations since the formation of the Estates Company. In 1891 the net revenue was £16,265; that £16,000 was largely from the valuation of sheep, as far as I can gather. In 1892 the net revenue was £72,991, as appears on the books; £16,000 of that was due to the increased value of sheep. In 1893 there was a net revenue of £39,998; that year the stock stood at about the same •38—1 6.
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figures. In 1894 the revenue stood at £35,913, and showed a decrease in value of sheep of £5,000. In March, 1895, there was a total revenue from the stations of £12,356; in that case the stock stood at the standard value. The statement shows the receipts from the stations from 1891 to 1896 inclusive. 267. Where did you get that return from ? —From the books. 268. I want you to take a note of some figures. The revenue in 1891 to 1894 :In 1891 it was £120,000 from the whole of the properties. They had fallen down in 1894 to £74,000. That was a big drop in four years ?—I am pleased to hear of such profits, but Ido not think I could make it again. 269. This is one of the returns which was made to order? —I do not know. It is very discouraging to me to think that others could do it and not I. 270. In taking charge of the stations you got a valuation made of the sheep, horses, implements, and everything?— Yes. 271. How did you find this correspond with the values in the books?— With regard to sheep, the account was £94,000 worse. The figures for the cattle had always been based on current value, and without a knowledge of the herd I could not say. 272. How did you find the implements?—l think they were very fairly valued. 273. Were not some kept in the books at their original cost while they were just old iron ?— No ; every year there has been an appropriation for depreciation in value. With regard to implements, they have to be taken at their value to the property. If you have to sell them you have to do so in many cases for the value of old iron. 274. But will not implements soon get out of date and be useless to the stations ?—The total value of.the implements is not a very large thing, and I did not scrutinise that very closely, but we are providing for their depreciation. 275. Are you altering the system by reducing the amount of work on the stations in the shape of ploughing?— New improvements we have discontinued to a very large extent. 276. You are just keeping up the estates and growing sufficient feed for your stock?— Yes. -277. Do you think that is the best class of management considering you have to sell the estate ?—Yes, I think we have got enough to do as it is. If we sell some of the land we might be able to take in some other blocks. 278. I suppose if the present prices keep up you will be able to sell largely?—We shall make a big hole in it. 279. Everything will depend upon the price of products ? —Yes. 280. What would be the effect of 2d. a pound rise on wool on the different stations ?—About £20,000. 281. Is it as much as that ? I thought we had an estimate last year that it would be about £12,000? —The increase this year—and, roughly, there has been over a penny rise—has been £12,000. It would be about £18,000 to £20,000 roughly. 282. Have you handed in the circular to-day stating how the managers were to charge the sheep? —Yes. It is in the evidence of yesterday. 283. You have sold the Carnarvon Station since you took possession? —Yes 284. How did it realise as compared with the book-cost?— The book-cost was £50,453. We have realised £47,226. The amount realised was £8,154 more than the offer made by the Land Purchase Board. 285. There is a very strange story told by Messrs. Kember and Smith in their first report to. the Colonial Treasurer with regard to the sheep on the Carnarvon Station. Do you know anything about that ?—Yes. 286. You had 17,019 sheep at 31st March, 1895, valued at £5,668 14s. 6d. That was your first entry in the book ?—That is right, Sir. 287. According to the arrangement about the standard values, they were put up to £9,025 2s. 9d.?—Yes. 288. During the financial year 1895-96 you bought 9,138 sheep and bred 4,804. Add the sheep on station at 31st March, 1895—17,019 —and you have a total of 30,961 sheep ?—But there was a number sold. 289. You sold 27,932 sheep, and for those you got considerably less than the value you had for the .17,000 ?—That is so. 290. You would not approve of book-keeping of that kind ?—We were forced to sell at the worst time of the year ; but when valued at the previous March they were valued at 6s. 9d. all round. They were crossbred sheep, and Ido not think that is too high. .291. This would be the worst case you had?— Yes; it was a forced realisation. Some of the sheep, after the drought broke, would probably have been worth 2s. or 3s. more. That was my valuation ; the book-valuation was more. 292. What was the book-valuation ?—los. 7d. 293. Your valuation was £5,668 and the book-valuation was £9,025. There was a loss of 4s. on the same sheep?— They did not bring out my valuation. 294. When you want sheep from, say, Bskbank transferred, say, to Bushy Park, you do not go into.the market to buy them, but transfer them from one station to another? —Yes. The system. I have adopted is that the managers settle the price, and if there is any dispute they refer the matter to me. . '."".- . . 295. You charge the managers so much a head—you credit one and debit the other?—-Yes, 296. And it was this sort of transaction that you made with Carnarvon Station?— Yes. . 297. So that the money was not actually paid?— No. In a matter of this sort I interfere as little as possible ; but if there is a dispute the managers refer to me. 298. If you have good managers, do you find it better to let them work the stations on their own lines ?—Yes ; I think it is necessary to let them have a little discretion. They have a discussion amongst themselves, and if there is anything they cannot agree upon they refer to me.
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299. You find that the best course ?—I have been a station-manager, and T think it is. 300. Mr. Seddon asked you where you got your manures from,and you said Sydney?— Yes, we have bought most of it there, about 1,400 tons out of 1,600. 301. Did you buy that direct ? —Yes. 302. Have you bought any in New Zealand at all?— Yes, in Wellington and Christchurch. About, thirty or forty tons in Wellington ; and from the analysis of it, and its price, I would have taken all I could have got. 303. From the meat companies?— Yes, from the Meat Export Company. 304. I suppose there was a big run on it ?—No, but they do not give it all to one customer. 305. They did not want to give you the whole quantity?— No. I wrote asking them to give it to me, as it was the best of any I purchased, but they would not do so. :.": 306. You were asked by Mr. Maslin about keeping carcases in Auckland. What was your object in keeping them there?—We did ship a few just before we commenced to freeze, and we got very little more than we receive in the colony for the skins. Now, those we have sold here will come out certainly better by 10s. 307. Do you prefer to sell here in a line?—l like ready cash. 308. Suppose a man came along and said, " I will buy thirty thousand sheep as they stand in the freezing-works," would you sell ?—Yes; 1 do not like risks, I like the money. 309. Are you at heavy expense in keeping them? —No; the expense after two months, after the last available date of shipment, was per pound —cheaper than you could hold them on grass. 310. Yes ; but they did not eat anything ? —They did not get any thinner. 311. If you hold them for a long time, does it make any difference in them ?—That is a matter of opinion. Some hold that they get paler in colour, but the mutton is just as good. 312. I have heard a great deal about that, and I wanted to hear your opinion?—-I should be very glad to send down a sheep to you to try, and that is the best answer to the question. 313. I suppose you will not keep them long now if you can get them away? —I am in hopes of doing so. 314. Did Nelson Brothers buy any ?—Nelson Brothers bought, in the early part of the season, about six or seven thousand. 315. Did you sell all your Canterbury sheep ?—All we had until we began turnips, and on their legs. Lately we have been holding on for a better price, and got it. 316. Who bought them ?—William Grant, of Timaru. 317. Is he acting as agent for some other people?—l am not aware of that, but he probably is. 318. Had you anything to do in connection with the dispute about the debentures to be paid by the Assets Board to the Bank of New Zealand for the estates now in the hands of the Realisation Board ?—I had nothing to do with it beyond in a conversational way with the Auditor. 319. You were not mixed up in it?—No; I assumed that the Auditor reported to the Government without reference to the office. 320. As to the report to the Colonial Treasurer with regard to the £54,507, have you given any evidence with regard to that ?—Yes. That £54,507 was an amount that was shown on the sheets submitted to the Committee last year as a portion of the money allocated to the stations for purchase by the Assets Board. 321. Is that in excess of Mr. Hean's valuation ?—That is the amount Mr. Hean allotted to the estates. That was added to the cost of the Estates Company by Mr. Hean. 322. Then, the amount of £54,000 had never been apportioned among the estates?—No; it was kept in the books in a separate account. 323. Who distributed the £54,000? —It was distributed without authority by a subordinate officer in the Estates Company's office. 324. Would a subordinate officer take upon himself to do that ?—From inquiries I understand it was done in this way: The ledger-keeper, when the Auditor was going through the books on one occasion, asked how this £54,000 was to be dealt with, and the Auditor's reply, which, I believe, was erroneously taken as an instruction by the ledger-keeper, was to the effect that if the sum was distributed pro rata amongst the stations, he, as Auditor, would not take exception to it as an improper entry. It was not given as an instruction, I learn. It was never authorised either by me or by the attorneys. 325. There is another sum representing produce that went Home last year—£9o,ooo ?—That was the free consignment sent to London. We did not draw against that. 326. And the Auditor wished to give debentures for that amount to the Bank of New Zealand? —It was not taken into account as a receipt. 327. Would you have got the £90,000 if the debentures had been given to them ? —Yes, we should have had the £90,000 to carry on with, and pay interest on debentures. 328. Was any arrangement made to that effect? —Only in regard to the Auditor's adjustment. It would have been my wish to have it that way, because it is more economical finance, and, besides, is revenue. 329. But you do not require to borrow any money now. Do you use the money for the sale of the properties ?—We can, but I do not think it is a prudent course to take. 330. You could not take it as revenue for the year, and then replace it ?—We have power to do that, but Ido not think it advisable. There was a question asked as to the date on which the call was made on the Thames Valley shares. It was the sth March, 1896. It was charged to our debit in the bank here on the sth March, 1896; but, of course, it had been paid in London by the head office sometime prior to that. I have here, also, the report and balance-sheet of the Thames Valley Land Company. Ido not know whether you want it.
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331. Hon. Mr. Seddon.] I want to know what the amount of the shares was?—£lo—£B paid up. 332. Then, there is a contingent liability of another £2. That is £80,000 that can still be called up ?—Yes. 333. Can you give us the station accounts —the value of the assets at 31st March, 1895? —I have no valuations later than the valuations submitted to the Committee last year. 334. Can you give us the value of the freeholds in New Zealand and of the freeholds beyond New Zealand ? Can you state whether there is any chance of disposing of the freeholds beyond the colony, or is anything being done with them ? —Yes; very considerable progress has been made, and the realisations which have taken place are satisfactory as compared with the estimated deficiency. 335. You have a job lot of stuff which came into the bank which you might put under the head " Not otherwise enumerated " ? —I do not know what you mean. 336. Have you such a thing as a steam navvy?— Yes ; there is what is called a " devil" over in Australia. I think it was at one time in Dunedin. 337. Do you think you will be able to realise much on the " devil " ?—No, lam afraid not. He is a bad asset. 338. Hon. Mr. J. McKenzie.] That would be Proudfoot's, I suppose ?—I presume it would be. 339. Hon. Mr. Seddon.] Can you give us a statement of the job lot called " Sundry properties," amounting to £53,000? —I could supply you with a statement as to that. 340. At all events, you will give us details of the sundries ?—Yes. There were one or two questions asked yesterday. The area of turnips as at 1896 was 14,606 acres. The amount for 1895, I think, will be found in my report. Another question was asked as to realisations to 31st August, compared with my valuations. The sale price was £185,000. My valuation was £180,000, so that there is a surplus of £5,000 on my valuation. Another question was as to the proportion of money paid on account of the purchase of Carnarvon. The property was sold for £47,226, and when the delivery is finally completed in December we shad have received £27,749 on it—more than 60 percent.- There is only now remaining the names of the attorneys—Messrs. H. J. Le Cren, John Murray, W. T. Holmes, and J. M. Butt. 341. The Chairman.] You will make inquiries concerning Mr. Hanna's reports of the various stations, whether they can be got, and, if so, you will send them to the Committee ?—Yes, Sir. Hon. Joseph George Ward sworn and examined. 342. Hon. Mr. Seddon.] You are member for Awarua in the New Zealand Parliament? —Yes. 343. You were Colonial Treasurer from when to what date ?—I was Colonial Treasurer, but I cannot give you the dates from memory. 344. You have been a member of the Executive from 1891 to 1896? —Yes.
Saturday, 19th September, 1896. Examination of Hon. Joseph George Ward continued. 1. Hon. Mr. Seddon.] I think it would probably be better for the witness to make a statement, commencing from what took place in 1893 and giving everything in consecutive order. I prefer that course instead of asking leading questions in respect to matters. Well, you have told us that you are the member for Awarua, and were a member of the Ministry from 1891 to 1896 ?—Yes. 2. During that time you held the position of Colonial Treasurer ?—Yes. 3. Will you state to the Committee what occurred in respect to the Bank of New Zealand— the legislation affecting the bank, the purchase of the Colonial Bank, and other matters incidental thereto—during the time you were Colonial Treasurer. Commencefirst with the letter notifying the bank in respect to its reserves, the passing of the Bank-note Issue Act, and the conference between the managers of the bank and the Government with respect to the crisis in Australia. There was no correspondence on that?—ln 1893 the General Manager of the Bank of New Zealand, Mr. Holmes, was in Wellington. He saw the Government, and stated that the Bank of New Zealand was desirous of increasing its capital, and that to enable this to be done legislation was necessary. He asked that legislation to enable an increase of share capital in the Bank of New Zealand should be put through. That was done. He asked that authority should be given enabling the bank to get further share capital, and, I think, at or about the same time, that bank-notes should be made a legal tender. It was, I think, the 2nd of September when the Bank-note Issue Bill was put through. Legislation was passed through the House for both purposes. I understand, from reference to the Act, that the Note Issue Bill was introduced in the beginning of September, and the authority to increase its share capital afterwards. 4. What occurred in reference to the note-issue ?—ln connection with the note-issue a meeting was held in the Cabinet-room, in the Government Buildings, at which representatives of the whole of the banks were present; and, before it was introduced into the House, they confirmed the desirability of that legislation being proceeded with, not that, so far as I understood at the time, there was any immediate fear so far as the banks trading in New Zealand were concerned, but that the financial disturbance in Australia was such that the premonitions of warnings justified the representatives of the banks as a matter of prudence having the necessary legislation put through making notes a legal tender. The General Manager of the Bank of New Zealand told me at the time that he was proffering the request for the legislation to enable the Bank of New Zealand to issue further share capital, that it was the intention of the bank to purchase the business of the National Bank, and that he had reason to believe that upon the successful flotation of the extra capital that could and would be done. I heard nothing further bearing upon the matter, so far as the National Bank was concerned, until after the visit of Mr. John Murray to Wellington in June, 1894. He
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interviewed me, and told me that the efforts to obtain the extra share capital by the Bank of New Zealand had not been successful, and owing to.several circumstances which he narrated the bank was in imminent danger of going down. He stated the position was such that the principal officers connected with the institution were restless and uneasy ; that, in consequence of the enormous depreciation in the values of properties of the Bank of New Zealand Estates Company, the long-continued low price of our staple products, and the probable and contingent losses that the bank anticipated making upon some large accounts that it held, it would be impossible for it to continue the business without State aid. 5. You are forgetting the link—that you wrote to the bank in the interim calling attention to the reserves? —Yes; lam obliged to you for reminding me. Before the visit of Mr. Murray to Wellington —I think it was on the 9th October, but the correspondence will show that—the position of the coin reserves of the Bank of New Zealand were regarded by the Government as being below what the law demanded. At any rate, they were unsatisfactory, and, after consideration of the position in Cabinet, I wrote to the General Manager, calling his attention to the unsatisfactory state of the reserves, and requesting that they should be brought into—l cannot say the exact words I used, but 1 wrote in October, 1893, to the General Manager of the Bank of New Zealand in reference to the matter :— Hon. Colonial Treasurer to the General Manager, Bank of New Zealand. (Confidential.) Dear Sir, — The Treasury, Wellington, 9th October, 1893. I have the honour to call your attention to the position of your bank's reserve. I trust that you will recognise the desirableness of bringing the reserve within legal limit at as early a date as possible. I am, &c, The General Manager, Bank of New Zealand, Auckland. J. G. Ward. On the 27th October the General Manager sent a reply. He stated that the bank's cash reserves in Australia and New Zealand at that moment exceeded considerably a million sterling. He included in his criticism of the position of the reserves, balances in Australia in addition to those in New Zealand, and that was a point upon which the Government disagreed with the view taken by the General Manager in adjusting the reserves or bringing the reserves within the legal limit. The General Manager, Bank of New Zealand, to the Colonial Treasurer. (Confidential.) General Manager's Office, Bank of New Zealand, Auckland, Sir,— 27th October, 1893. I have the honour to acknowledge receipt of your " confidential" letter of the 9th instant, and in reply beg permission to lay before you a few considerations touching the asserted inadequacy of the bank's coin reserves in New Zealand which I think you will agree with me are pertinent to the question, and should not be overlooked. I desire to point out, in the first place, that the bank's Act of Incorporation does not make it at all clear what reserves are to be maintained in this colony, and I do not therefore admit that the bank has failed to keep them within " legal " limit. The proportion has been lower on a previous occasion than it was in the June quarter without objection being taken. Apart, however, from that, and with reference to the general question whether it is not desirable that a bank should maintain a holding of coin, bullion, and public securities, to the extent of not less than one-third of its demand liabilities, our reply is that our colonial reserves are not inadequate. The bank always keeps in Australia cash resources largely in excess of what are needed for its business there ; in fact our coin in Australia is invariably largely in excess of our demand liabilities in those colonies. The large sums of money which the bank has to move to London to provide for Government remittances necessitated in the past, and still necessitates, its having ample cash resources available at a point where exchange on London is regularly procurable, when wanted, at every season of the year, which is not the case in New Zealand. It is only by working exchange through Australia that we are able to afford the Government the favourable terms for London exchange which are conceded. Our contention is that, in view of the rapidity of steam communication, and the facility with which gold can be transferred from Australia to any point in this colony—a facility greater in many cases than that with which it can be moved from point to point in the colony itself—in view also of the comparatively trivial liabilities of the bank in Australia, and its preponderating assets there (more than treble its total liabilities), the bank is entitled to treat its cash resources in Australia as part of its New Zealand reserve. Our position in this respect is peculiar, and entirelydifferent from that of other banks whose trading is not entirely confined to New Zealand. Their Australian position is normal, and their demand liabilities exceed their coin-holding there. Viewing the position of the bank's reserves from this standpoint, you will find, taking the last published returns (June quarter) for example's sake, that the bank held during that quarter average coin and bullion in New Zealand and Australia equal to 29-J- per cent, of all its demand liabilities in those colonies, including its liability to the New Zealand Government on deposits (£469,000) which can hardly be regarded as "ordinary cash deposits of customers." If we exclude these deposits the proportion was 84-J per cent. These are the proportions of actual coin and bullion available in the bank's colonial coffers, and do not include bills and notes of other banks and balances due to us by other banks which averaged during that quarter £52,421, and were practically as good as coin. There is one other point to which I would ask leave to direct your attention. The bank's demand liabilities, as disclosed by the published statements, are swollen by-Bank of New Zealand
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Estates Company deposits, amounting in the June quarter to over £425,000. These deposits cannot be regarded as in any sense " ordinary cash deposits "of a customer. The amount is not withdrawable, because there are advances to a greater extent standing in the bank's books as liabilities of the company to the bank, and which the bank treats as a set-off. On technical grounds these deposits and advances have to be kept separate; but for all practical purposes the position, as far as the bank's liabilities to the public are concerned, is the same as though they were combined in one account. The credit balances are practically fixed, although they appear in the bank's returns as payable on demand. If we deduct these deposits from our demand liabilities we find the bank held 34 per cent, of coin and bullion to those liabilities (including Government deposits)—a proportion in excess of the reserves which it is asserted the Act requires should be maintained. If we exclude Government deposits, the proportion is nearly 41 per cent. It will reassure you to know that the bank's available cash resources in Australia and New Zealand at the moment exceed considerably £1,000,000 sterling. I have, &c, W. T. Holmes, The Hon. the Colonial Treasurer, Wellington. General Manager. With respect to that letter from the General Manager, I asked the Secretary to the Treasury to minute it for reference to the Cabinet, which he did, as follows :— Memorandum by the Secretary op the Treasury. The Principal Act (1861) did not provide for extension of business beyond the Colony of NewZealand, and the subsequent Acts giving extended powers are silent as regards limit of liabilities. I think it may therefore be fairly argued that the limit defined by section 13 of the Principal Act ("not to exclude three times the amount of the coin, bullion, and public securities—within the colony ") is the legal limit which we may properly ask should be maintained. That no objection should have been made on a previous occasion, when the proportion was even lower than the present, cannot be accepted as an argument against exception being taken now. Mr. Holmes excuses the position of the bank in New Zealand by asserting that the resources of the institution in Australia are largely in excess of what are needed for its business there, and that these excess resources can be readily brought to New Zealand, should occasion arise, and therefore the reserves in Australia should be treated as part of the New Zealand resources. Ido not see how the Treasury can recognise this line of explanation, for if the bank chooses to do business in Australia, it must not do so at the cost of imperilling their New Zealand assets; and if an actual shrinkage takes place, it is our duty to draw attention to it. lat once allow that the requirements connected with the conduct of the Government business necessitate an exceptional treatment, but the Bank of New Zealand, having undertaken to do the business of the Government, must conduct their whole business upon lines which should not challenge adverse criticism. The introduction of the Estates Company deposits into the question of the adequacy or otherwise of the bank's resources is, I think, unfortunate, because it is impossible to separate the Estates Company from the bank proper. Mr. Holmes's explanation shows how completely the two concerns are interwoven. The percentages quoted by Mr. Holmes are more a matter of opinion (taken from the peculiar standpoint of the onlooker) than of actual fact, and do not, in my opinion, remove the necessity for calling upon the bank to strengthen their cash resources. J.8.H." 4th January, 1894. That letter and that minute were considered by Cabinet, and on the 12th January, 1894, the following minute to Mr. Heywood was put upon the memorandum by me: — Mr. Heywood,— Owing to the New Zealand Loan and Mercantile Company's suspension, the general financial position is so surrounded with difficulties that, while I think the bank reserves must be strengthened as soon as possible, it is not desirable to press the institution at the present moment. Do not lose sight of the matter. 12th January, 1894. J. G. Ward. That was in January, 1894. About that time there was a financial crisis of a very acute nature in Australia, and its reflex was distinctly noticeable in New Zealand. People forget now the way in which the banks were hauling in and restricting necessary accommodation ail round. That minute indicates the desire of the Government to have the bank's reserves increased -that the circumstances immediately surrounding the position were so difficult that, while we were anxious to do it, it was decided not to press the institution, but to have the matter brought up again, and that the matter was not to be lost sight of. Now, I come back to Mr. Murray's visit to Wellington in June, 1894, following from the point at which I stopped. Upon his intimating to me the dangerous position in which the Bank of New Zealand was placed, I suggested that he should interview the Premier or Cabinet. 6. Was anything specially done calling the attention of the Bank of New Zealand between the time that minute was written and Mr. Murray coming to see you in Wellington ? Yes. When the Loan and Mercantile Company failed in 1893. 7. Were there any special circumstances which decreased or increased the anxiety in respct of the Bank of New Zealand from the time the minute was brought under the notice of Cabinet?— Yes. After the suspension of the New Zealand Loan and Mercantile Company the management of the Bank of New Zealand stated that the position was rendered more difficult on the top of the financial crisis in Australia by the stoppage of a large company such as the New Zealand Loan and Mercantile Company, which was carrying on its banking business with the Bank of New Zealand, and that a
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large amount of that company's paper —bills, &c, in transitu to London—which were current at the time, in consequence of that stoppage, could not be- met. That aggravated the position, so the Government was informed, considerably; but we were not advised that there was any intention to ask for State aid ; neither were we informed there was any probability of legislation being required. 8. You are now only at the beginning of 1894. Make sure whether the Loan and Mercantile Company's suspension occurred at the beginning or end of 1894?—1t was, I think, in 1893. At any rate, it was before my minute of 12th January, 1894, which I have just read. We were not told that there was any probability of the bank requiring State aid—or legislation to give it State aid— to enable it carry on or to keep its doors open. 9. Well, Mr. Murray appeared on the scene, and what happened then ?—At the interview he had with me he gave me briefly the outline I have indicated. I told him it would be necessary for him to interview the Premier, or the Cabinet, I forget which. 10. Will you give the date of that ? The date he saw you and I was the 25th June, 1894, was it not ? —Yes, I believe that was the date ; his letter bears that date, and I think it was on the same day. He interviewed the Premier and myself, and, in substance, he repeated to us both, what he had stated to me. We told him it would be necessary to state his request in writing, so that it should be considered by the whole Cabinet, and we also asked that a balance-sheet, showing the position of the Bank of New Zealand up to the latest possible date, should be furnished. We had the balance-sheet of the bank itself up to the 31st March, 1894, which we understood was the latest available. Mr. Murray set out the position as stated in the following letter : — Sir, — Bank of New Zealand, Wellington, 25th June, 1894. I have the honour to inform you that I have been commissioned by the directors of this bank to communicate with the Government regarding its affairs, and to say that, owing to low prices, bad seasons, and other circumstances, the directors find that it will be quite impossible to declare a dividend to shareholders at the approaching annual meeting, the certain result of which must be the closing of the bank ; because even now, notwithstanding efforts to collect resources, the executive find the utmost difficulty in maintaining the gold reserve prescribed by law. The very'low price of the bank shares in the market is itself evidence of distrust which may at any moment develop into panic. That the closing of the Bank of New Zealand would be a calamity to the colony of the first magnitude can be questioned by no one. Its business relations in New Zealand are larger and more important in proportion to the population and resources of the country than, are those of any bank in any other colony. This will appear more strikingly when the following figures are considered : The bank has within New Zealand ninety-five branches or agencies. At these there are kept 25,000 current accounts, with an aggregate on deposit of £1,600,000; 12,000 fixed deposits, £2,800,000; which means, after allowing for cases of persons holding more than one fixed deposit, say, 35,000 separate depositors, with a total of £4,400,000 on deposit. On the other hand, there is afforded accommodation by way of overdraft to 4,600 persons to the total amount of £2 550,000; and there are, besides, 950 discount accounts, representing a large number of traders' acceptances, the aggregate amount being £600,000. That many of these persons would find accommodation elsewhere is no doubt true, but these would be the better off, large numbers of well-doing but not rich men would be ruined, promising enterprises crushed, and the industries of the colony would suffer damage from which it would take years to recover. That the lock-up of the money of 35,000 depositors would cause ijnuieiise dislocation of business, inconvenience, and loss goes without saying. Among these depositors there is the Auckland Savings-Bank, with, say, £60,000 at its credit in the Bank of New Zealand. You are aware that a run on it took place last year. There is also the Government of New Zealand, with about £800,000, between actual deposits and drafts of the bank held. This large sum is in addition to the liabilities to the public detailed above. There are, say, £1,500,000 of London deposits which, as quickly as the money could be collected in the colony, would be withdrawn from use there. I will only add that the bank has 1,300 shareholders in New Zealand, who, besides the capital they have at stake, are liable for £720,000. It is not my place to allude to other banks, but I think I only echo a general opinion when I say that the trouble would not stop short with the Bank of New Zealand. On this point recent Australian experience is suggestive. Finally, it is clear that the evil would be intensified by the depression admittedly now existing in the colony, or would greatly intensify it. Employment, already scarce, would become scarcer, and the finding of work for the unemployed would strain the resources of the Government, and unavoidably involve much waste of these ; while, as a matter of course, the public revenue would suffer seriously. He would be a bold man who would permit such a calamity to overtake New Zealand if he could prevent it, and I am firmly persuaded it may be prevented if the Government will meet the crisis wisely, boldly, and in good time. The business of the bank is as yet practically intact— distrust has not to any material extent reached depositors; and it only needs that the bank be put upon a stable footing to avert the mischief which as yet, happily, is only imminent. But I must respectfully warn the Government that it is imminent, and, if they determine to adopt any measures to deal with the situation, these would need to be taken at once to be effective. To do this two things are required : (1) That the bank be placed in possession of increased capital resources, partly to fortify its cash reserves, partly to enable it to extend to its customers the accommodation they require in the second half of the year in anticipation of their wool-clips and crops of the ensuing season ; (2) and that this be done to an amount which will suffice to maintain confidence in the bank's stability, even if no dividend be paid for a time on its existing capital. The directors hoped to have been able themselves to have issued the required amount of preference capital, but this has been found impracticable.
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I have therefore to propose to the Government that the colonial guarantee be given to an issue of two millions in preference shares, bearing not exceeding 4 per cent, interest, the period to be ten years ; such issue to be then replaced by a fresh issue of ordinary shares or otherwise, and the State relieved of its guarantee. No dividend to be in the meantime paid on the present capital till the Estates Company assets be disposed of, and the business of the bank declared by an auditor of the Government's appointing to be clean and sound. In seeking the interposition of the State, I have-no idea of the bank shareholders being relieved of one penny of the loss which may fall upon them at the expense of the taxpayer. As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000; reserve liability, £1,500,000 : total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin. Of the proposed two millions, one to be at the disposal of the bank in its ordinary business, the other million to be held in reserve, and invested only in such manner as the Colonial Treasurer may approve. I have verbally suggested to you precautions which the Government might take to secure itself and to guard against a recurrence of the state of things which calls for such exceptional treatment; but it is for the Government to impose conditions. I need not, therefore, dwell on that aspect of the matter herein. I will only ask permission to add that, ajiart from preventing so terrible a misfortune to the colony, such arrangements as I have suggested (including State supervision and public audit) would have the effect of placing and maintaining the banking business of the colony fundamentally on a sound footing. The want of a great bank, the true position of which was known to the Government by independent audit of its own appointee, and through which the financial assistance of the State could in time of monetary crisis be extended to the community without hesitation, was severely and even disastrously felt recently in Australia. The great nations of the Old World have each their national banks in more or less intimate relations to the State. It is felt that these banks have, in case of need, the State behind them ; and on their stability the immense fabric of banking, currency, and credit rests. In entering upon such relations, the Government of New Zealand would only be following the highest examples. I have, &c, The Hon. the Premier. John Murray. After receipt of that letter there was a meeting of Cabinet, and the letter was placed before the whole of the Ministers who were present. Mr. Murray was asked to attend Cabinet the same day, which he did. He was asked a great many questions by various Ministers, and he detailed at considerable length the causes that, in his opinion, had led to the Bank of New Zealand being placed in the position in which it was then. Inquiries were made particularly as to the position of the Bank of New Zealand Estates Company. The Government, as a whole, were desirous that the amount of assistance that Mr. Murray asked for should, if possible, be limited to a million. My recollection of the matter is that he expressed the opinion that a million would be sufficient to cover the losses of the bank, but that, in addition to actual losses it might be necessary to meet, it was essential for the bank to rehabilitate its credit, and that, in addition to providing the necessary capital.to meet its losses, in his opinion a further million, to be held for investment in liquid assets to insure the financial credit of the bank, was essential. Mr. Murray could not speak specifically as to the probable deficiency in the Bank of New Zealand Estates Company, or, indeed, as a matter of fact, of the bank itself. But I recollect that when pressed upon this point by some of the Ministers he stated that there was a very big hole to fill in the New Zealand Estates Company, and that very much would depend upon the future values of our staple products and the restoration from a nominal value of many of the properties that were held by the Estates Company, which could only be brought about by more prosperous times. We had the position of the bank as at 31st March, 1894, showing, as usual, its assets and liabilities under the various heads. We had that information before us when we were considering the position in Cabinet. Every member of the Government, I may say, at that time was desirous of having time to consider the position and to investigate the affairs of the bank of New Zealand, but the difficulty was that we could not get the time we desired. It was a grave crisis requiring decision and promptitude. We had absolute —what we regarded as conclusive—evidence that, in the absence of prompt assistance, the Bank of New Zealand would be compelled to close its doors within a few days. The Cabinet finally decided that, considering the enormous interest at stake, and what we believed to be the disastrous consequences that would follow to the colony the stoppage of the Bank of New Zealand would involve, State aid to the extent of two millions was desirable, and that decision was unanimously arrived at by Cabinet. The necessary legislation was authorised, and the day fixed upon which it was to be introduced to Parliament. It is needless for me to say that the whole matter was surrounded by extraordinary difficulties, requiring not only delicacy, so far as handling the matter was concerned, but more than ordinary care. Once the decision had been come to to give State aid, it was necessary that the legislation should pass through in one night, which at the time was regarded as necessary for the preservation of the Bank of New Zealand, and to prevent anything approaching a financial scare occurring in the colony ; and I was at it day and night until the morning of the day upon which the legislation was introduced. It was in a case of this sort regarded by the Government as desirable—in fact, as necessary—that some of the leading men on both sides of the House should be taken into the confidence of the Government as to its intentions so far as the course of procedure in getting the legislation through Parliament was concerned, and some members of the Ministry—the Premier and myself—with the concurrence and the desire of Cabinet, were to confer with certain men. I was to see Sir Robert Stout, Mr. Bell, the Hon. George McLean, and Mr. Saunders. The Premier, also, was to see these and some others—the leader of the Opposition and Mr. Mitchelson—whom I did not see. I saw three of them—Sir Robert Stout, the Hon. George McLean, and Mr. H. Bell—and I indicated to them what the position was, what the decision of the Cabinet was, and what the intended mode
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of procedure was —that the Government had thought it desirable to get this legislation through Parliament, and I asked them to assist, as far as they reasonably could, in the expedition of that legislation through Parliament. Sir Robert Stout and Mr. Bell generally concurred, and expressed their willingness to do so as far they could without committing themselves to the terms of the Bill, which they had not seen, and at that time neither had I. The Hon. George McLean, who for the first time, as far as I know, had received any intimation or indication from the Government that it was intended to come to the rescue of the Bank of New Zealand, was averse to the course that was proposed. He expressed himself to me that, in his opinion, the better course would be for the Government not to give State aid, as there was no telling where it would end, but to meet the pressing obligations of the Bank of New Zealand —that was in reality the Government Bills that were in transitu to London—to provide for their payment and to let the Bank of New Zealand go into liquidation. He expressed the opinion that the end was not in sight even with the proposed legislation, and he was of opinion that the Government should use the Colonial Bank with the object of carrying on the Government business and liquidating the Bank of New Zealand, preserve the good business that belonged to it, and get rid of once and for all the bad and doubtful business attached to the Bank of New Zealand and to the New Zealand Estates Company. In short, his belief was that it was not desirable to commit the colony to the two millions, and he advocated the other as an alternative and better course. As a matter of fact, I did not agree with him. My own opinion was that it would be disastrous to the colony if the Bank of New Zealand was allowed to come down, and I expressed myself to that effect. He interviewed the Premier, and he afterwards saw the Premier with me. The Premier and myself were both of one opinion as far as the desirableness of preventing the fall of the Bank of New Zealand was concerned. The Hon. George McLean, who regarded the position as a very grave one, while not concurring with the views we entertained, expressed himself as willing and anxious to do his utmost to assist the colony out of the grave crisis that it was placed in. As far as my observation went, he did so to the utmost of his power. The same trouble presented itself to him that had presented itself to every member of the Ministry, and that was the uncertainty of the step we were taking in consequence of the limited time at our disposal to ascertain the real position of the Bank of New Zealand and of the New Zealand Estates Company, so far as its internal business was concerned. However, the legislation was introduced that night, and it was passed through Parliament; and I should like here to say that the request made by a limited number of members to have a parliamentary Committee set up to investigate the position of the Bank of New Zealand that night was opposed by the Government wholly and solely from the motive and belief it had that it was beyond human possibility, in one night —or in three months, or six months, or even twelve months—to ascertain the necessary detailed information that we were all anxious to have, if we could have obtained it, before proceeding to prevent the Bank of New Zealand from going down. Mr. Murray informed me that the Bank of New Zealand had made overtures to the National Bank for the purchase of its business—that Mr. Coates, the general manager of the National Bank, who had some time previously proceeded to England, had been approached with a request that he should interview his directors in London with a view to the disposal of the National Bank's business to the Bank of New Zealand, which was dependent upon the Bank of New Zealand getting the increased capital that the legislation of 1893 gave them authority to obtain. Mr. Murray told me —and I know from Mr. Coates since—that representations were made to the National Bank directors, and that the negotiations proceeded to a considerable extent, and that the inability of the Bank of New Zealand to obtain the necessary extra capital at the time was the primary cause of the cessation of these negotiations. In June, 1894, Mr. Murray informed me that he had again approached the National Bank —that he had reason to believe —or to hope, I do not remember which —that the business of the National Bank could be obtained by the Bank of New Zealand, and I may say that he indicated from the start that it was, in his opinion, necessary that, with the extra imposition of £80,000 a year for interest upon the fresh two million of capital, it was absolutely essential that the Bank of New Zealand should acquire the business of another bank; and after the legislation he again told me that he again approached the National Bank and had made overtures to Mr. Coates to take the general managership of the Bank of New Zealand, and to acquire the business of the National Bank. The transfer of the head office of the Bank of New Zealand from London to Wellington was one of the difficulties that cropped up from the National Bank's point of view at this stage, so I understood. A condition that was stipulated for in the first instance, in 1893, by the National Bank was that its directors, or the principle directors, were to be directors of the Bank of New Zealand, that the National Bank was to receive par value for its shares, and that the whole of its officers were to be provided for by the Bank of New Zealand. The attempt to put this into operation after the legislation of 1894 turned out not to be practicable, and Mr. Murray intimated to me, within a short time after the passing of the legislation in 1894, that negotiations in this direction had come to a stop. He then turned his attention in the direction of the Colonial Bank, and expressed himself to the same effect, as far as the acquisition of its business was concerned—viz., that it was of the utmost importance to the Bank of New Zealand; and he met the Hon. George McLean in my room —I think in the presence of Mr. Seddon—where they, for the first time over a considerable period of years, came together, and they informally, at the first interview, discussed banking matters generally, and Mr. Murray urged that the Colonial Bank should amalgamate with the Bank of New Zealand. They left shortly afterwards, and about that time, or within a short time afterwards, the Bank of New Zealand and the Colonial Bank went into the question of the proposed amalgamation. The result of their negotiations with a view to obtaining the amalgamation of the Colonial Bank with the Bank of New Zealand was embodied in a communication sent to the Government, dated the 11th September, 1894, by Mr. John Murray and the Hon. George McLean; and a letter of the same date from Mr. John Murray, and a proposed amalgamation scheme of the same date sent by Mr. John Murray and the Hon. George McLean was forwarded, and I would like this correspondence to be put in my evidence seriatim. *39—1. 6.
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Mr. J. Murray and the Hon. G. McLean to the Hon. the Colonial Treasurer. Sir,— Wellington, 11th September, 1894. We have the honour to hand you the enclosed two documents embodying the agreement between us for an amalgamation of the Colonial bank of New Zealand with the Bank of New Zealand, subject to the approval of the Government and of the shareholders of the respective banks. We have, &c, John Murray. The Hon. J. G. Ward, Colonial Treasurer. George McLean. 1. Negotiations have taken place for the amalgamation of the Bank of New Zealand and the Colonial Bank of New Zealand, and conditions have been provisionally defined. These are embodied in the accompanying memorandum, and are now respectfully submitted for the sanction of the Government as a necessary preliminary to their being laid before shareholders of the respective banks for their confirmation. 2. It is confidently claimed that this arrangement, if carried into effect, will greatly contribute to the soundness and stability of banking in the colony, and, by reason of the materially-increased net profits which will accrue to the Bank of New Zealand from the accession of the Colonial Bank's business, it would strengthen the security of the State in respect of its guarantee for the Bank of New Zealand. 3. The presence on the Bank of New Zealand's balance-sheet of a large item representing shares in the Bank of New Zealand Estates Company is a source of weakness to the bank, and the Colonial Bank reasonably make it a condition of amalgamation either that it be entirely removed or that the Government undertake to make good the ultimate deficiency, if any, which might remain after liquidation of the assets and of the collateral cover held by the Government, viz:— (1.) The paid-up capital of the bank, which, under the proposed £ agreement, is to be written down to ... ... ... 600,000 (2.) Reserve liability of shareholders ... ... ... ... 1,500,000 (3.) The interest of the Bank of New Zealand shareholders in the ' future profits of the bank, which, if the amalgamation be carried out, can hardly fail in ten years to accumulate to ... 500,000 Say ... ... ... ... ... £2,600,000 4. This undertaking in point of fact already exists, because the two millions capital guaranteed by the State is liable to creditors to make good this item with the others in the balance-sheet. The complete separation of the Estates Company from the bank, and the assumption by the Government of a share in its management and liquidation, would be a measure wise in itself, and which the country desires to see carried out. 5. It is respectfully suggested that a small Board or commission be set up; half to be nominated by the Government, half by the bank, with an administrative head to be jointly appointed. 6. And it is submitted that, in order to economy, and thereby the better security of the State, arrangements be made for the redemption of the £1,500,000 debentures, which are now a first charge on the assets, which impose a heavy and quite unnecessary burden of interest, and so lessen the resources to which the colony has to look for the protection of its guarantee, and which stand in the way of a satisfactory rearrangement of the administration. It is believed that this can be effected without raising any more money by loan. If part of the money already raised be used for extinguishing so much of these debentures there will, on the contrary, be an actual reduction in the amount owing. But this means, by the resumption of some of the estates under the Land for Settlements Act, and by assistance from the bank itself, the incubus referred to can be got rid of. Wellington, 11th September, 1894. John Murray. The undersigned, being of opinion that an amalgamation between the Bank of New Zealand and the Colonial Bank of New Zealand would be mutually advantageous and in the interests of the colony, agree, as regards the Bank of New Zealand, to recommend to the approval of the Government, and, as regards both banks, to recommend to their respective directors and shareholders, the following terms : — 1. The assets of each bank to be reviewed by a Board or other tribunal, upon which the other bank's representatives shall be preponderant. Upon these Boards respectively being satisfied that the assets of each bank are so far sound that any deficiency can be made good by the provisions available therefor, the Bank of New Zealand to assume the liabilities of the Colonial Bank and take over its assets, as hereinafter provided. 2. The Bank of New Zealand to take the necessary measures to increase its capital by the creation of new shares, of the nominal value of one million pounds sterling, to be designated B shares. Of these, four hundred thousand pounds to be issued to the shareholders of the Colonial Bank in lieu of, and in exchange for, the present paid-up capital of that bank ; the shares so issued to be considered as fully-paid-up shares, and to carry no further liability whatever. The remaining six hundred thousand pounds in shares to be vested in the President of the bank for the time being, and to be held for the present as unissued, but to be at the disposal of the shareholders of the Bank of New Zealand or their transferees at a period to be appointed by the directors of the bank for the time being, but not later than the end of the year 1903. The subscriptions to be pro rata to the holdings of the C shares hereinafter mentioned, and six months to be given to subscribers in which to pay for the shares by instalments. When all the instalments are paid, the shares to carry no further liability. Such of those shares as are not subscribed for by those having a right to do so shall thereafter be absolutely the property of the bank as then constituted,
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and free from any restriction as to issue. The Bank of New Zealand to write down its present paid-up capital of nine hundred thousand pounds to six hundred thousands pounds, the sum of three bundred thousand pounds so released to be used as hereinafter provided. The old shares so written down to be designated C shares. The capital of the bank after amalgamation thus to be, — £ Guaranteed preference stock (A) ... ... ... ... 2,000,000 B shares, fully paid up ... ... ... ... ... 400,000 C shares, fully paid up ... ... ... ... ... 600,000 3,000,000 B shares unissued ... ... ... ... ... ... 600,000 £3,600,000 3. The first board of directors shall consist of seven members, of which four shall be elected by the present shareholders of the Bank of New Zealand, and three shall be elected by the present shareholders of the Colonial Bank, or their respective transferees. It is of the essence of this agreement that the Bank of New Zealand shall have a preponderance of one member on the new board of directors. Therefore if the Government should appoint as President of the bank a person heretofore connected with either bank, such President shall stand for one of the directors to be nominated by that bank. 4. With the exceptions of the principal executive officers—-namely, the joint general managers, chief inspector, and London manager (regarding which a separate agreement has been entered into) —the officers of the bank shall be selected by the new board, of directors from the present staffs of both banks, and appointed to their various posts. These selections, so far as may be practicable, shall be made in accordance with the numbers and positions of the present officers of the two present staffs relatively, departure from this condition being only made where deemed necessary in the interests of the bank. The Colonial Bank officers coming in shall have no rights in the present Bank of New Zealand Guarantee and Provident Fund. Officers dispensed with to be compensated by the bank to which they at present belong. 5. The liabilities and assets of the Colonial Bank shall be taken over by the Bank of New Zealand, as provided in clause 1, excepting such assets or advance business which by the new board of directors (having a preponderating number elected by the Bank of New Zealand) shall be considered unfit and not proper to be so taken. Such amounts as may be so rejected, but which it may not be thought expedient to wind up, or not to wind up speedily, also such amounts as are determined to be subjected to speedy realisation, shall be liquidated or otherwise treated by the bank under the new Board for behoof of the present shareholders of the Colonial Bank or their transferees, but under direction and according to the wishes of appointees of the said shareholders. The reserve funds and undivided profits of the Colonial Bank shall be used in the first instance to make good any deficiency resulting from liquidation as above. If any surplus remains after making good such deficiency, such surplus shall be divided equitably amongst the shareholders of the Colonial Bank; if the reserve fund and profits be insufficient to make good the deficiency, then a call shall be struck on the Colonial Bank shares, and shall go to make good such dificiency before the final exemption of the shareholders from liability. The limit of time allowed for acceptance or rejection of advance business as above shall be four calendar months from the date of amalgamation, and no such account shall be carried on for more than twelve months, unless with deposit of a reserve against it to the satisfaction of the Board. 6. The new board of directors shall pass in like review the assets and liabilities of the Bank of New Zealand in existence prior to amalgamation; but if any representative of the Colonial Bank on the Board shall take exception to any asset so reviewed, then the tribunal must be narrowed by so many of the representatives of the Bank of New Zealand withdrawing as shall leave a preponderating number of Colonial Bank appointees to decide whether such asset shall be taken over or rejected. Within four months from date of amalgamation there shall be set aside for liquidation or other treatment all such assets and accounts as may be considered unfit and not proper to be continued as business of the bank. Such accounts as may be so set aside shall be liquidated or otherwise treated by the new Board in the same manner as those of the Colonial Bank, but under the direction and according to the wishes of the appointees of the present shareholders of the Bank of New Zealand. The three hundred thousand pounds released from the capital of the bank as per clause 2, the reserve funds, and the undivided profits of the Bank of New Zealand shall be used in the first instance to make good any deficiency resulting from liquidation as above. If any surplus remains after making good such deficiency, such surplus shall be credited to the account of the Bank of New Zealand Estates Company (Limited) with the bank. If the said released capital, reserve funds, and undivided profits be insufficient to make good the deficiency, then the dividends and profits which shall accrue on the six hundred thousand pounds C shares shall be used in the first instance to make good such deficiency, and shall be so applied until the deficiency be wiped off. 7. The present premises of both the Bank of New Zealand and the Colonial Bank to be valued by the new Board on the basis that they are going concerns ; and if these values be agreeable to the appointees of the relative banks, then such values be adopted, and the premises so agreed upon be taken over by the amalgamated bank. If the appointees of either bank disagree with any such valuation of the new Board, then the Board and the appointees so disagreeing shall in each case appoint an umpire, whose valuation shall be final. But it shall be reserved for the appointees of
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each bank to decide whether the amount of any valuation should be accepted from the amalgamated bank, or that in preference any particular premises should be liquidated as specified in clauses 5 and 6 hereof. Should the valuations of the present premises of the Bank of New Zealand amount to a sum exceeding that at which the whole of the premises now stands in the books of the said bank, such surplus shall be credited to the liquidation account for the ultimate behoof of the Bank of New Zealand Estates Company (Limited), as per clause 6, and any surplus in like manner arising by valuation of the premises of the Colonial Bank shall be credited to the liquidation account mentioned in clause 5. If instead of a surplus there should arise a deficiency to either bank on account of premises, such deficiency shall be treated, in the case of the Bank of New Zealand, as provided for deficiencies on other assets in clause 6, and in the case of the Colonial Bank, as likewise provided in clause 5. 8. It is an integral part of this agreement that before amalgamation takes place legislation shall be passed by the Parliament of New Zealand by means of which the Bank of New Zealand Estates Company (Limited) will be entirely separated from the bank, so that the present shareholders of the Colonial Bank who are about to transfer their capital, and the future creditors of the Bank of New Zealand, may run no risk whatever from the bank's connection with the said Estates Company or future advances to it. 9. It is hereby agreed that, after payment of four per cent, per annum on the guaranteed preference stock, and six per cent, per annum dividend on the other paid-up capital of the bank, and after placing twenty thousand pounds per annum to a new reserve fund, all other profits and dividends earned and payable (after due provision for bad and doubtful debts) shall be applied to reduce the ultimate deficiency of the Bank of New Zealand Estates Company (Limited). 10. The bank shall afford to the Bank of New Zealand Estates Company the necessary banking facilities, under suitable guarantee, for carrying on and liquidating the business and assets of the company, and the concerns belonging to it. Amounts at credit of the company with the bank are to be placed for interest purposes against amounts at debit, and interest at the rate of four percent, per annum is to be charged or allowed on the daily balances on either side until the company shall be either liquidated or placed in a solvent condition. 11. The said amalgamation shall take effect within fourteen days after the shareholders of the respective banks shall have adopted a resolution approving of such amalgamation; but the parties may by mutual consent extend such period of fourteen days for a further period not exceeding two months. John Murray. Dated at Wellington, the 11th day of September, 1894. George McLean. On receipt of the communication from Mr. Murray and Mr. McLean containing the amalgamation scheme I sent it on with the following letter, dated 12th September, 1894, for the Premier : — I received last night the attached proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. Since the colony guaranteed £2,000,000 to the Bank of New Zealand the whole matter has given me the greatest concern and anxiety, not so much on account of the guarantee to the bank proper, but on account of the position of the Bank of New Zealand Estates Company. Attached to the bank as it now is, it will, in my opinion, render it impossible for the bank to extricate itself, even with the colony's guarantee, and must, if not now dealt with, call in the future for further substantial aid from the colony. If the Estates Company is left under the same control as the bank itself, the duties of the President, Auditor, and Colonial Treasurer will be greatly interfered with, —and, indeed, I may add that, in my humble opinion, the Treasurer's life would not be worth living. To insure himself against the possibilities of disaster in the guarding of the £2,000,000, he would require to know almost every detail of the way in which the two concerns —namely, the Estates Company and the bank itself —were operated upon, otherwise the possibility of a loss in either of being transferred or even absorbed by the other would be not only easy to do, but exceedingly difficult over so huge a concern to detect. No President or Treasurer would feel safe (where two large businesses, conducted ostensibly as two establishments, but in reality one) in assenting to the investment of the funds guaranteed by the State. I recognised at the time, and stated so in the House, that the Government would take steps this session to separate the Estates Company from the bank. How to effect this has been the difficulty to solve, and day by day since the House passed the bank legislation it has engaged my attention. The result of the considerations that have occupied the attention of the executive of the bank and myself are embodied in the attached proposals. They are, — 1. An amalgamation between the Bank of New Zealand and the Colonial Bank. 2. The clearing of both of all bad or doubtful accounts. 3. Each proprietary to be held responsible for and to provide for any losses made on any accounts now held by either. 4. The capital of the combined banks to be £3,600,000. 5. All profits after certain provisions named in the proposal hereto to be paid to liquidate the Assets Company. 6. The Estates Company to be separated from the bank, the colony undertaking, should any deficiency ultimately arise, to make good such. This is virtually the position now. 7. The collateral securities against the Assets Company to be held by the Government to be £2,100,000. The profits from the bank to be paid into the Assets Company estimated to realise at least another £500,000. Total, £2,600,000. I am of opinion that, to guard the interests of the colony, the Agent-General should be appointed to the London board ; not if the Estates Company remains attached to the bank. The colony, with a clean and sound bank, would gain by having such a representative on the London board.
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There should also be a small advising board in Melbourne or Sydney to control and advise upon the Australian business. The policy in each of. the Australian Colonies should be to reduce business gradually, and to confine the business of the bank there entirely to one of a liquid character. Advances there on property or real estate should generally be avoided. The Government to control the Estates Company by the appointing of a president or chairman to it, and also two directors. The bank shareholders, who would be liable for £1,500,000, also to appoint two directors. The Government Bank of New Zealand Auditor also to be auditor of the Estates Company. The name of the Estates Company to be changed by the excision of the words " Bank " and " New Zealand." It would be well, in my opinion, to completely change its name. The past odium attaching to it would thus not continue to live daily in the history of the bank, and the colony could well afford not to have its name attached to it either. The position is both a difficult and a serious one. In the absence of the proposal now under consideration being adopted, the next best course, and one which could be adopted, would be to separate the Estates Company from the bank, and guarantee its outcome, holding the uncalled capital of the Bank of New Zealand against any loss that might arise. In the event of this course being adopted, the colony should control the Estates Company as suggested under the amalgamation scheme. If this course is thought to be preferable to an amalgamation, it will be essential to retire the £1,500,000 of 5-J-per-cent. Estates Company debentures, and to do this an issue of 3-J-per-cent. Government stock would be necessary. So far as my opinion is worth anything, the latter scheme has much less to recommend it than an amalgamation. The whole matter, however, requires the most careful consideration of all the Ministers. Wellington, 12th September, 1894. J. G. Ward. And in covering the position of the Bank of New Zealand in its relations to the colony I pointed out that the whole matter was of such serious importance that it required the most careful consideration of all the Ministers. It will thus be seen that members of the Ministry had the whole proposals before them immediately after they reached me. It was carefully considered by Government, and it was decided to lay the proposed amalgamation scheme on the table of the House. lam not sure from memory of the date it was laid on the table of the House, but after the receipt of the proposed amalgamation scheme from Mr. Murray and the Hon. George McLean I wrote the following letter, dated 22nd September, 1894, stipulating certain conditions that will be seen from the letter and asking for a reply before noon of the following Monday : — " Gentlemen, " Colonial Treasurer's Office, Wellington, 22nd September, 1894. " I have the honour to acknowledge the receipt of your joint letter of the 11th instant, covering proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. " In reply, I have to state that the matter has received the careful consideration of the Government. " Without in any way committing the Government to any fixed course or approval of the proposals, it will be necessary — " 1. If any legislation is undertaken by the Government, that it shall be of a permissive character, to enable the Government to be satisfied, before assenting to an amalgamation, that the general interests of the colony are conserved and protected. " 2. That, in addition to the scrutiny which is proposed in the memorandum of agreement, the Government to appoint a special representative or representatives, independent of either bank, to examine and report to the Government on the various accounts and assets proposed to be dealt with. " 3. The shareholders of each bank to be responsible for and to make good all losses on existing business that is not passed by the colony's valuers. " 4. That, upon the expiration of ten years, the profits of the combined bank shall still continue to be paid to the Estates Company, until any deficit in the winding-up of the Estates Company is liquidated. The Government lien upon the interests of the shareholders in the Bank of New Zealand to be continuous until all liability to the colony is at end. " 5. The Government to nominate a chairman and two directors of the Estates Company, and the shareholders of the Bank of New Zealand to nominate two directors to the same, the said board to have full control over the uncalled capital of £1,500,000 of the Bank of New Zealand shareholders. " 6. In addition to the appointment of a president and auditor to the Bank of New Zealand, the Government to appoint one director to the combined bank. " I should like to have your reply to the foregoing before noon on Monday. The Government will then further consider the matter, and decide what course they deem it desirable to take. " I have, &c. "J. G. Ward, Colonial Treasurer. " John Murray, Esq., and the Hon. George McLean, Wellington." The stipulations of the Government are acknowledged in a letter from Mr. John Murray, dated the 24th September: — " Sir, — " Bank of New Zealand, Wellington, 24th September, 1894. I have the honour to acknowledge receipt of your letter of 22nd September having reference to amalgamation of the Bank of New Zealand and the Colonial Bank of New Zealand, and setting forth certain supplementary conditions as necessarily precedent to any action therein by the Government. "These conditions—l to 4 inclusive—l should willingly recommend to bank shareholders, but I greatly regret that I cannot say so of Nos. 5 and 6, nor do I think that, even were I to recommend them, the shareholders in the Bank of New Zealand would entertain them.
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" It will probably make the position more clear if I begin with 6, which is that, ' in addition to the appointment of a president and auditor to the Bank of New Zealand, the Government to appoint one director to the combined bank.' '' In considering this stipulation, I would ask the Government to bear in mind that Bank of New Zealand shareholders are responsible for the future of the bank not only to the extent of their large paid-up capital, future profits without limit of time, and reserve liability £1,500,000, because, under the terms of the provisional agreement, 4 per cent, is to be debited to the Estates Company on account of the large item " Share Account," and in consideration therefor surplus profits, after a dividend of 6 per cent, and £20,000 to reserve, are to be returned to the Estates Company. " Now, should there be ineffective management the consequences would appear in the amount of surplus to be paid over to the Estates Company, for the outcome of which shareholders are liable in the great sums I have named; while, with only four directors on the new board to the Colonial Bank three, and a director and the president (also a director) nominated by the Government, Bank of New Zealand shareholders would be in minority—though primarily liable for results, would be at the mercy of persons not of their appointment and beyond their control. "It is of the essence of the arrangement embodied in the Share Guarantee Bill that the shareholders should, by directors of their own appointment, manage the bank, the Government maintaining audit and power of veto on objectionable business. To take the ordinary management out of the control of shareholders, while yet holding them responsible for its results, would, I feel sure, be regarded by them as inequitable. " The explanations I have given above will serve to make clear the reasons why clause 5 also would not be assented to. " Shareholders, being held responsible to the extent of over £2.000,000, cannot, I submit, be reasonably expected to part with tbe control of their property to a person in whose selection they have no say, and hand over to him the power to make calls upon them. Clearly, as between two directors appointed on each side, the chairman would exercise, at least as regards the shareholders, supreme power. " At the same time, I feel sure there will be no objection made to the Government taking an effective part if they wish in the management of the Estates Company. " In conclusion, I desire to point out that an erroneous impression has been disseminated that legislation is in some way necessary to free the bank from the Estates Company. Except as a condition of amalgamation made by the Colonial Bank there is no such necessity. It fs already a separate company, and separately administered, though to a large extent under bank control. " As to its being a burden on the bank, it is only so in the sense of being a burden on bank shareholders, which it must of necessity remain till it be liquidated, unless the colony were to relieve them, which nobody proposes. " I have, &c, " The Hon. the Colonial Treasurer, Wellington." "John Murray. And also in a letter from Mr. George McLean, dated 24th September, in reply to the stipulations contained in the Government's letter of the 22nd September : — " Sir,— " Dunedin, 24th September, 1894. " I have the honour to acknowledge the receipt of your letter of 22nd September, and have submitted the contents to my colleagues here. In reply lam desired to state that the conditions imposed by you make the scheme such as we could not recommend to our shareholders. Taking the clauses of your letter seriatim, — " 1. We do not object to the permissive character of the proposed legislation. "2. We have not the slightest objection to your appointing representatives to examine the condition of our accounts and assets, and refer you to our letter of 20th July. When applying for a share of the Government account we specially asked the Government to do this before giving us that share. "3. This stipulation is all right, and was fully provided for in the agreement so far as the scrutiny by the other bank was concerned. We have no objection to its application to the suggested further scrutiny. "4. This so vitally affects the interest of our shareholders that we will not under any circumstances agree to propose it to them: it would be an invitation to spread the realisation of the Assets Company over an indefinite period, and would make our shareholders' dividends responsible beyond what can fairly be asked or was ever intended. This bank will have no voice in the management or realisation of the assets. Regarding the Government lien on the interests of the present shareholders in the Bank of New Zealand, we can raise no objection. " 5. This does not immediately concern us. " 6. The powers possessed by the Government under the scheme submitted and under clause 2 above — namely, a president with a power of veto, an auditor, and a preliminary scrutiny of assets and accounts to be made by a Government representative, on whose report the acceptance by the Government of the whole scheme will depend —must be held to be sufficient. It is obvious that the presence of a nominee of the Government on the board would detrimentally affect the business of the bank. " Final clause : The assent to amalgamation on the part of the Colonial Bank would greatly depend upon the shareholders being represented in the amalgamated institution by tnen in whom they had confidence. Without this guarantee there would be little prospect of obtaining the necessary consent. The attitude which the directors at the general meeting on Wednesday must take up with regard to the proposed amalgamation will evidently so largely depend upon the answer which we receive to this, that I must ask you to reply as definitely as possible on the whole affair not later than noon to-morrow. " I have, &c, "The Hon. the Colonial Treasurer, Wellington." " Geo. McLean.
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On the same day of the receipt of the two letters, dated 24th September, from Mr. Murray and the Hon. George McLean, I wrote them that the Government could not see its way to depart from the conditions stipulated for : — " Sir,— " Wellington, 24th September, 1894. " The Government have carefully considered your communication of to-day, and in reply I have the honour to inform you that they cannot see their way to depart from the conditions named in my letter of the 22nd instant. " I have, &c, " J. Murray, Esq., Wellington." "J. G. Ward, Colonial Treasurer. " Sir,— " Wellington, 24th September, 1894. The Government have carefully considered your communication of to-day, and in reply I have the honour to inform you that they cannot see their way to depart from the conditions named in my letter of the 22nd instant. " I have, &c, " The Hon. G. McLean, Dunedin." " J. G. Ward, Colonial Treasurer. That ended the negotiations, and brought the proposed amalgamation between the two banks to a stop. During the session, notice of a Bill was given by Mr. H. D. Bell, its effect being to prevent purchase or amalgamation by the Bank of New Zealand with any other bank taking place during the recess. Some time after the Government introduced legislation with a similar object, and I should like to say that there was no pressure brought to bear upon the Government to do this, and neither was there any pressure brought to bear upon myself by any member of the Ministry, or by any one else. I, unsolicited, requested Cabinet to agree to the introduction and passage of such a measure, to prevent amalgamation or purchase of the Bank of New Zealand with any bank during the recess without first obtaining the authority of Parliament, and that was passed through the House without alteration, so far as my memory serves me. That ended the legislation in connection with banking in 1894, so far as the assistance to the Bank of New Zealand and the stoppage of negotiations for the purchase or amalgamation or purchase of any other bank without the authority of Parliament was concerned. Regarding the appointment of President of the Bank of New Zealand, this was first offered to Mr. William Watson, by the unanimous decision of Cabinet, as will be seen by the following letters. It was on the 25th September, 1894, that the following letter was sent to Mr. Watson : — " Sir, — " Colonial Treasurer's Office, Wellington, 25th September, 1894. " I have the honour to inform you that the Government yesterday decided unanimously to offer you the position of President of the Bank of New Zealand during good behaviour. Salary, £2,000 (two thousand) per annum; and I shall be glad to know at your early convenience whether the position is accepted by you. " I have, &c, " J. G. Ward, Colonial Treasurer. "William Watson, Esq,, Inspector, Colonial Bank, Wellington." That letter was sent to Mr. Watson, who wrote acknowledging it on the 25th September, 1894 :— " Sir, " Wellington, 25th September, 1894. " I have the honour to acknowledge the receipt of your letter of this date, and to tender my thanks, to the Government for the offer of the appointment referred to. I shall at once proceed to Dunedin, and forward to you a definite reply as soon as possible. " I have, &c, "The Hon. J. G. Ward, Colonial Treasurer, Wellington." "W. Watson. Mr. Watson proceeded to Dunedin to interview his friends in connection with it, and on the 28th September wrote as follows, declining the offer : — " Sir,— " Dunedin, 29th September, 1894. " I have now the honour to inform you, in reply to your letter of the 25th instant, that I am obliged to decline acceptance of the position therein offered to me. In doing so I would again beg to express my thanks and gratitude to the Government for the high honour conferred upon me by the offer. "I have, &c, "The Hon. J. G. Ward, Colonial Treasurer, Wellington." " W. Watson. Soon after receipt of Mr. Watson's letter declining the position Cabinet met and discussed th matter, and, as it was not considered desirable to have a positive offer made a second time and a possible refusal again given, feelers were put out in the meantime ; and I may say it was after due consideration decided to ascertain personally from Mr. Coates, the general manager of the National Bank, whether he would, if offered it, accept the position, and, if he was agreeable to accept it, the decision of Cabinet was that it was to be offered to him. I saw him, and conveyed the decision of Cabinet to him. He dissented from the salary, in the first instance, which was £2,000 a year, and stated that unless the salary was £2,250 he was not prepared to be released from his then position of general manager of the National Bank in order to accept that of President of the Bank of New Zealand. I conveyed his request upon this point to Cabinet, and it was decided to increase the salary to £2,250. Mr. Coates saw me again, and expressed his willingness to accept the position provided he could procure the cancellation of the agreement he had with the National Bank for a period of years. With the concurrence of Cabinet, I cabled to the Agent-General the same day, asking him to interview the directors of the National Bank with a view of getting Mr. Coates's term, of appointment cancelled, so that he might accept the position Government had offered to him :— " (Confidential.) "Westminster Chambers, 13, Victoria Street, London, S.W., " Sir,— 6th October, 1894. " On receipt of your cablegram of the Ist instant re the proposal to offer Mr. Coates the position of President of the Bank of New Zealand, I immediately interviewed the directors and urged them as strongly as I could to favourably entertain your wishes. They were taken by
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surprise, and evidently did not view the suggestion with favour, and promised to communicate with Mr. Coates. From the letters received, copies of which are attached, I gather that Mr. Coates has definitely declined the position. " I have, &c, " The Hon. the Premier, Wellington." " W. B. Perceval. " (Telegram.) "(Received Ist October, 1894.) " Inform the governors of the National Bank of New Zealand immediately New Zealand Government will appoint James Coates President Bank of New Zealand, subject to their approval. Chairman National Bank of New Zealand consents to. If not favourably received, keep strictly confidential. " Treasurer." " (Telegram.) " (Despatched Ist October, 1894.) " Have informed directors National Bank of New Zealand proposals New Zealand Government. Directors will communicate with Coates." " The National Bank of New Zealand (Limited), 71, Old Broad Street, " Dear Sir, — London, E.C., 3rd October, 1894. " The particulars of your interview, on the Ist instant, with some of the directors have been communicated to the board, who are rather surprised at the request addressed to them by the New Zealand Government, without any reason assigned, to transfer the services of their latelyappointed general manager almost immediately after his establishing the head-quarters of the bank in Wellington. " A telegram received from Mr. Coates throws little or no additional light on the question, and the board is in further telegraphic communication with the colony. " I am, &c, " Sir Westby B. Perceval, K.CM.G." " Richd. Maxwell, Secretary. " The National Bank of New Zealand (Limited), "Dear Sir, — London, sth October, 1894. " We have now received a telegram from Wellington which informs us that Mr. Coates has intimated to the Government of New Zealand that he cannot accept their proposals to leave the service qf this bank. This disposes of the inquiry which, on behalf of the Government, you addressed to us on the Ist instant. " Yours, &c, " Sir Westby B. Perceval, K.CM.G., &c." "Richd. Maxwell, Secretary. " (Confidential.) « Sir,— " 29th November, 1894. " With reference to the correspondence which has taken place in connection with the Government's proposal to offer Mr. Coates the position of President of the Bank of New Zealand, you will, ere this, have learned that Mr. William Watson, late of the Colonial Bank, has been appointed. It remains for me to thank you for the trouble you have taken in the matter of the negotiations with the National Bank. " I have, &c, "A. J. Cadman, " The Agent-General for New Zealand, London." " For the Colonial Treasurer. I understood from Mr. Coates at the time that he also was cabling, which I have since learned he did, urging the directors to release him. The directors of the National Bank apparently communicated with their New Zealand director—the only director they had in the colony—Mr. Rattray, who had just arrived m Wellington from Sydney. Mr. Rattray saw me, and I stated to him the desire of the Cabinet to have Mr. Coates appointed to the position of President of the Bank of New Zealand, and endeavoured to get him to acquiesce in the arrangement, with a view to his so advising his directors. He left me to consider the matter, and he afterwards informed me that, much as he desired to see Mr. Coates advance in life, he considered the general financial position in the Australasian Colonies was such that his duty to the National Bank compelled him to advise the directors to retain the services of Mr. Coates, and I understand that he cabled to that effect. Within a day or two afterwards Mr. Coates communicated with me expressing his regret that he was unable to accept the position in consequence of his own bank desiring to retain his services. I reported the matter to Cabinet, and some days after that we had a Cabinet meeting, at which it was again decided, after consideration, to offer the position to Mr. Watson at the salary of £2,250 per annum. That was conveyed to Mr. Watson in a telegram dated the 6th October, 1894: — " W. Watson, Esq., Colonial Bank, Dunedin. " I beg to offer you position President Bank of New Zealand, salary two thousand two hundred and fifty per annum, during good behaviour. If accept, can you come on here by to-day's express ? Beply. "J. G. Ward, Wellington. "6th October, 1894." Mr. Watson replied by wire on the 6th October, 1894 : — "Hon. J. G. Ward, Wellington. " Accept offer with thanks. Cannot go by express to-day, but will leave Monday morning. " Dunedin, 6th October, 1894." " W. Watson. Those are the facts in connection with the appointment of the President of the Bank of New Zealand. I may say that there was no request or application from Mr. Watson to me, either verbally or in writing, or through any other person, before the position of President was offered to him on the 25th September, 1894. I never had any conversation with Mr. Watson upon it concerning himself, nor did he with me, nor had I any conversation before Cabinet met with any body else in connection with that position so far as Mr. Watson was concerned. The facts are as I have stated them, and as contained in the correspondence bearing upon the point. With regard to the appointment of Government Auditor, that was not offered, in the first instance, to the present gentleman who fills the position. It was offered to another gentleman occupying a high position
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in one of the Australian banks doing business in the colony, and he, after consideration, expressed his regret that he was unable to accept it. The Cabinet again considered the matter, and the appointment was finally conferred upon Mr. Butt, the present holder of the position. I think that covers the principal points in connection with the banking business of 1894. Now I come to 1895. In July of 1895 I was advised by the President of the Bank of New Zealand—verbally, in the first instance—that, as a result of the investigation by himself and the directors and officers of the Bank of New Zealand, its position was such that further legislation was imperative. The general position of the bank was conveyed in a letter from the President, addressed to me, on the 23rd July, 1895 :— Sir, — Bank of New Zealand, Wellington, 23rd July, 1895. I have the honour to hand you herewith balance-sheets of the Bank of New Zealand, the Bank of New Zealand Estates Company, and the Auckland Agricultural Company, as of 31st March, 1895. You are aware that the Bank of New Zealand Estates Company is entirely owned by the Bank of New Zealand, and the £750,000 debentures of the Estates Company guaranteed by the bank. In like manner the Auckland Agricultural Company is owned by the Estates Company, and the debentures of the Agricultural Company guaranteed by the bank. In the remainder of this letter, therefore, the term "Estates Company" will include the Auckland Agricultural Company. I have also, with much regret, to enclose a letter, dated yesterday, which I have received from the Government Auditor of the bank for the colonies, and to state, with the concurrence of the other directors, the true position of the bank, involved as it is with the affairs of the Estates Company. In the bank itself there are £3,085,296 represented as assets which are entirely unremunerative, £1,850,000 of this amount being shares of the Estates Company, and £1,235,296 consisting of other debts, of which £376,898 are irrecoverable, and others are of so doubtful a character that the board consider provision to the extent of £200,000 should be made for them to place the bank in a thoroughly sound position. In the Estates Company there is a deficiency of £472,938, which sum is not represented by assets, at all, and is altogether apart from the book-values of the properties and other assets. Besides the amount of £3,085,296 above mentioned, there is amongst the debts due to the bank at 31st March the large sum of £1,442,000 due by the Estates Company, on whose debit balances it has hitherto been the custom to charge interest at the rate of 5 per cent. —a charge which, owing to the recurring yearly deficits accruing from the working of the Estates Company, the board do not feel justified in continuing any longer. The severest economies have been introduced into both the bank and Estates Company — economies which, with other adjunctive measures instituted, are calculated to produce, without impairing efficiency, no less than £85,000 annually to better the results of the two concerns ; but, whilst the magnificent portion of the business which is sound might enable the bank to stagger along under its load, the entanglement with the Estates Company is such that, without severance from it, the bank can no longer carry on. The board of the bank have given lengthy and careful consideration to the whole matter, and, in view of the report which they will have to present to shareholders at the annual general meeting in August, have decided to request the Government to take steps to prevent disaster. In the opinion of the board it is imperatively necessary that action should be taken by the Government by way of further legislation, to be declared before the shareholders' meeting takes place; otherwise the necessary disclosures would imperil the existence of the bank and the safety to the colony of the £2,000,000 stock guaranteed by the Government, besides rendering any subsequent efforts to save the bank and the good-will of its really valuable business very problematical. The board consider it their duty to point out to you the widespread ruin and disaster which, by deterioration of values and impossibility of sales, would be caused to kindred institutions and all classes of the community, let alone numerous shareholders of the bank, if the business and assets of the bank and the Estates Company should be exposed to immediate or even protracted liquidation. Such a calamity, they think, would result as has never yet been experienced by any British colony, and such they are convinced that prompt and judicious legislation would now avert and render altogether unnecessary. To this end I and the other directors are anxious to confer with the Government on the matter, and beg to request that you will arrange for a conference at the earliest possible time which will be convenient to the Government, and inform me, so that the board may duly attend. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President. Aggregate Balance-sheet of Bank of New Zealand at 31st March, 1895. (Pro forma.) Dr. Liabilities. Assets. Or. Capital— £ s. d. £ s. d. 4-per-cent. guaranteed stock .. 2,000,000 0 0 Coin and cash balances at banker's .. 1,302,009 0 0 100,000 shares of £5 ss. each .. 525,000 0 0 Bullion on hand and in transit .. 92,185 0 0 50,000 shares of £7 10s. each .. 375,000 0 0 Investments .. .. .. 880,213 0 0 Call of 1895 account .. .. 159,745 0 0 Bills receivable and bills discounted .. 2,112,348 0, 0 Notes in circulation .. .. 468,195 0 0 Other advances and securities, and Bills payable in circulation .. ... 1,486,891 0 0 debts due to the bank, including Deposits and other liabilities .. 7,141,755 0 0 £1,372,661 due by the Bank of New Zealand Estates Company .. 5,123,002 0 0 Bank of New Zealand Estates Company's shares (par value) .. .. 1,850,000 0 0 Landed property, bank premises, &c. 419,931 0 0 Deficiency.. .. .. .. 376,898 0 0 £12,156,586 0 0 £12,156,586 0 0 * 40—1. 6.
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Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. Dr. Liabilities. Assets. Gr. Capital paid up— £ Stations in New Zealand— £ Estates Company .. .. .. 1,850,000 Lands and improvements .. .. 1,586,537 Auckland Agricultural Company.. .. 148,110 Stock and implements .. .. .. 335,454 Debentures— Difference between Mr. Hean's valuation Bedeemable in 1910 at £103 .. .. 750,000 and amount at which globo assets were Bedeemable up to 1902 .. .. .. 282,960 purchased from the bank .. .. 54,507 Debts due to the bank .. .. .. 1,426,702 Sundry freehold properties in New Zealand .. 602,790 Accrued interest on debentures .. .. 26,225 Interest in Thames Valley Land Company Beserve for loss on Onehunga Ironworks stocks 3,316 represented by land and stock .. .. 137,142 Sundry creditors .. .. .. .. 4,688 Coal-mine and land, Waikato .. .. 17,674 Sundry accounts held in suspense .. .. 1,238 Freehold land beyond New Zealand .. 50,776 Leaseholds .. .. .. .. 75,721 Trading ooncems .. .. .. .. 567, 658 Amounts due by purchasers .. .. 132,103 Sundry balances due to company .. .. 65,551 Shares .. .. .. .. .. 214,080 Mortgages .. .. .. .. 111,411 Sundries .. .. .. .. 53,344 Funds in hands of trustees .. .. 21,414 Deficiency ... .. 467,077 £4,493,239 £4,493,239 Combined Balance-sheet of the Bank op New Zealand Estates Company (Limited) and the Auckland Agricultural Company (Limited), as at 31st March, 1895. (Pro forma.) Dr. Liabilities. Assets. Cr. Capital paid up— £ Stations— £ Estates Company .. .. .. 1,850,000 Land and improvements .. .. 1,083,959 Auckland Agricultural Company.. .. 148,110 Stock and implements.. .. .. 335,453 Debentures— Sundry freeholds in New Zealand .. .. 399,496 Bedeemable in 1910 .. .. .. 750,000 Interest in Thames Valley Land Company reBedeemable up to 1902 .. .. .. 282,960 presented by land and stock .. .. 50,256 Debts due to the bank .. .. .. 1,426,702 Coal-mine and land, Waikato .. .. 12,977 Accrued interest on debentures .. .. 26,225 Freeholds beyond New Zealand .. .. 20,571 Beserve for loss, Onehunga Ironworks stocks.. 3,316 Leaseholds .. .. .. .. 52,508 Sundry accounts in suspense .. .. 1,238 Trading concerns .. .. .. .. '421,062 Sundry creditors .. .. .. .. 4,688 I Shares .. .. .. .. .. 16,792 Mortgages .. .. .. .. 101,569 Sundries .. .. .. .. 21,020 Amounts due by purchasers .. .. 132,089 Sundry balances due to company .. .. 59,690 Funds in hands of trustees .. .. 21,414 Deficiency .. .. .. .. 1,764,383 £4,493,239 £4,493,239 The above is an estimate of the position after writing down the book-cost of the properties to the level of the latest valuations received. The letter covers the aggregate balance-sheets pro forma of the Bank of New Zealand and the companies connected with it at the same date, together with a letter addressed to the President from the Auditor of the Bank of New Zealand of the same date, dated the 22nd July : — The Auditor, Bank of New Zealand, to the President. Dear Sir, — Bank of New Zealand, Wellington, 22nd July, 1895. When writing you on the 12th instant on the subject of the bank's balance-sheet to 30th March last, I did not refer to the fact —with which you are, however, familiar—that the bank received no dividend during the year covered by the balance-sheet upon its £1,850,000 of shares in the Bank of New Zealand Estates Company. I have since been looking into the company's books and returns, and have come to the conclusion that not only can no aid to the bank's profits be expected from the company unless a radical alteration in the position of its affairs can be effected, but that the existing state of things imperils the very life of the bank. Apart from the fact that the company's operations are being carried on at a loss, there is the serious feature that items of account totalling some hundreds of thousands of pounds appear in its balance-sheet against which no assets exist. These must be written off; and the only available fund for that purpose is the paid-up capital of the bank. The amount required is so large that, in conjunction with the provision needed to clear the bank's own bad debts, it practically sweeps away the whole of the £900,000 of paid-up sharecapital. The report of this state of affairs, which you will no doubt deem it your duty to make to shareholders, must, in my opinion, prove fatal to the bank, unless you are in a position to at the same .time announce that measures calculated to strengthen it and place it upon an undoubtedly sound footing are in progress. In view of the magnitude of the. colony's stake in the welfare of the bank, no time should be lost in acquainting the Colonial Treasurer with the serious difficulties that confront us. Yours, &c, The President. J. M. Butt, Auditor.
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On receipt of that intimation from the President of the Bank of New Zealand—the verbal intimation, in the first instance, which he gave me—l may say that to express myself as having been practically staggered at the result of the disclosures in connection with the affairs of the Bank of New Zealand is about the only word which would convey the feelings I entertained at the time. The reported deficiencies in the three balance-sheets were, in round numbers, about £2,600,000. In the aggregate balance-sheet of the Bank of New Zealand itself it was £376,898 ; in the Bank of New Zealand Estates Company it was £467,077 ; and in the combined balance-sheet of the Bank of New Zealand Estates Company and the Auckland Agricultural Company it was £1,764,383. I am not quite sure at the moment whether the last combined balance-sheet of the Auckland Agricultural Company and New Zealand Estates Company does not cover the estimated deficiency in the aggregate balance-sheet preceding it, but the balance-sheets are put in and they can speak for themselves. I wrote the President of the bank on the 25th July : — Hon. the Colonial Treasurer to the President, Bank of New Zealand. Sir, — 25th July. I have received your letter dated the 23rd instant with deep regret. The subject-matter was of so much importance that I felt it my duty to at once place the letter before my colleagues; and Government have decided to afford your board an opportunity of further explanation at an interview some time next week : the precise date and hour I shall inform you of as soon as possible. In the meantime, I must ask you to furnish me as speedily as you can with a statement showing in detail the separate value of each property held by the Estates Company—such statement to show the value of the land, of the buildings thereon, and of the stock belonging to each property. The valuations should be the latest, and such as have been accepted by your board. I am, &c, J. G. Ward, W. Watson, Esq., Bank of New Zealand, Wellington. Colonial Treasurer. The letter from myself to the President of the bank on the 25th July requested him to furnish as speedily as-possible a statement showing in detail the separate value of each property held by the Estates Company, showing the value of land, the value of buildings, and the value of stock separately, and to give the latest valuations. He replied as follows : — The President, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, sth August, 1895. I have the honour to hand you, as verbally requested, balance-sheets of the bank and the Bank of New Zealand Estates Company, drawn up by the Government Auditor, according to his estimates of the actual positions at 31st March, 1895. I have also to convey to you the following suggestions and recommendations for urgent legislation, which have been carefully considered by the board of the bank :— 1. That the present paid-up capital of £900,000 and the proceeds of the call of £3 6s. Bd. per share (estimated at £450,000; total, £1,350,000) be written off, and applied to deficiencies, as follows :— (a.) Bad debts of bank, after application of £45,000 reserve fund ... £376,900 (b.) Contingency fund against doubtful debts of bank ... ... 200,000 (c.) Balance to writing off in the bank's books a corresponding amount from the nominal value of the Estates Company's shares, which will reduce these shares to estimated real value ... 773,100 £1,350,000 2. That the Government take over, to be worked by a joint board of administration, the landed properties, plant, and stock of the Estates Company in New Zealand only (other than trading concerns and shares, excepting the shares of the Thames Valley Land Company), amounting, per book-values of 31st March last, to £2,734,104, and hand to the bank that amount in Government bonds or inscribed stock, bearing 3-J per cent, interest. As security for any deficiency on realisation of these properties, the bank to hypothecate to Government the reserve liability of shareholders, amounting to £1,000,000, and, further, to issue to Government £500,000 in deferred shares, to rank pari passu with £900,000 in deferred shares to be issued to the present shareholders; all deferred shares to be fully paid up, and carry no further liability. Such portion of the £1,000,000 reserve liability as may not be required to meet deficiency to be set free and cancelled, and such portion of the £500,000 deferred shares not required to be cancelled. Any surplus on realisation of properties to be paid to the bank. 3. A new issue of £1,000,000 preference shares, fully paid and without reserve liability, to be made by the bank, for which the Government shall subscribe. These shares to carry a fixed preferential dividend of per cent., and to be paid up by instalments as may be agreed upon between the Government and the bank. 4. Future net earnings of the bank, after providing for bad and doubtful debts, 4 per cent, interest on the guaranteed stock, and 3-J per cent, interest on the preference shares, to be devoted to payment of such dividend on the deferred shares as the board of the bank may determine, subject, whilst the guarantee for the £2,000,000 stock lasts, to the approval of the Government. 5. That the disability, in so far as purchase of the business of any other bank is concerned, caused by Act 64 of 1894 be removed. It is computed that, if the measures herein suggested be carried into effect, no loss will accrue to the colony from the guarantee for the £2,000,000 stock, and that the shareholders of the bank will receive 5 per cent, per annum on their £900,000 deferred shares. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
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General Manager's Office, Bank of New Zealand, Dear Sir, — Wellington, sth August, 1895. In accordance with your instructions, I have taken out and now hand you a pro formd combined balance-sheet of the Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited) as at 31st March last, after adjustment of valuations, and including the Matamata and joint interest acquired by the Estates Company since the balance date, with valuations also adjusted. The valuations adopted were those made by the Land- and Income-tax Department wherever available, with 10 per cent, added. In the majority of other cases the valuations given by the managers of the bank in the district where the assets lie have been taken; in a few minor instances I have had to fix values in consultation with the local officers of the Estates Company. Trading concerns have been roughly valued on a 5-per-cent. basis. The valuation of the live-stock has been based on the average price of stock during the years 1891-93. It is perhaps a little on the high side, although, I think, not much. The Auckland Agricultural Company holds 1,606 ordinary shares in the New Zealand Loan and Mercantile Agency Company, on which there is a liability of £8 10s. per share = £13,651. I also enclose, as requested, a pro formd balance-sheet of the bank as at 31st March, 1895, after writing off the estimated bad debts. I have, &c, The President, Bank of New Zealand. J. M. Butt, Auditor. Aggregate Balance-sheet of Bank of New Zealand at 31st March, 1895. (Pro formd.) Dr. Liabilities. Assets. Cr. Capital— £ £ 4-per-cent. guaranteed stock .. .. 2,000,000 Coin and cash balances at banker's .. 1,302,009 100,000 shares of £5 ss. each .. .. 525,000 Bullion on hand and in transit .. .. 92,185 50,000 shares of £7 10s. each .. .. 375,000 Investments .. .. .. .. 880,213 Call of 1895 account .. .. .. 159,745 Bills receivable and bills discounted .. 2,112,348 Notes in circulation .. .. .. 468,195 Other advances and securities, and debts due Bills payable in circulation .. .. 1,486,891 to the bank, including £1,372,661 due by Deposits and other liabilities .. .. 7,141,755 the Bank of New Zealand Estates Company 5,123,002 Bank of New Zealand Estates Company's shares (par-value) .. .. .. 1,850,000 Landed property, bank premises, &c. .. 419,931 Deficiency .. .. .. .. 376,898 £12,156,586 £12,156,586 Pro formd balance-sheet of the Bank of New Zealand after writing off bad and doubtful debts in accordance with Auditor's estimate. sth August, 1895. J. M. Butt. Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. (Book-values.) Dr. Liabilities. Assets. Cr. Capital paid vp — £ I Stations — jg Estates Company .. .. .. 1,850,000 Land and improvements .. .. 1,586 537 Auckland Agricultural Company .. .. 148,110, Stock and implements .. .. .. 335 454 Debentures — Difference between Mr. Hean's valuation Bedeemable in 1910 ac £103 .. .. 750,000 and amount at which globo assets were Bedeemable up to 1902 .. .. .. 282,960 purchased from bank .. .. .. 54,507 Debts due to Bank of New Zealand .. 1,426,702 I Sundry freehold properties in New Zealand .. 600496 Accrued interest on debentures .. .. 26,225 Interest in Thames Valley Land Company Beserve for loss on Onehunga Ironworks (represented by land and stock) .. .. 137 142 stocks.. .. .. .. .. 3,316 Coal-mine and land, Waikato .. .. 17 674 Sundry creditors .. .. .. .. 4,688 Freehold lands beyond New Zealand .. 53^070 Sundry account held in suspense .. .. 1,238 i Leaseholds .. .. .. .. 75 721 Trading concerns .. .. .. 567658 I Amounts due by purchasers .. .. 132 103 1 Sundry balances due to company .. .. 65 551 Shares .. .. .. .. .. 214,080 Mortgages .. .. .. .. 111,411 Sundries .. .. .. ~ 53 344 Funds in hands of trustees .. .. 21' 414 Deficiency .. .. .. .. 467^077 £4,493,239 £4,493,239 Compiled under my direction. J. M. Butt, Bank Auditor. Combined Balance-sheet, Bank of New Zealand Estates Company and Auckland Agricultural. Company, as at 31st March, 1895. (Pro formd.) Assets. Cr. Dr. Liabilities. Stations — ,g Capital paid up— £ Land and improvements .. .. 1 083 959 Estates Company .. .. .. 1,850,000 Stock and implements .. .. .. '335453 Auckland Agricultural Company .. 148,110 Sundry freeholds in New Zealand .. .. 396460 Debentures — Interest in Thames Valley Land Company, Bedeemable in 1910 at £103 .. .. 750,000 represented by land and stocks .. ..' 50 256 Bedeemable up to 1902 .. .. .. 282,960 Coal-mine and land, Waikato .. .. 12*977 Debts due to the bank .. .. .. 1,426,702 Freeholds beyond New Zealand .. .. 23607 Accrued interest on debentures .. .. 26,225 Leaseholds .. .. ~ .. 52508 Reserve for loss on Onehunga Ironworks Trading concerns .. .. ~ .. 421 062 stocks.. .. .. .. .. 3,316 Shares.. .. .. .. .. 16*792 Sundry accounts in suspense .. .. 1,238 Mortgages .. .. .. .. 101*569 Sundry creditors .. .. .. .. 4,688 Sundries .. .. .. .. 21020 Amounts due by purchasers .. .. 132089 Sundry balances due to company .. .. 59690 Funds in hands of trustees .. .. 21' 414 Deficiency .'.' 1,764' 383 *M 93,289 £M 937239"
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The above is an estimate of the position after writing down the book-cost of the properties to the level of the latest valuations received. Compiled under my direction. J. M. Butt, Bank Auditor. Balance-sheet of Bank of New Zealand Estates Company (Limited) at 31st March, 1895. Dr. Liabilities. Assets. Or. Share-capital,— £ s. d. Properties— £ s. d. Authorised— Balance, representing unrealised pro--75,000 6-per-cent. cumulative pre- perties at date .. .. .. 3,021,581 19 6 ference shares £10 each. Amounts due from purchasers .. 128,360 2 8 125,000 ordinary shares, £10 each. Advances to trading concerns—workIssued— ing capital supplied .. .. 21,000 0 0 60,000 preference shares .. 600,000 0 0 Bank of New Zealand .. .. 27,661 11 4 125,000 ordinary shares .. .. 1,250,000 0 0 Cash in hand .. .. .. 132 10 0 Debentures redeemable in 1910 at £103 750,000 0 0 Bills receivable .. .. .. 100 0 0 Bank of New Zealand .. .. 1,112,535 12 10 Adjusting account of revenue .. 6,150 0 0 Accrued interest on debentures .. 21,225 0 0 Debts due to the company .. 10,506 10 1 Onehunga Ironworks stock reserve .. 3,316 111 Balance, Profit and Loss Account .. 521,584 0 5 £3,737,076 14 9 £3,737,076 14 9 N.B. —Assets, in terms of section 16 of " The Bank of New Zealand Share Guarantee Act, 1894," are taken as at par- or book-value. This is to certify that, having examined the above balance-sheet and accounts, and compared them with the relative books, returns, and vouchers, we have found the same to be correct. This certificate, however, is qualified by our special report of even date. " Profit and Loss Account" attached herewith. J. B. Hobart. Wellington, 24th July, 1895. R. W. Gibbs. Balance-sheet of Auckland Agricultural Company (Limited) at 31st March, 1895. Liabilities. Assets. Cr. Dr. £ s. d. Stations, &c. — £ a. d. Share capital .. .. .. 148,110 0 0 Land and improvements .. .. 493,470 2 2 Stations — Stock and implements .. .. 73,195 3 3 Sundry creditors, Bank of New Zealand Horse- and stock - feed, grass - seed, Estates Company, &c. .. .. 4,645 15 10 manure, and sundries on hand .. 4,302 0 7 Accident Insurance Account .. 42 4 2 General— Bank of New Zealand, Cambridge Mortgages and agreements ..£34,669 Station, Working Account .. 13,012 19 5 Less Pah mortgage .. 28,490 Bank of New Zealand— ■ 6,179 0 0 Ordinary Account .. .. .. 90,185 14 0 (Property being also shown as an No. 1 Account .. .. .. 90,968 3 5 asset below.) Debentures outstanding— Surrey Hills—Unpaid balances .. 3,743 16 0 Old issue .. .. .. £4,950 Pah Estate and other properties taken New issue.. .. .. 278,010 over from Williamson .. .. 28,708 2 4 282,960 0 0 Shares in various companies taken Accrued interest on debentures .. 5,000 0 0 over from Williamson .. .. 5,150 0 0 Sundry accounts held in suspense .. 1,238 0 2 Funds in hands of trustees .. .. 21,414 12 8 £636,162 17 0 £636,162 17 0 W. C. Cuff, Secretary. At the request of the President of the bank an interview was arranged between the Cabinet and the bank directorate. At that interview all the Ministers were present with the exception of the Hon. Mr. Cadman and the Hon. Mr. Carroll. The various aspects of the situation were discussed, and the inevitable impossibility, as far as we could judge, of the bank being able to carry on without further remedial legislation. Finally it was decided by Cabinet to give—as the matter was of so particularly a delicate and intricate character—a note of warning in the Financial Statement, and to set up a Joint Committee of both Houses to inquire into the whole position. That Committee was set up, and reported, on the 28th August, 1895, the result of its investigations to both Houses, as follows: — Report. The Committee appointed to inquire into and report upon the Bank of New Zealand Estates Company and its relation with the Bank of New Zealand, to inquire how, in the colony's interest, the two institutions can best be separated, and how the earning-power of the Bank of New Zealand may be increased, its stability insured, and its usefulness extended, have the honour to report as follows :— Before proceeding to investigate the several matters referred to it by both Houses of Parliament, your Committee received from the Colonial Treasurer the following letter, addressed to him by the directors of the Bank of New Zealand, which explains why Parliament has been called upon to deal with the question : — " Bank of New Zealand, " Sir,— ■ " Wellington, 17th August, 1895. " I have the honour to quote, for your information, the following minute passed by the board of the Bank at a meeting held this morning : — ' Parliamentary Committee to inquire into the affairs of the Bank of New Zealand Estates Company and the Bank of New Zealand, with a view to separating the Estates Company from the bank, and increasing the earning-power of the bank.
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' Resolved, To place on record that it was the desire and expressed wish of the directors, made at a conference with Ministers, that this Committee of both Houses should be appointed.' " I have, &c, " W. Watson, " The Hon. the Colonial Treasurer, Wellington. " President." Your Committee have, since appointment, been continuously and carefully engaged in going into the several matters referred to, and have had before them the President of the bank, Mr. Watson ; all the directors of the Bank of New Zealand ; the Auditor of the bank, Mr. Butt; Mr. Poster, the general manager of the Estates Company ; Mr. Lyon, until recently employed as manager of several of the properties of the Estates Company ; Mr. McKerrow, Land-purchase Inspector; Mr. McGowan, Commissioner of Taxes ; and Mr. Cuff, Accountant of the Estates Company. Your Committee have had before them balance-sheets of the Bank of New Zealand, balancesheets of the Estates Company and of the Auckland Agricultural Company, combined balancesheets and statements concerning the business of the bank and of the Assets Company, which are appended to the report. Your Committee find that the present directors of the bank are not responsible for the present unsatisfactory condition of affairs. The Committee consider that the present directors have acted efficiently since they took office, and have candidly and fully given every information to the Committee. There is a deficiency in the bank of £376,900, and a contingent dependency of £200,000. There is a deficiency of £467,077 in the Estates Company, against which no assets exist, and a further deficiency of £444,601 in trading concerns and properties outside New Zealand. These altogether amount to £1,488,578. Of this sum, £148,110, though shown as a liability, is really a debt due by the Agricultural Company, and represented by assets. Deducting this from the aforesaid sum of £1,488,578, there remains £1,340,468. This is provided for as follows: — £ Capital, bank ... ... ... ... ... ... ... 900,000 ■ Estimated amount of call made ... ... ... .... ... 450,000 £1,350,000 leaving a balance of £9,532, which goes to a dependency account. Your Committee are of opinion that, in the present financial circumstances of the colony, and taking into consideration the financial position of the Australian Colonies, and also considering the magnitude of the interests, both public and private, which are involved, as well as the widespread disaster that would follow should the bank be compelled to suspend operations, the colony should render such assistance to the bank as will restore confidence, insure stability, and enable it to carry on its business in a satisfactory and profitable manner. The Committee is of opinion that any assistance should be of an effective and definite character. In support of the Committee's opinion, it may be stated that it has been found that, apart from any indirect injury to the country, the following interests would be directly affected by any disaster to the bank. As will be seen from returns annexed, there were on the 31st March, 1895, in New Zealand, the other colonies, and London, deposits in the Bank of New Zealand to the number and amount as follows:— New Zealand ... ... 35,110 depositors, representing £5,032,900 Other colonies ... ... 2,839 „ „ 530,223 London ... ... .. 3,351 „ „ 1,578,632 Totals ... ... 41,300 £7,141,755 This includes Government deposits amounting to £1,145,396. The total number of advances by the bank on the 31st March, 1895, and the amount of same in New Zealand, the other colonies, and in London, were as follows :— New Zealand... ... ... 15,593 advances, amounting to £5,428,222 Other colonies ... ... 1,277 ;, „ 1,463,516 London ... ... ... 137 „ „ 300,915 Totals ... ... 17,007 £7,192,653 The shareholders in New Zealand number 1,050, liable for £403,000. There are 115 branch banks, and 28,584 current accounts. The Discount Account, representing traders' acceptances, equals £456,000. The Colony of New Zealand, independently of the " A" stock, £2,000,000, and remittances in transitu, is creditor to the bank for £1,403,000, the amount in New Zealand being £458,000, and in London £945,000. From the evidence taken and the balance-sheets submitted it will be found that the Bank of New Zealand and Estates Company, though two in name, are practically one institution; that the Estates Company and the Auckland Agricultural Company, though under different names, are practically one concern ; and that the combined Estates Company, Auckland Agricultural Company, and Bank of New Zealand are practically one concern. The division is in name only, because the whole of the shares in the Estates Company are owned by the Bank of New Zealand, the only interest held outside the bank being the debenture-holders who recently acquired five hundred thousand pounds' worth of the debentures previously held by Baron Schroder, and the debentureholders of the Auckland Agricultural Company, who hold £282,960 worth of debentures. Your Committee is of opinion that it would, be in the best interests of the colony, of the shareholders of the Bank of New Zealand, and of all concerned that a separation of the affairs of the
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Bank of New Zealand and the Estates Company should take place. In dealing with so momentous and intricate a question it is necessary that every precaution should be taken to safeguard the colony against losses, and to render future application for the intervention of Parliament unnecessary. To effect this, your Committee recommend that the whole of the freeholds, leaseholds, stations, stock, and implements in New Zealand be disposed of, and that the Bank of New Zealand and Estates Company sell them to a Realisation Board, to be established for that purpose. That an Assets Realisation Board, consisting of three members, be created as hereinafter provided. That the Assets Realisation Board be authorised to issue bonds for £2,734,000, bearing 3£ per cent, interest, and that the deficiency, if any, on these bonds, after the realisation of the New Zealand Estates Company's properties, be guaranteed by the colony to the bank. In return for these, the Bank of New Zealand, the New Zealand Estates Company, and the Auckland Agricultural Company to transfer the whole of the property referred to the Realisation Board for liquidation purposes. That £500,000 of uncalled reserve liability of the Bank of New Zealand shareholders be called up in four equal instalments, the first being payable on the 30th June, 1896, the second on the 31st December, 1896, the "third on the 30th June, 1897, and the fourth on the 31st December, 1897. That, to encourage the shareholders of the bank to meet the call of £500,000 proposed to be made, your Committee recommend that the first charge on all annual profits of the bank beyond £50,000 per annum should be a payment of interest not exceeding 5 per cent, on amount paid by shareholders on the call as aforesaid. That the Bank of New Zealand, out of its profits, pay to the Assets Realisation Board the sum of £50,000 per annum as hereinbefore mentioned, and any further sum which may remain after paying 5 per cent, to ordinary shareholders until any deficit on realisation is provided for. Your Committee are of the opinion that the last valuations of stations and landed property may, under favourable circumstances, be maintained, but the more prudent course would be to allow for further depreciation. That, to insure the colony against any loss on account of guaranteeing any deficiency that may arise on bonds, in addition to the payments from profits above provided for, security be given over the freeholds, certain leaseholds, stations, stock, and implements in New Zealand, the bank's latest ascertained value of which is £1,879,000, and over the second call of £500,000, and also over the balance (£500,000) of the uncalled reserve liability of the bank shareholders. That the first call, the last payment of which is due on the 26th November next, estimated to amount to £450,000, together with the present paid-up capital, amounting to £900,000, be written off to provide for losses, of which £1,150,000 is for ascertained losses, and includes £9,532 which is proposed to be held as a dependency, and £200,000 as a contingency for unascertained loss. In conjunction with this proposal, and to enable adequate capital to be provided for the bank to carry on its business and restore its credit, your Committee recommend the colony to subscribe £500,000 for preferential shares, bearing 3-J per cent, interest, and that they be paid for by the issue of 3-J-per-cent. stock to the bank ; the bank to have the right to purchase for purpose of sale any or all of. these shares, bank shareholders to have priority of purchase. This, with the £500,000 of capital from the second call of the reserve liability, will give the Bank of New Zealand a clear capital of £1,000,000 sterling. In addition to this, the position of the bank will be strengthened by having the whole of the £2,000,000 of "A " stock for use in its ordinary business. Under the altered position that the bank will occupy, these proposals, if given effect to, will put it on a sound basis. On investigation, your Committee ascertained that the second million "A" stock, now invested according to law in liquid securities, entails a heavy annual loss on the bank. To prevent this recurring loss, and in order to increase the earning-power of the bank, your Committee recommend that the million be freed and made available for use in the bank's general business. And, to further enable the bank to increase its earning-power, your Committee are of opinion that the bank should be at liberty, if deemed advisable, to secure further trade by purchasing other banking business, but that no purchase be allowed unless with the sanction of the Governor in Council. And that, to enable this to be done, section 3of " The Banking Act, 1894," be repealed. And, further, with a view of increasing the earning-power of the bank, the Committee recommend that the colony's business in England be transacted by the Bank of New Zealand. The directors of the bank are of opinion that, if these recommendations be given effect to, the net earning-power of the bank will be so increased as to leave a profit of £135,000 per annum. That, in consideration of the £500,000 preferred shares to be taken up by the Government, the colony should have further representation, and that the Governor in Council be empowered to appoint one director. That the Assets Realisation Board shall consist of three members, and, inasmuch as the colony has guaranteed the deficiency, if any, on the bonds to be issued by the said Board, the Governor in Council shall appoint two members, and the directors of the Bank of New Zealand one member. The Committee are of the opinion that the shareholders of the Bank should be prohibited by law from winding up the bank until the whole of the obligations to the colony are repaid. This is an obvious precaution, considering the large responsibilities of the bank to the colony. And the Committee also recommend that the power under " The Bank Guarantee Act, 1894," be amended, so that the power to appoint a Receiver shall arise on any default of the bank. The proposals of the Committee deal only with the landed properties, stations, stock, implements, &c, in New Zealand. The trading concerns, both in and outside New Zealand, and the properties owned by the Estates Company outside New Zealand, are not to be transferred to the Assets Realisation Board. The directors of the Bank of New Zealand have informed the Committee that the latter properties may be realised in two years. The directors have so far written these down in value that the Committee is of opinion that there need be no great delay in carrying out such
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immediate realisations. The details of the trading concerns and other assets have not been appended, as they are for sale, and it would be inadvisable to furnish all such particulars. With the papers appended to the report will be found a scheme submitted by the directors of the Bank of New Zealand. The Committee did not see its way to accept it, seeing that it entailed heavy obligations upon the colony which the circumstances of the case did not warrant. The Colonial Treasurer also submitted a scheme, the distinct feature of which was that the colony did not directly issue stock to the bank as against the assets of the Estates Company ; but, in lieu thereof, as a last recourse, the colony guaranteed the deficiency on the bonds. Sir Robert Stout also placed before the Committee certain resolutions. These will be found with the papers appended to the report. Chas. C. Bowen, Chairman. From the report it will be seen that the Committee recommended, among other things, that the New Zealand Estates Company should be completely separated from the bank, that increased share capital to the extent of £500,000 guaranteed by the State should be given, and that the bank should acquire the business of another bank. There were many other details suggested in the report which can be seen by reference to it. Among the recommendations the Committee made was one to the effect that the business of the colony in London in connection with the inscription of stock by the Bank of England should be transferred to the Bank of New Zealand. That is the only important suggestion recommended by the Banking Committee of 1895 that has not been given effect to, the reason for it being that there is an Imperial statute confirming an agreement made by Sir Julius Vogel many years ago with the Bank of England providing for the domiciling of the stock of the colony with the Bank of England, and I understand that the Bank of England has exercised its legitimate rights in this direction and objects to transfer the stock registers of the colony which are domiciled with it to the Bank of New Zealand or to any other bank. The legal difficulties have alone been, as far as I know, the cause of the recommendation of the Committee upon that point not having been given effect to. The recommendations of the Joint Committee passed both branches of the Legislature in 1895, and in that respect the matter is familiar to every member of the Committee. I think, generally, I have led up to the position as far as the first legislative action was concerned, and .also as. far as the legislation taken upon the report of the Committee of 1895 is concerned, and I think, Mr. Chairman, perhaps, unless there is any point which suggests itself to yourself or to any other member of the Committee present, that I may bring my necessarily brief explanation of the circumstances to a close at this point; and I will ask the Committee to elicit any further information concerning any matters they desire connected with the banking legislation by question, which I will be happy to answer to the best of my ability. I have not gone into the second amalgamation question gone on w'th as the result of the 1895 Committee's recommendation. In the recommendations of the Banking Committee the acquirement of the business of another bank was recommended. After the passing of that legislation I took no part in connection with any proposals for amalgamation or purchase by the Bank of New Zealand, nor did I take any part —nor was I consulted in any way with the negotiations for the acquisition of the Colonial Bank by the Bank of New Zealand—in connection with the agreement entered into by the two banks as authorised by the legislation as contained in the first Bill passed in 1895. I think that takes the position up to that point. 11. The Chairman.] You have completed the statement you wished to make, and are now prepared to answer any questions ?—Quite. 12. Hon. Mr. Seddon.] Do you remember, Mr. Ward, anything in reference to the account of the Bank of New Zealand in London —any information being asked of Mr. Murray to be supplied to the Government at the time of the interview with the Cabinet on the 27th June?— Yes. 13. What was said in reference to that ?—Cabinet desired to ascertain the whole position of the Bank of New Zealand in London as well as in the colonies up to the date that the legislation was introduced. Mr. Murray expressed himself to the effect that it was difficult to obtain detailed information by cable, and that he could not be responsible for information obtained by cable from London professing to give the position of the bank there ; and, as a matter of fact, my impression is that he was asked by the Government to give the London position, and he afterwards expressed his inability to do so. There is a telegram from London in the correspondence stating that it would be incomplete and difficult to give it by wire. There is also a letter, dated the sth July, from the Secretary to the Treasury to Mr. Murray, requesting him to have a carefully-prepared statement made as on the 30th June :— The Secretary to the Treasury to Mr. J. Murray. Sir— sth July, 1894. I have the honour, by direction of the Colonial Treasurer, to request that you will cause a carefully-prepared statement of the position of the Bank of New Zealand as on the 30th ultimo to be furnished to me with the least possible delay. The information should contain the several amounts of the ledger balances representing the bank's business within the colony and Australia on the date above named, and the London balances, separately stated, as on the date of the latest advices received. These balances should show the whole of the liabilities and assets of the bank under the heads set out in the usual quarterly statements furnished to the Government. Under " Assets" I am directed to ask you to distinguish the amount due by the Estates Company. The Colonial Treasurer would also be glad to be favoured with any other information you might consider of value to him. It is, of course, understood that the particulars you may be good enough to furnish will be treated as strictly confidential and only for the information and guidance of the Government. I have, &c, John Murray, Esq., Jas. B. Heywood, Bank of New Zealand, Wellington. Secretary to the Treasury.
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And Mr. Murray replied on the sth July, stating that, as the head office of the Bank of New Zealand was in London, and the London accounts, so far as he was aware, were not sent to the colony, he would ask the bank at Auckland to have the information furnished that was required : — Mr. J. Murray to the Secretary to the Treasury. Sir, — Bank of New Zealand, Wellington, sth July, 1894. I have the honour to acknowledge receipt of your letter of date hereof, requesting statement of the position of the Bank of New Zealand as on the 30th ultimo. I shall forward copy of your letter to the bank at Auckland, with request that they will forthwith furnish the information required. As the head office is in London, and London accounts are not, so far as I am aware, sent to the colony, it may be that that part of the return will have to be sent for. I have, &c, The Secretary to the Treasury. John Murray. 14. Now, beyond the balance-sheet on 31st March—the intimation by Gazette of the position of the bank in the colony —the Government had not any detailed information in respect to the position of the bank at the time Mr. Murray was present in conference with Ministers on behalf of the bank ?—No. 15. The Government, on the 26th August, received the balance-sheet showing the position of the bank at 25th June?—On the 21st August, Government got the covering letter of the balance-sheets of the Bank of New Zealand in New Zealand and Australia at the 25th June, 1894, and a statement giving the figures relating to the Estates Company explanatory of the statements coming under the heads of " A," " B," and " C." 16. Does that statement fairly carry out what was stated by Mr. Murray to the Government as being the position, as far as he knew, of the Bank of New Zealand in the colony and Australia at that date —that is, the bank exclusive of the Estates Company ?—So far as I know, it does. 17. There is a letter dated the 25th August from the Secretary to the Treasury to Mr. Murray. Have you got that ?—Yes. 18. Was that sent by your direction asking for further particulars after receipt of the balancesheet to which I have referred?— Yes. 19. You have Mr. Murray's reply on the 22nd August?— Yes. 20. The cable from London, or the contents of it, was put before the Government ?—Yes. 21. Did you ever receive the balance-sheet from London that had been requested in the correspondence and what had taken place at the interviews ?—Not unless it is amongst the papers on record in the Treasury. 22. You have no recollection of it?—l have no recollection of it. 23. You are not aware that it has turned up recently ?—I have no knowledge of it myself, but I heard that a balance-sheet had been discovered by one of the bank officials ; but, so far as my recollection of it, that balance-sheet was not sent to the Treasury. 24. And in no way affects the communications from the directors in 1895, giving the position of the bank, with regard to any further position of the bank itself ?—That is so ; yes. 25. In reference to what transpired at the conference, did Mr. Murray point out the difficulties there were in the way of dealing with the Estates Company owing to it being differently situated — being" a London company —to the Bank of New Zealand in respect to legislation ? —Yes, he did. 26. Do you remember anything being said as to the amount —two millions—being sufficient, or as to any question between a million, a million-and-a-half, and ultimately a two-million guarantee? —Yes ; I remember Mr. Murray stated that in his opinion a million would be sufficient to cover the losses of the bank. A million and a half was discussed, but he advocated the two millions, because he said he thought the Bank should be rehabilitated beyond the filling-up of the losses. 27. Were there any communications between the Government and the Agent-General in reference to changing the guarantee into stock ?—Yes. 28. Will you tell the Committee what transpired in respect of that ?—The following correspondence has taken place between the Agent-General and myself : — The Colonial Treasurer to the Agent-General. Sir,— 7th July, 1894. The necessity of the recent legislation affecting the position of the Bank of New Zealand came upon the Government, as you may well believe, like a thunderclap, without the least warning. Mr. John Murray, who had been accredited by the London Board, waited upon me some three weeks ago, and represented the straits the bank was in owing to the collapse of the grain trade, to the extremely low price of our staple product—wool, to the disaster which had befallen that huge concern the Loan and Mercantile Agency, to the incubus of the Globo Assets Estates Company, and to the general shrinkage and depression in the trade and commerce in Australia as well as in our own colony. Owing to the disasters which had overtaken banking institutions in our neighbouring colonies, it had been impossible for the directors of his bank, so Mr. Murray assured me, to secure the increase to their capital which they had counted upon through the legislative authority given by the Act of last session. This being the case, and it having become painfully evident that without an increase of capital the bank could not continue to conduct business, Mr. Murray had been deputed to lay before the Government the exact position at which the bank had arrived, with the single alternative that the Government, through the Legislature, would have to come to the assistance of the bank or the doors of the institution would then and there require to be closed. I need hardly assure you of the very grave anxiety the consideration of such an important subject has entailed upon the Government. The bank's position is of colonial importance, and the financial results, whether good or evil, must necessarily affect not only the Government but the whole community, and, such being the case, it did not take long to decide that the bank could not be allowed to fall, and so involve the colony in widespread disaster. * 41—1. 9.
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After anxious consultation with the bank's representative and among ourselves the Government assented to afford assistance in the shape of the colony's guarantee to a 4-per-cent issue of new capital. You will, of course, understand that, having made up our minds as to the shape the assistance was to take, it became necessary to secure the needed legislative authority without a moment's delay, and that, having started on our course, any delay would have been fatal to the bank, as it was of the utmost consequence that the public should have no inkling of what was going on until the necessary legislation should have been secured. The three Bills passed on Friday week last will remain as records of a Government and Legislature capable of grappling with a crisis of momentous aspect, and successfully rescuing the community from inevitable disaster; and I am proud to think that, after I had placed the very grave issue before the House and country, our legislators on both sides of the House and of all shades of opinion had no hesitation in recognising the responsibilities arising out of the situation, and there was little time lost in sanctioning the proposal of the Government by passing into law the Bill pledging the colony to a guarantee of two millions for the benefit of the Bank of New Zealand. And now, after more mature consideration than time then allowed, the Government is quite of opinion that the course pursued was the proper one in the best interests of the people, and my earnest hope is that the wisdom of our action will be demonstrated by the restoration of the bank to a thoroughly sound financial position, able to show the country that our assistance was legitimate and prudent. I may here add that not only has the press of the colony been unanimous in praising the prompt action of the Government, hut hundreds of letters and telegrams have reached the Premier and myself from persons of all shades of political opinion congratulating and thanking the Government for averting what in most persons' estimation would otherwise have been a colonial calamity. I need not go over the ground which has already been covered in the cable despatches between us, copies of which I append hereto. It is sufficient to note the unwillingness of the Government that the bank should again have to submit to loss on the issue of new capital on account of the apparent urgency of the matter. Considering the magnificent position now occupied by the New Zealand Government 'Stocks in the London money market, I am emboldened to believe that our colonial guarantee should be sufficient to secure a handsome premium to the bank, notwithstanding the short currency of ten years which I recognise places the offer at some disadvantage. It must not be forgotten that if we allow the money market to make their own terms to secure a low rate to the bank the colony's interests through the price of its stocks are likely to suffer also, and naturally I am jealous of such a*n event occurring. Underwriting under such circumstances appeared to me to be fraught with danger to the price of our securities, and therefore to be deprecated and avoided if possible. However, after very anxious consideration and consultation with Mr. Murray, I decided that you and your financial advisers are in the best position to know what will induce the public to subscribe on the most advantageous terms, and I therefore determined to allow you a free hand to make the best possible arrangements for both the bank and the Government, only asking you to keep me fully supplied with all possible information; and I shall look forward to an early intimation by cable that the required capital has been fully subscribed at a profitable price. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
The Agent-General, London. Wellington, 30th June, 1894. Bank of New Zealand's business this morning quite normal, therefore very satisfactory. Government think it desirable to see Glyn, and urge that we do not see the necessity to pay high commission to obtain new capital. Think it desirable to keep Government informed as fully as possible of Bank of New Zealand's action in respect of new capital. Treasurer.
The Agent-General, London. Wellington, 3rd July, 1894. Text of Bank of New Zealand Share Guarantee Act: Clause one, short title ; two, interpretation; three and four, bank empowered to issue £2,000,000 guarantee preference capital and dividends without further liability ; five, directors shall, if Colonial Treasurer requires, call up one-third of reserve liability within twelve months after notice, bank may pay interest on same ; six, bank shall at expiry of ten years, cancel, repay preference shares at par ; seven, dividend on preference shares shall not exceed four per cent.; eight, colonial guarantee given to preference shares and dividend ; nine, Crown prior lien in respect of guaranteed shares waived in favor of general creditors; ten, £1,000,000 applicable for general bank business, £1,000,000 held in reserve for investment in securities, Colonial Treasurer approves ; eleven, until guarantee shares cancelled, directors shall not pay dividends on ordinary shares without the consent of the Colonial Treasurer ; twelve, headoffice to be removed to Wellington, Government appoints President with power of veto ; thirteen, Government appoints banking expert Auditor, attached to bank ; fourteen, Colonial Treasurer may make regulations defining Auditor's powers ; fifteen, Colonial Treasurer, upon Auditor's report, confirmed by President, may require directors to stop objectionable business ; sixteen, in balancesheet, the directors and Auditor shall, pending liquidation of Estates Company, value shares or items therein at par or book-value ; seventeen, deed settlement deemed amended to conform with this Act. Treasurer.
The Colonial Treasurer, Wellington. (Received 4th July, 1894.) Your message of the 3rd instant received. Amount at credit of Public Account: will make the necessary arrangements. Bank of New Zealand Act: does head office mean Auckland or London ? Daily conferring with Glyn. No excitement.
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The Agent-General, London. Wellington, 4th July, 1894. Your message of the 3rd instant received. Bank of New Zealand Act means removal of head office, London, to Wellington. What is your opinion of price likely to be obtained for Bank of New Zealand guarantee shares ?
The Agent-General, London. Wellington, sth July, 1894. Your message of yesterday received yesterday. Agree immediate London issue desirable ; but before issue, cable me the principal points of proposed prospectus. Bank Act does dispense shareholders consent. After consideration prospectus, will cable express authority. Certify whatever necessary to give effect to guarantee £2,000,000 preference shares. Sections six, seven, and eight, verbatim, as follows: — Section Six. —The Bank shall, at the expiration of ten years from the date of issue of such A shares, call in and cancel the same on payment of the nominal or face value of the same, with accrued dividends. Section Seven. —The rate of dividend on such A shares shall not exceed four per centum per annum, and the directors shall pay the same out of the moneys of the bank. Section Eight. —Every sum of money for which such A shares shall be issued under the authority of this Act, and the dividend therepn, shall be a charge upon, and in the event of default in respect thereof by the bank shall be payable out of the Consolidated Fund of New Zealand without further appropriation than the authority of this Act.
The Colonial Treasurer, Wellington. (Received sth July, 1894.) Bank of New Zealand : As operation impracticable August, September, and doubtful during the month of October, lam strongly of opinion that immediate London issue is desirable. Assume Act dispenses shareholders consent. Scheme favourably received, and prospects encouraging. Immediately underwriting £2,000,000, so as to provide Bank of New Zealand may receive 100 per cent., in accordance with English law. Cannot arrange issue of shares subject to a discount. If Government approve, cable express authority Government authorise Agent-General to approve of prospectus and execute New Zealand Government guarantee. Cable, verbatim, clauses six, seven, and eight.
The Colonial Treasurer, Wellington. (Received 6th July, 1894.) Proposed offer shares not less than one hundred and one. Prospectus would invite subscriptions £2,000,000 bearer shares simply on basis interest and principal being guaranteed by the New Zealand Government. Negotiations still pending. Whole to be underwritten at 1 per cent., in addition to brokerage, one-eighth. Latter payment in accordance with law. It is very important to successful issue that shares be bearer. Cable express authority, separate and uncoded, immediately if Government approve, so as to provide underwriting. Negotiations proceeding immediately, and matter completed during the next few days, which deemed very important. London, sth.
.The Agent-General, London. Wellington, 6th July, 1894. Message yesterday. Government deprecate any idea underwriting £2,000,000. Colonial guarantee should be amply sufficient to secure successful issue in open market. Instruct whether agree premium. What is your opinion lowest price guaranteed 4-per-cent. shares fetch in open market ?
The Colonial Treasurer, Wellington. (Received 7th July, 1894.) The Bank of England. Scrimgeour, and my opinion is that you can rely on no more than par for shares. Compare Greymouth debentures, having currency of thirty-one years, with shares ten years. Market prefer stock to shares. Question underwriting very difficult. It is not usual for public to subscribe more than 25 per cent, any issue. Would the New Zealand Government Departments tender at par for £750,000, selling Consolidated 1884 Stock Debentures to provide money ? My advice is the Bank of New Zealand be authorised to issue inscribed stock, guaranteed by the New Zealand Government, alternative to shares, leaving the question of underwriting at price not below par, to be settled by Agent-General and Bank of New Zealand. I think it desirable the Agent-General have full discretion, as prompt action often essential. London, 6th.
The Agent-General, London. Wellington, 7th July, 1894. Government strongly of opinion shares should be floated so as to realise to the Bank of New Zealand net par value. Government does not approve issue of inscribed stock by the Bank of New Zealand ; indeed we do not think there is any legal authority. You are authorised to act with full discretion, and give the necessary guarantee, keeping us posted in all particulars.
The Colonial Treasurer to the Agent-General. Sir,— . 11th July, 1894. In continuation of my letter —No. 95—dated the 7th instant, on the subject of the colony's guarantee of two millions for the benefit of the Bank of New Zealand, I concluded my despatch with an expression of hope that you would be able to cable me that the guaranteed capital had been successfully raised. I was therefore much concerned and disappointed to receive on Sunday your telegram, dated the 7th instant, pointing out that the deed of settlement of the bank limited the individual holding of shares to two thousand (the deed, I think, reads three thousand),
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and that, as there was a growing dislike to £10 shares, financial experts could not too strongly urge upon the Government the necessity to make the proposed issue in the form of stock instead of shares; and, further, offering the opinion that such an alteration would increase the value of the issue in the money market by 2 per cent. You also ask if it would be possible to pass an amending Act so as to do away with the share-limit, and to procure the necessary authority for the guaranteed capital to be issued, in the form of stock or otherwise, as suggested. It is greatly to be regretted that this fatal blot of a limit of shareholding was not discovered before the Guarantee Act was passed ; and on consulting our Law Officers there seems to be no other remedy than for an amending Bill to be introduced. You will, of course, understand that having to go before Parliament a second time is much to be deplored in the interest of the bank, and I cannot be certain that some antagonism will not be shown by parties interested in rival institutions, and by those who consider it their duty to oppose any measure introduced by the Government. Added to the difficulties of the position is the unfortunate fact of my enforced absence from the House, owing to a severe attack of the prevailing epidemic—influenza—which developed into bronchial catarrh, and has compelled me to keep my bed ever since the night of the introduction and passing of the Bank Act. I am, however, rapidly recovering, and think I may be in my place in the House to commence the work of next week. In the meantime, it is admittedly difficult for my colleagues to secure the same attention and consideration for financial matters as would be given to the Colonial Treasurer on his personal explanation. On consulting Mr. Murray it was decided that he should cable to the London directors with the view of ascertaining, if possible, full particulars of the nature of the stock or debentures which would prove most acceptable to the London money market, and that upon receipt of such information an amending Bill would be at once prepared to embrace the altered position of affairs, and toclear up or strengthen one or two other points which since the passing of the Act have been pointed out necessary under its operation. I enclose copies of telegrams herewith. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
(Telegram from the Agent-General.) The Colonial Treasurer, Wellington. Received Bth July, 1894. Growing dislike ten-pound shares. Financial experts cannot too strongly urge upon you issue stock instead. Bank of New Zealand deed settlement limits individual holding to 2,000 shares. Is it possible pass amending Act cancelling limitation and giving power Bank of New Zealand raise fresh capital in form of stock or otherwise ? This probably increase money-market value 2 per cent. —in fact, essential to successful issue. (London, 7th.)
(Telegram to the Agent-General, London.) Wellington, 9th July, 1894. Your message of the 7th instant received. Regret such unforeseen difficulties have arisen through shares-limit. Question amending Act so as to provide issue stock instead shares now under consideration. Advise any suggestion you think advisable.
(Telegram from the Agent-General.) Treasurer, Wellington. Received 10th July, 1894. Amending Act should cancel limitation holding, and give general and comprehensive power raise capital form of stock or otherwise. Success assured. (London, 9th.)
The Colonial Treasurer to the Agent-General. Sir,— 12th July, 1894. Bank of New Zealand Guarantee. —The bank having undertaken to bear all charges which the Government might incur incidental to the guarantee, I have the honour to request you to be good enough to collect from the bank the cost of all cablegrams you have sent or may yet despatch in connection with the matter. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
Memorandum for the Secretary to the Treasury. Mr. Heywood,— Colonial Treasurer's Office, Wellington, 19th July, 1894. I think you had better send a cable to the following effect to the Agent-General: " I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Every effort must be made to carry into effect this assurance." J. G. Ward.
Telegram to the Agent-General. The Agent-General, London. 19th July, 1894. I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Every effort must be made to carry into effect this assurance. Treasurer.
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The Colonial Treasurer to the Agent-General. Sir- 26th July, 1894. After the despatch of my letter, dated the 11th instant, intimating the disappointment I felt at receiving your cable about the discovery of the limit of shares, no time was lost in getting an amending Bill prepared, which was introduced in the House on Tuesday, the 17th instant. As might have been expected, the amending Bill met with some opposition ; but after careful explanation of the position, which I was personally able to make, the support of our own party was assured, and the few members of the Opposition who were clamouring for more information, and for the relegation of the Bill to a Select Committee, were at last convinced that the measure before them was essentially necessary in order that the guarantee of the colony contained in the main Act should have successful results for the bank in whose interests it had been passed. Little difficulty was experienced in the passage of the Bill through the Upper House, and His Excellency's assent was obtained on the 20th instant. Under separate cover I am sending you six copies of the Amendment Act as passed. Copies of cables to and fro since the 11th instant are enclosed, but I think I need only refer to yours dated the 24th instant, in which you informed me that the two millions of 4-per-cent. stock had been subscribed four times over, and that present quotations were -|--per-cent. premium. The quoted premium I read to mean that the stock was for sale at \ per cent, over the issuing price of 101-J —in other words, was being quoted at 101f. I therefore felt compelled to express the opinion of the Government on our committal to what we cannot but think was unnecessary underwriting; and I can assure you that the expression of opinion on this subject in business circles here is entirely antagonistic to such underwriting, and I feel, myself, that the bank should have been saved from such an expense. At the same time, I am prepared to fully recognise the responsibilities thrown upon you in connection with this matter, and to acknowledge that, in a large transaction such as this, the opinions of eminent financial experts should receive full consideration, and, if no other course presented itself to you, their advice had to be acted upon. One great fact remains that, by offers of four times the amount required, there is clear evidence that the credit of our colony stands higher than ever in your financial circles; and this is a matter for great congratulation. - I beg you will accept my cordial thanks for the very great trouble you have taken in the negotiations between the bank and the Government. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
Telegram from Agent-General, London, dated 24th July, 1894. Application has been made (for) Bank of New Zealand 4-per-cent. stock four times over. Present quotations are f-per-cent. premium.
Telegram to the Agent-General dated 25th July, 1894. Message of 24th received. Result shows underwriting unnecessary. A good deal of feeling upon the point here. Have you received resolution from directors in writing in accordance with my cable eighteenth.
Mr. Murray to the Colonial Treasurer. Sir,— Bank of New Zealand, Wellington, 12th July, 1894. I have the honour to inform you that, in response to an inquiry from me, the President of the bank in London has sent me the following cable message : " You may assure the Government that the board of directors will co-operate to fulfil conditions." I have, &c, The Hon. the Colonial Treasurer, Wellington. John Murray.
Mr. Murray to the Colonial Treasurer. Sir,— Bank of New Zealand, Wellington, 30th July, 1894. For the sake of record, I have the honour to quote as follows a cable message, dated London, Ist ultimo, which I received from the President of the Bank of New Zealand, the original of which I submitted to the perusal of the Hon. the Premier and yourself : " John Murray, Bank of New Zealand, Auckland. Board of directors, Bank of New Zealand, empower you to act.—Glyn, President." I wish also to record that, in notifying the directors in London of the passing of the Share Transfer Amendment Act, I informed them that the Government, as a condition of the guarantee, expected them to act thereon, to which I received reply dated the 21st instant : " Board are taking all reasonable care to satisfy themselves with regard to the means of transferees." And, further, that in reply to a telegram from me, dated 11th inst., stating that the Government required an express assurance that the directors would co-operate to fulfil the conditions of the Guarantee Act, I received the following message from the President : "Referring to your telegram of 11th July, you may assure Government board of directors will co-operate to fulfil conditions.— Glyn." I have, &c, The Hon. the Colonial Treasurer, Wellington. John Murray.
The Secretary to the Treasury to Mr. J. Murray. Sir,— 2nd August, 1894. I have the honour, by direction of the Colonial Treasurer, to acknowledge with thanks the receipt of your letter of the 30th ultimo, enclosing, for record in this office, copies of cablegrams received by you from the President of the Bank of New Zealand, —(1) Empowering you to act;
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(2) Assurance Board will co-operate in fulfilling conditions Guarantee Act; (3) Board are satisfying themselves as to means of transferees. I have, &c, Jas. B. Heywood, Secretary to the Treasury. John Murray, Esq., Bank of New Zealand, Wellington. Mr. J. Murray to the Secretary to the Treasury. Sir, — Bank of New Zealand, Wellington, 21st August, 1894. I have the honour to enclose, as desired by you, a statement of the assets and liabilities of the Bank of New Zealand in the colonies as at the 25th June, 1894. The figures for London are not available in the colony, and have been written for. I have added, in a memorandum attached, figures explanatory of the amounts shown in the balance-sheet as due to and by the Bank of Zealand Estates Company. I have, &c, The Secretary to the Treasury. John Murray. Statement of Assets and Liabilities of the Bank of New Zealand at 25th June, 1894, in New Zealand and Australia. In New Zealand. In Australia. Liabilities. £ s. d. £ s. d. Notes in circulation .. .. .. .. .. .. .. 439,413 0 0 20,941 0 0 Bills in circulation .. .. .. .. .. .. .. 19,010 17 8 4,617 1 3 Balances due to other banks .. .. .. .. .. .. 3,51112 7 4,263 0 3 Deposits—Government .. .. .. .. .. .. 402,661 9 10 119,353 10 4 Not bearing interest .. .. .. .. .. 1,409,013 12 4 180,030 17 11 Bearing interest .. .. .. .. .. .. 2,836,319 11 2 196,551 11 2 £5,109,930 3 7 £525,757 0 11 Bank of New Zealand Estates Company (Limited) — Cr. balances .. .. .. .. .. .. .. 89,860 15 9 Deposit in name of Estates Company jointly with Messrs. Jaffray and Glyn, being cash proceeds of realisation not otherwise specified .. .. .. .. .. .. .. 347,117 13 11 £5,546,908 13 3 £525,757 0 11 Assets. £ s. d. £ s. d. Coined gold and silver and other coined metals.. .. .. .. 557,543 16 11 239,942 16 1 Gold and silver in bullion and bars .. .. .. .. .. 29,891 711 28,200 0 0 Notes and bills of other banks .. .. .. .. .. 25,257 15 4 12,51118 8 Balances due from other banks .. .. .. .. .. 973 14 0 7,113 0 2 Landed property and bank premises .. .. .. .. .. 288,809 14 4 88\717 011 Notes and bills discounted .. .. .. .. .. .. 653,970 8 7 94,570 8 4 Other advances .. .. .. .. .. .. .. 2,712,473 8 6 870,622 17 3 Shares in Bank of New Zealand Estates Company (Limited) .. .. 1,850,000 0 0 6,118,920 5 7 1,341,678 1 5 Bank of New Zealand Estates Company (Limited), as per annexed statement .. .. .. .. .. .. .. .. '654,790 311 £6,773,710 9 6 £1,341,678 1 5 * The item £89,860 15s. 9d. should not, properly speaking, be shown on the other side, and should be deducted on this, because it is pro formd: representing assets transferred from one concern to another, appearing formally in the books as credits to certain accounts. The Auditor in London insisted on treating the items as realisations.—J.M. E. and O. E. M. Andrews, Inspector of Accounts. The figures relating to the Estates Company may be explained approximately as follows : — A. Advances Account, landed estates being worked :— (1.) Permanent improvements ... ... ... ... £161,000 (2.) Additional, live-stock* ... ... ... ... ... 127,000 (3.) Purchase of land previously held under Maori lease, or for other special reasons ... ... ... ... 28,000 £316,000 B. Advances Account, trading and industrial concerns : — (1.) Working capital, including ordinary overdrafts taken over from bank ... ... ... ... ... ... £134,000 (2.) AdditionS'to stock-in-trade, &c. ... ... ... ... 51,000 £185,000 *C. (1.) Sundry shares, interests, and properties acquired (this is largely pro formd, as shown below) ... ... ... £124,000 (2.) Additions under various heads, including improvements to house property, premises, and plant ... ... ... 30,000 £154,000 Total as per bank sheet ... ... ... ... £655,000 Of which ... ... ... ... ... 90,000 Leaving ... ... ... ... ... £565,000
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is merely transfers of live-stock, or assets from one concern to another, chiefly in the items above marked,* and appears as a credit balance in the bank return —£89,860 15s. 9d. It has bad to be kept in this form because, having been credited in the company's books to certain concerns, the London auditor insisted that it must be treated as realisations—a contention which the company and the bank resist. Realisations by Estates Company. The nominal total is, say ... ... ... ... ... £790,000 Deduct, as explained, being merely pro formd ... ... ... 90,000 Actual ... ... ... ... ... 700,000 Firßt mortgages paid off, and calls on shares paid... ... £194,000 Special expenses chargeable to this account ... ... 3,000 197,000 £503,000 Held— Cash in bank ... ... ... ... ... £347,000 Mortgages and bills held for unpaid advances . ... 156,000
Mr. J. Murray to the Secretary to the Treasury. Dear Heywood,— Bank of New Zealand, Wellington, 21st August, 1894. Referring to the figures relating to the Estates Company annexed to the bank's balancesheet, people are apt to connect me with that company as if I had been all along controlling it. I wish you to understand, and any Minister who may see the statement, that for the first two years or so—during which period, in fact, these figures grew up—l had nothing to do with the Estates Company. For the last sixteen months or so I have controlled it, and have been doing so in the direction of stopping expenditure and bringing things down as much as possible without needless sacrifice and upsetting. I have, &c, John Murray. P.S.—I do not wish it to be supposed that I reflect on what was done : I do not doubt that it was, all things considered, wisely enough done.—J.M.
The Secretary to the Treasury to Mr. J. Murray. Sir, — 22nd August. I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the 21st instant enclosing a statement of the assets and liabilities of your bank in the colonies as at 25th June, 1894, and to thank you for it. I have, &c, John Murray, Esq., Jas. B. Heywood, Bank of New Zealand, Wellington. Secretary to the Treasury.
The Secretary to the Treasury to Mr. J. Murray. Sir,— 25th August, 1894. Referring to the statement of assets and liabilities of the bank in New Zealand and in Australia at 25th June last, I am directed by the Colonial Treasurer to express his regret that the London business was not also included in such statement. I am to note, however, your remarks that particulars have been written for, but he would have preferred that they should be supplied by cable. In examining the figures, there are several items which call for remark; but on this occasion it is not intended to make an elaborate criticism of the statement, but to ask you for particulars connected with £564,929 of asset under the head of the Bank of New Zealand Estates Company. The Colonial Treasurer desires to point out how enormously inflated these figures are, in his opinion, taking into consideration the fact that the business of the Assets Company is asserted to be disassociated from the bank. In view, however, of the fact that the Assets Company is now indebted to the bank on advance account alone considerably over half a million of the bank's money, it will be understood how desirous the Colonial Treasurer is that he should be able to form some idea of the value of the asset now under remark. From the memorandum accompanying the statement he finds that the £564,000 is made up of three sets of items—namely, £316,000 for advances connected with landed estates; £185,000 for advances on account of trading concerns, &c. ; and £154,000 for sundry shares, interests, &c, making a total of £655,000, from which you have deducted £90,000 as a transfer-entry affecting both sides of your books. The Colonial Treasurer desires further information respecting the advances on account of landed estates. He would like to know the names of the occupiers, and where the estates are situated, upon which the sum of £161,000 has been paid by way of permanent improvements, and the same particulars with regard to the sum of £28,000 for purchase of land. Assuming that the figures above given represent the original cash values, the Colonial Treasurer would be glad to receive an estimate of their present market value. Although the advance of £185,000 for trading, &c, is exceedingly large, it is of course recognised that a necessity for advances of this sort exists.
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The Colonial Treasurer is of opinion that more detailed information should be compiled concerning the £124,000 advanced for sundry shares, &c, and that particulars similar to those asked for in connection with the item of £161,000 should be supplied concerning the £30,000 for improvements to house property. Passing on to the item of £347,117 on the other side of the statement, I am desired to ask you to explain the item of £156,000. You state that £503,000 net has been realised, of which £347,000 is held in deposit; but you do not explain what has become of £156,000. Under what head is the amount represented in the bank books ? Finally, with regard to the asset of £565,000, I am to request that you will have the value of these assets very carefully examined, and that you will furnish the Colonial Treasurer with an estimate of what, in your opinion, is their present market value. Before concluding, I am desired to draw your attention to the result of the Australian business, which apparently shows that the Colony of New Zealand has been drained to the extent of over £800,000 for the purpose of maintaining the bank's business there, and I am therefore to ask you whether this drain is expected to continue, and whether the business done in Australia is of such a remunerative character as to warrant such a strain upon the bank's resources within New Zealand. I have, &c, Jas. B. Heywood, Secretary to the Treasury.
Mr. J. Murray to the Secretary to the Treasury. Bank of New Zealand, Wellington, Sir,— 27th August, 1894. I have the honour to acknowledge the receipt of your letter of 25th instant. In compliance with the Colonial Treasurer's wish, I am cabling to the London office of the bank for their figures; and I have written to the manager of the Estates Company in Auckland for the particulars and the information -the Treasurer requires. Without assuming responsibility for the policy which has led to what your letter describes as the "enormous inflation " of-the figures denoting the Estates Company's financial relations to the bank, I ask permission to point out that, taking the total indebtedness at... ... £565,000 there should be set against this money on deposit with the bank ... ... ... 347,000 Leaving ... ... ... ... ... ... £218,000 actually, so to speak, out of pocket by the bank. Then there is £156,000 represented by mortgages and other securities for unpaid balances of properties sold—good interest-yielding assets, which any lender might advance upon ; and, though these are not held by the bank, they may be regarded almost as cash assets. Then, again, £194,000 has been applied in paying off first charges on Estates Company properties, and in paying calls on shares. As it was not found practicable to sell all the estates quickly, the then local board of the Estates Company determined to increase the productiveness of certain of them by development of their resources. Without debating the wisdom of this policy, it may be urged that the carryingcapacity of their properties has been much increased, the exports of the colony materially contributed to, and much employment provided for labour. In reply to your inquiry regarding the item £156,000 on the credit side of realisation account in my memorandum, that, as I have just said, is represented by mortgages and other securities for balances due on account of properties sold. It has nothing to do with the bank figures. I set it out merely to explain the position of the liquidation account. As regards the Australian business of the bank, your remark " that the Colony of New Zealand has been drained to the extent of over £800,000 for the purpose of maintaining the bank's business there " indicates, as it seems to me, a grave misconception. Reference to the sworn bank quarterly returns of 25th June last —as, indeed, to the statement of assets and liabilities now under review—will show that the Bank of New Zealand employs within the colony not only all the resources derived therefrom, but all its capital as well. The resources employed in Australia are derived from London. I have, &c, The Secretary to the Treasury. John Murray.
[From London, in answer to request to cable their advances.] Aug. 28. —Referring to your telegram of 28 August, telegram would be very lengthy, and liable to be misunderstood. Are they absolutely essential ? Would it not suffice telegraph particulars items required ?
The Agent-General to the Colonial Treasurer. Westminster Chambers, 13, Victoria Street, London, S.W., Sir,— 20th July, 1894. Referring to my memorandum No. 842 of the 14th instant, I beg to transmit copies of further cablegrams which have passed relating to the Bank of New Zealand. I also enclose copy of correspondence with the bank, and copy of the prospectus which has been issued inviting applications for the £2,000,000 Bank of New Zealand 4-per-cent. stock.
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With reference to your cablegram with respect to the bank receiving not less than par for the stock, the issue price of £101 ss. in cash for every £100 in stock is sufficient to meet the J per cent, brokerage payable to the bank's broker for negotiating the underwriting, and also the 1 per cent, commission payable to the underwriters themselves, leaving £100 per cent, net payable to the bank. On my pressing upon the board of directors the expediency of carrying into effect, so far as possible, the urgent wish of the Government that the bank should receive par, they represented that virtually that would be the case; at the same time they did not disguise the fact that over and above the commission to the underwriters and the brokerage there would be certain miscellaneous expenditure which the bank would have to provide, such as the cost of advertising, printing, telegrams, &c, and some additional brokerage which outside brokers, through whom the public might apply, would probably claim. The amount of this expenditure cannot, of course, be ascertained until after allotment; but the directors represented that in any case it would not exceed, at the outside, \ per cent. The arrangements for the issue had, however, proceeded so far, and there had been already so much unexpected delay, that it would have been extremely hazardous, particularly at this time of the year, to have postponed the issue any further. The financial portion of the city were already leaving London, and any further postponement would have necessitated another reference to the underwriters, which would, in addition to causing a delay which would have probably seriously affected the success of the issue, might have resulted in the underwriters withdrawing altogether. These and other considerations weighed with me so heavily that I considered that I should be justified in allowing the stock to be issued at the price which I have named. With regard to the underwriting, I may say that at the beginning I was extremely reluctant to concur in the view taken by the bank directors, that endeavouring to place the stock, simply trusting to the public to take it up, would seriously risk the success of the issue ; but finding that other financial authorities, such as the Governors of the Bank of England and Messrs. Scrimgeour, took a similar view to that taken by the directors, I felt myself justified in withdrawing my opposition. There are other points, such as issuing the stock at a fixed price instead of by tender, on which I might make some remarks; but I think it will suffice if in the present communication I assure you that this and every other point of any importance received the most earnest and careful consideration on the part of the directors and myself. In conclusion, I may be allowed to express my conviction, which is confirmed by the opinions expressed to me by the Governors of the Bank of England and by Messrs Scrimgeour, that the terms on which the operation has been carried out are, taking all the circumstances into consideration, as satisfactory as could possibly be expected. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. B. Percival.
Telegram to Agent-General, London. Received 18th July, 1894. For purpose of preventing transfer of shares to persons of inadequate means, Government have passed Bill providing that no transfer be effected without consent of directors in writing. Treasurer.
Telegram to Agent-General, London. Received 19th July, 1894. I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Depend upon your decision to carry into effect this assurance. Treasurer.
Telegram to Colonial Treasurer, Wellington. Despatched 19th July, 1894. Bank prospectus issued, price of issue 101J, so as to provide for underwriting, brokerage, Bank of New Zealand receiving par and providing some miscellaneous expenditure which cannot yet ascertain until after allotment; this most satisfactory arrangement possible under the circumstances. Bank of England and Scrimgeour thought underwriting essential and terms very satisfactory.
The Agent-General to the Manager, Bank of New Zealand. Westminster Chambers, 13, Victoria Street, London, S.W., Sir,— 19th July, 1894. I have to inform you that I have received telegraphic advice from my Government that " The Bank of New Zealand Share Guarantee Act 1894 Amendment Act, 1894," has been passed, and herewith I enclose, for the information of your directors, copy of its provisions as received by me by cablegram from my Government. I have further to state that, previous to my certifying as Agent-General, on behalf of my Government, to the guarantee provided for under these Acts, I shall require a written assurance from the directors of your bank that Mr. Murray was duly authorised to represent them in the arrangements he has made on your bank's behalf with my Government, and that they accept without reserve the provisions of the main and amending Acts which have now been passed, and under which the £2,000,000 Bank of New Zealand stock guaranteed by my Government can now be issued. I have further to request that you will move your directors to pass a formal resolution to the above effect, and that the same be communicated to me forthwith by letter. * 42—1. 6.
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T have to add that, in the discussion in Parliament which took place in the passing of the Amendment Act, my Government gave an assurance that they would require that the bank shall receive not less than par value for the stock. I shall, accordingly, be satisfied to leave the issue price to be fixed by your directors, provided they will give me an assurance that the above requirements will be duly carried into effect. 1 have, &c, W. B. Percival. The Manager, Bank of New Zealand, 1, Queen Victoria Street.
The Manager, Bank of New Zealand, to the Agent-General. Sir, — Bank of New Zealand, London, 19th July, 1894. I have to acknowledge the receipt of your letter of this date, and to inform you that my Board are prepared to give you the assurance for which you ask, that they have authorised Mr. Murray to represent them in the negotiations with the Government, and that they accept without reserve the provisions of the main and amending Acts. In confirmation thereof, I beg to hand you the annexed copy resolution. I am also instructed to inform you that the issue price which has been settled for the stock will provide for the bank's receiving par therefor after payment of the underwriting commission. There will, however, be certain additional expenses, such as the usual brokerage and advertising expenses, the amount of which is not at present ascertainable, but which is estimated not to exceed £5,000. We are advised by counsel that these expenses are legitimately payable by the bank, as they do not involve any question of the issue of the stock at a discount. I have, &c, Sir Westby B. Percival, K.G.M.G. C. J. Tegetmeier, Manager. Agent-General for New Zealand, 13, Victoria Street, 3.W. ' <
Memorandum.-—At a meeting of the board of directors of the Bank of New Zealand, held on Thursday, the 19th July, 1894, the Board resolved : " That Mr. Murray was duly authorised to represent them in the arrangements he has made on behalf of the bank with the New Zealand Government, and hereby affirm and approve his action ; and further, that the Board accept without reserve the, provisions of the main and amending Acts which have now been passed, and under which the £2,000,000 Bank of New Zealand Stock guaranteed by New Zealand Government is now about to be issued." C. J. Tegetmeier, Manager.
Bank op New Zealand 4-per-cbnt. Guaranteed Stock (guaranteed by the New Zealand Government.) Issue of £2,000,000, repayable at par on 9th July, 1904. Dividend payable half-yearly on Ist May and Ist November. Authorised by the New Zealand Parliament under an Act intituled " The Bank of New Zealand Share Guarantee Act, 1894," and an amending Act. Thd Bank of New Zealand invite applications for £2,000,000 of the above stock. Principal and dividend are absolutely guaranteed by the New Zealand Government. The interest will be payable half-yearly, on the Ist May and Ist November, and the principal will be repayable on the 19th July, 1904. Both principal and dividend will be payable at the Bank of New Zealand in London, and in terms of the Acts above referred to in the event of default by the bank, will be payable out of the Consolidated Fund of the Colony of New Zealand. The stock will be issued in certificates to bearer of £1,000, £500, and £100 respectively, with option to holders to convert at any time into registered stock. The books of such registered stock, which will be transferable in any amount, will be kept at the Bank of New Zealand, London, where all transfers will be registered. The Act provides that holders of this stock shall not be under any further liability, reserved or otherwise, beyond the amount of the instalments specified herein, nor shall they be entitled to vote as shareholders. The issue price will be at the rate of £101 ss. in money for every £100 expressed in the stock certificates, payable as follows : £5 per cent, on application ; £26 ss. per cent, on allotment (which includes the premium of 1J- per cent.); £70 per cent, on 26th October, 1894. Payments may be. made in full on allotment or at any date prior to 26th October, 1894, under discount at Bank of England rate. Dividend on instalments Commences from date of payment thereof and scrip certificates to bearer with coupons attached for the accrued dividend up to Ist November will be issed in exchange for the allotment letter. Stock certificates to bearer with coupons attached will be delivered in exchange for fully paid scrip. The first coupon, being for six months' dividend, will be payable on Ist May, 1895. The only contract made by the bank other than those made in the course of business is one with the brokers to the bank in regard to the subscription of the above issue. Warrants for the dividends on registered stock will be transmitted by post. Applications for other than even hundreds of stock will not be accepted. The stock certificates will be countersigned by the AgentGeneral for New Zealand on behalf of his Government. The subscription list will be opened at the Bank of New Zealand, No. 1, Queen Victoria Street, London, E.G., on Tuesday, 24th July, 1894, and closed on or before Wednesday, 25th July, 1894, at 4 p.m. Applications must be upon printed forms which may be obtained at the Bank of New Zealand, and at the office of Messrs. W. Greenwell and Co., the Brokers, 2, Finch Lane, E.C. Bank of New Zealand, London, 19th July, 1894. '■ -. ■- !
I approve of the above prospectus.—Westby B. Percival, Agent-General for New Zealand,
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Form of Application. Bank of New Zealand 4-per-cent. Guaranteed Stock guaranteed by the New Zealand Government for £2,000,000. To the directors of the Bank of New Zealand, No. 1, Queen Victoria Street, London. hereby request that you will allot to £ , say pounds nominal of the above stock on which enclose deposit of 5 per cent, or £ , and agree to accept that amount or any less sum that may be allotted to and to pay the instalments thereon upon the terms of the prospectus dated 19th July, 1894, and agree to waive any fuller compliance with section 38 of " The Companies Act, 1867," than is contained in the said prospectus. Name in full . Usual signature . Address . Occupation or description Date July, 1894.
The Agent-General to the Colonial Treasurer. Westminster Chambers, 13, Victoria Street, London, S.W., Sir,— 27th July, 1894. Referring to my letter, No. 849 of the 20th instant, I beg to report that the subscription list for the Bank of New Zealand 4-per-cent. stock was opened on the 24th instant, and was closed on the same evening, applications having been sent in for about five times the amount of the issue. I have not yet received from the bank any detailed particulars of the result of the issue; but I understand that one-fourth (£500,000) was applied for direct by the public, and that the remainder of the applications came through brokers. I attach copies of cablegrams which have passed, in continuation of those which went with my letter of the 20th instant. I also enclose copy of letters to and from the bank relating to the transfers of shares. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. B. Percival.
Telegram to Colonial Treasurer, Wellington. (Despatched 24th July, 1894.) Application has been made Bank of New Zealand 4-per-cent. stock four times over. Present quotations are one-half per centum premium.
Telegram to Agent-General, London. (Received 25th July.) Your message of 24th instant received. Result shows underwriting unnecessary. A good deal of feeling upon the point here. Have you received resolution from directors in writing in accordance with my cable 18th. Treasurer.
Telegram to Colonial Treasurer, Wellington. (Despatched 25th July, 1894.) Your message of 25th instant received. Resolution directors obtained according to instructions. A reliable indication cannot be had from result that underwriting unnecessary. Opinion still held city success doubtful without. Week ago money-market most uncertain. Informed Bank of New Zealand Government strongly objected underwriting, but, taking into consideration Bank of England's, Scrimgeour's, and Bank of New Zealand's advisers' strong opinion in favour, reluctantly felt compelled concur. Underwriting ensured success, causing excessive speculative applications to endeavour to obtain proportionate amounts.
Dear Sir,— 13, Victoria Street, London, S.W., 19th July, 1894. I am directed by the Agent-General to inform you that he has received telegraphic advice from his Government that, for the purpose of preventing transfers of shares to persons of inadequate means, an Act has been passed by the New Zealand Legislature providing that no transfer be effected without the consent in writing of the directors. I have, &c, Walter Kennaway, The Manager, Bank of New Zealand. Secretary to the Department.
Sir,— Bank of New Zealand, London, E.C., 21st July, 1894. I have to own receipt of letters from your department dated 19th instant, the contents of which are noted. In reply thereto, I beg to inform you that the directors, before passing transfers are taking every reasonable care to satisfy themselves that the transferees are fully responsible for the reserve liability on the shares. I have, &c, C. J. Tegetmeier, The Agent-General, for New Zealand. Manager. 29. What action was taken in regard to the ten thousand shares of £10 each further capital referred to in the cable message of Bth July ? Was there a change in the legislation with a view to issue stock instead of shares?— Yes, it was decided to issue stock instead of shares, and further legislation was introduced to the House by the Government enabling that change to be made. The Agent-General was advised on the 9th. The correspondence bearing upon that is contained in the dates of 10th, 12th, and 19th July. The cable message of the 12th was in response to a request by myself and Mr. Seddon, asking for Mr. Murray's authority to represent the bank. 30. Do you remember Mr. Murray producing the cable message ?—Yes, saying that he had the authority at the first interview; and to make doubly sure we communicated with the AgentGeneral, and received the copy of the minute of the directors whereby he was appointed, and other communications about the guarantee.
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31. You are aware that after the banking legislation negotiations took place for the purchase of the Colonial Bank by the Bank of New Zealand ? —Yes, I understood so at the time. 32. Were you or any member of the Government made acquainted with the details or nature whatsoever in respect of these negotiations for purchase ?—I was not consulted about them in any way whatever, nor do I believe that any other member of the Ministry was. 33. Did you know anything in connection with the details of the purchase ? —No, not until a considerable time after the agreement had been ratified by Parliament. 34. What was the first intimation you had that a purchase had been arranged?— The receipt of a letter, dated 23rd October, 1895, from the President of the Bank of New Zealand. 35. Is that the first intimation the Government had as to the agreement having been made between the banks ? Look at the signature to that letter; what is that ?—lt is dated " Wellington, 23rd October, 1895":— The President, Bank of New Zealand, to the Colonial Treasurer. Sir,— Bank of New Zealand, Wellington, 23rd October, 1895. As requested, I have now the honour to report as under on the agreement between the Colonial Bank of New Zealand and the Bank of New Zealand for the purchase by the latter of the Colonial Bank's business and assets. 1. The amount of the assets referred to in the " A " list, and to be taken over, is £926,197 ; in the " B " list, £604,695 ; in the " C " list, £98,382. 2. The total amount of assets to be purchased as good by the Bank of New Zealand is £2,643,190, and the total amount of liabilities to be taken over is £2,509,284. The difference between these amounts —£133,906 —is to be paid in cash to the Colonial Bank. 3. As stated in the agreement, the Bank of New Zealand is to hold the sum of £327,305 (being part of the assets shown in the books of the Colonial Bank) pending the taking-over, realisation, or adjustment of certain accounts set forth in the " B " and " C " lists. 4. The assets mentioned in list "D " amount to £102,274. They are not to be purchased by the Bank of New Zealand, but are eliminated in accordance with the Act. . 5.. The Colonial Bank directors and staff afforded every facility to the purchasing bank for a thorough investigation of their business. The examination by the directors, Auditor, and officers of the Bank of New Zealand was of a most searching and exhaustive character, and I may here state that the directors of the Colonial Bank anticipate that, in addition to the £133,906 agreed to be paid in cash, they will receive out of the £327,305 a further sum for distribution amongst their shareholders. 6. I am of opinion that the Bank of New Zealand will receive sound value in the assets, aggregating £2,643,190, it has undertaken to purchase ; and that, with prudent management on the part of the purchasing bank, the increased earning-power from this source, as stated in the report of the Banking Committee, should be fully realised; also, that the purchase on the basis of the agreement will be beneficial to the interests of the colony and to the shareholders of the Bank of New Zealand. I have, &c., ■ W. Watson, The Hon. the Colonial Treasurer, Wellington. President. 36. The first intimation as to the purchase was after the agreement was complete ?—Yes. I have an impression that the agreement came up late at night to the House in the first instance, but it was not handed to me, and I did not see it at that time. 37. Have you seen the letter dated October 23rd before, and, if so, through whom ? —That came to the Treasury, I think. It may have heen handed to a Minister in the first instance. I have seen it before. 38. Look at the top of that. Does not Mr. Heywood certify it as being a correct copy on the 18th October?— Yes, he does; but I never saw that agreement. It was not handed to me. Copy op the Agreement between the Colonial Bank of New Zealand and the Bank of New Zealand. [Certified as a correct copy of the original agreement. —Jas. B. Heywood, Secretary to the Treasury, 18th October, 1895.] An agreement made the eighteenth day of October, 1895, between the Colonial Bank of New Zealand (hereinafter called " the selling bank ") of the one part and the Bank of New Zealand (hereinafter called " the purchasing bank") of the other part, whereby it is agreed as follows : — 1. The selling bank agrees to sell, and the purchasing bank agrees to purchase, the business and assets of the selling bank, except the uncalled capital and reserve liability of shareholders and the assets and debts mentioned in a certain list, marked " D," which has been prepared, and is identified by being signed by three directors of the selling bank and the purchasing bank respectively, and except also as hereinafter mentioned. 2. The business and assets of the selling bank, as disclosed in its balance-sheet hereinafter mentioned, a copy of which balance-sheet has been signed by such directors as aforesaid, shall, for the purposes of this agreement, be considered as the basis of the contract entered into between the said parties. 3. For the purposes of this agreement the face value of the consideration is estimated at £461,211; but from this sum shall be deducted and retained by the purchasing bank the sum of £327,305, as security pending the taking-over, realisation, or adjustment of the accounts in the " B " and " C " lists respectively, as hereinafter mentioned. The sum of £133,906 shall be paid in cash by the purchasing bank to the selling bank on the ratification and approval of this agreement, as hereinafter mentioned. 4. Three lists of debts and accounts have been prepared, and marked respectively " A," "B," and " C " lists, which are identified by being signed by such directors as aforesaid,
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5. The debts and accounts mentioned in the " A " list shall be taken over by the purchasing bank as of the value set opposite to the same respectively in such list. 6. The said sum of £327,305, part of the said purchase-money, represents sums in the righthand columns of the said " B " and " C " lists as marginal sums to be held by way of security pending the taking-over, realisation, or adjustment of the accounts in the said " B " and "C" lists respectively, and shall, subject to the provisions hereinafter contained, be retained by the purchasing bank for such purpose. 7. The assets and debts mentioned in the said " D " list shall not pass under this agreement, or become the property of the purchasing bank, but shall remain the property of the selling bank. 8. The business and the assets hereby agreed to be sold shall be retained by the selling bank up to the date hereinafter fixed for the transfer of the said business, and as from the 31st day of May last in London, and as from the 31st day of August last in New Zealand, up to such date so fixed the selling bank shall be deemed to have been and to be carrying on business on behalf of the purchasing-bank, and shall accordingly account to the purchasing bank for all benefits received, and be indemnified by the purchasing bank against all liabilities, obligations, and expenses (unless arising from the wrongful or negligent act of the selling bank or its officers) incurred in carrying on the business of the bank. All rates, taxes, and fire insurance premiums in respect of the premises and assets hereby agreed to be sold up to the said 31st day of August last shall be discharged by the selling bank, and thereafter by the purchasing bank, and all such rates, taxes, and premiums shall, if necessary, be apportioned. 9. The purchasing bank shall manage, realise, and adjust the accounts mentioned in the " B " and " C " lists respectively under the supervision of the selling bank, to whom monthly returns shall be furnished by the purchasing bank, and no increase of indebtedness shall be allowed in respect of any such accounts, except by mutual agreement between the selling bank and the purchasing bank; but if any such indebtedness is increased by mutual consent the selling bank, if required, shall provide a further guarantee to secure such increased indebtedness; and, if the purchasing bank shall allow any increase which may not be so mutually agreed upon, such increase of indebtedness shall be at the sole risk of the purchasing bank. • 10. The purchasing bank shall be entitled to apply any surplus arising from any of the said marginal sums in the " B " list in aid of any deficiency which may arise in any other accounts in such list until the whole of such accounts in such list shall have been taken over, liquidated, or adjusted. There shall be no liability on the part of the selling bank to the purchasing bank beyond the said marginal sums in respect of the said accounts or any of them. 11. If the selling bank shall consider that any steps or proceedings are necessary for the protection of the said accounts or any of them in the said " B " and " C " lists respectively, the purchasing bank shall, on receiving written instructions from the selling bank, take such steps and proceedings, but at the risk and expense of the selling bank. 12. If the purchasing bank shall represent to the selling bank that any account or accounts in the "B" list is or are in its opinion becoming bad, or in the event of a customer failing to pay interest on any such account, the purchasing bank may require that such account or accounts shall be closed and realised after one month's notice to the selling bank, but the selling bank shall have the option of withdrawing such account from the assets hereby sold on paying to the purchasing bank the amount then due thereon, and thereupon the amount standing opposite such account in the right-hand column shall be paid to the selling bank, and in the event of the selling bank declining to exercise such option within such month, then the purchasing bank may deal with the same in such manner as it thinks fit. 13. If at any time on the rendering of the monthly accounts or returns aforesaid it shall be found that the total amounts standing in the right-hand column of the "B" list shall exceed the total amount of debts to which they stand opposite in such list, then, and so often as the same shall occur, such excess of the total amount in such right-hand column shall be paid to the selling bank. 14. On the expiration of six months from the date of the transfer of the said business, and on the expiration of every six months thereafter, a statement shall be prepared by the purchasing bank and furnished to the selling bank of such accounts in the " B" and " C " lists as may have been taken over by the purchasing bank, liquidated, or adjusted, as also a statement of the position of the amounts in the said right-hand column of the "B " list. 15. An equitable adjustment shall be made of the interest due and to be allowed to the selling bank on any amount standing in the said right-hand column of the said " B " list which may ultimately be found to be in excess of the amount necessary for securing the debts mentioned in the said "B" list, and the rate of such interest shall be based on the current rates of interest for fixed deposits for twelve months paid by the purchasing bank. 16. After the expiration of two years from the 31st day of August last the selling bank may require the purchasing bank to pay over to the selling bank the whole of the amounts in the righthand column of the said " B " list, and surrender all securities held in respect of the debts or accounts mentioned in such list, on payment of the total amount of the balance then owing on such debts or accounts ; but the parties hereto may arrange from time to time to continue the liquidation of any of the accounts mentioned in the said "B" list for a further term. In the absence of any such arrangement the purchasing bank may proceed to liquidate all or any of the accounts mentioned in the said " B "list. 17. The purchasing bank shall not, so long as it retains any part of the said marginal sums as security as aforesaid, realise or discharge (except on payment) any security heid by the purchasing bank for or in respect of such accounts, nor realise or compound for such accounts, without the consent of the selling bank. 18. With respect to the accounts appearing in the said "C" list, the selling bank shall indemnify and protect the purchasing bank against any loss or deficiency on the realisation of such
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accounts respectively, provided that the purchasing bank shall, immediately on this contract taking effect, write off the amounts standing in the right-hand column of the "C " list, and credit the respective accounts in such lists with the amounts so written off. The purchasing bank shall have the option, within three months from the date of this contract taking effect, to take over all or any of the said accounts in the said " C " list, and in the event of the purchasing bank deciding to take over any such account the selling bank shall stand released from it agreement to indemnify and protect as aforesaid. The selling bank may at any time require the purchasing bank to elect whether such bank shall take over all or any of the accounts in the "C" list or reject the same, and in the event of the purchasing bank refusing to take over all or any of such accounts the selling bank shall be entitled to take over the accounts so rejected, with all securities in respect thereof, on payment of the amount owing on such accounts or account respectively, or require the purchasing bank to realise or liquidate the account or accounts which the purchasing bank refuses to take over, and any deficiency arising on such liquidation shall be made good by the selling bank. 19. The assets agreed to be sold as aforesaid shall be subject to all tenancies, liens, and equities subsisting or affecting the same, or any part thereof. 20. The purchasing bank shall pay, satisfy, and discharge all deposits, bank-notes, credit balances, bills, drafts, letters of credit, and circular notes for or in respect of which the selling bank shall be liable, and which are disclosed in the selling bank's books at the time appointed for the transfer of the business of the selling bank, and shall also pay and satisfy all liabilities and obligations of the selling bank incurred or undertaken in carrying on its ordinary business, and which shall be disclosed in the books of such bank, but, nevertheless, without prejudice to the provision contained in the next clause; and also will, from time to time, pay the rents payable, and observe and perform the covenants and conditions to be fulfilled or observed by the selling bank under any lease or tenancy held by the selling bank, and agreed to be sold by it; but nothing in this clause contained shall render the purchasing bank liable in respect of any contract entered into by the selling bank with any of its officers or servants, or for any loss arising from the improper conduct or neglect of any such officers or servants. 21. Notwithstanding anything contained in the last-preceding clause, the selling bank shall guarantee the- purchasing bank against all loss which it may sustain in respect of any letters of credit granted by the selling bank prior to the time of the said business being transferred ; but the purchasing bank shall elect within fourteen days thereafter whether it will stop or continue any credit in respect of such letters, or any of them, and after the expiration of such fourteen days the liability of the selling bank under this clause shall cease and determine in respect of any operation thereafter on any such letters of credit. 22. A list of the officers and servants of the selling bank shall be furnished to the purchasing bank, and their names shall be placed on such bank's register of applications for employment, and as many of such officers and servants shall be taken into the employ of such last-mentioned bank as the exigencies or interests thereof may require. 23. The purchasing bank shall be entitled at any time within six months from the time appointed for the transfer of the said business to reject any securities which it may consider contain onerous conditions. 24. The selling bank shall, if a written request in that behalf be made to it by the purchasing bank within nine months from the date appointed for the transfer of the said business at the cost and charges of the selling bank, complete any incomplete security (according to the nature of the security intended) for any of the assets sold and purchased as aforesaid, and in the event of the selling bank neglecting for a reasonable time to complete such security the purchasing bank may do so at the cost of the selling bank. 25. The selling bank shall guarantee— (a.) That the balance-sheet made up to the 31st day of May last in London, and up to the 31st day of August last in New Zealand, contains a true statement of the position of the selling bank at those dates, except as any variation thereof appears in this agreement. (b.) That all items (not included in the " A," " B," and " C " lists, and any securities held for the accounts therein) submitted to the purchasing bank during the negotiations for the sale and purchase were of the value which they were represented to be, but the landed property and bank premises appearing in such balance-sheet shall be taken at the values appearing in the said balance-sheet. The furniture and stationery mentioned in the said balance-sheet, after deducting an allowance in respect of working the business in London, has been assessed at £6,250. (c.) The accounts in the " A " and "B " lists, taken over by the purchasing bank, which have not in the meantime been paid off or reduced, shall, at the time appointed for the transfer of the business, be in as safe or substantially good position, having regard to the nature of the accounts and the circumstances of the debtors, as they were respectively in on the 31st day of August last. (d.) That the items shown in the balance-sheet as being in transitu between the various branches of the selling bank were of the values which they were represented to be in such balance-sheet. (c.) If any account taken over by the purchasing bank shall be wholly or partly secured by shares of the selling bank, such last-mentioned bank shall make good any deficiency which may arise in realising any such security to the extent to which such security was estimated in taking over such accounts, or any of them. (/.) That the selling bank will, if required by the purchasing bank within six months from the time when this contract takes effect, make good any defect in title to all or any of the assets sold which have been represented to consist of freehold land belonging to such bank as its own property, and not held by way of security only, and, as
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to leasehold properties, that all rents have been paid and all covenants performed in respect thereof up to the 31st of August last. If the selling bank is unable or unwilling to make good any such defect in title within a reasonable time after being so requested so to do as aforesaid, compensation shall be allowed to the purchasing bank for any deficiency in value of any freehold property prejudicially affected by any such defect in- title, such compensation 1 to be settled by arbitration in case of disagreement between the parties hereto as to ; the amount thereof. ' -•■- ---26. Agency work in connection with the liquidation of the selling bank shall be undertaken for such bank by the purchasing bank free of expense, except such charges as the purchasing bank may actually pay in respect thereof, but such last-mentioned bank shall not be under any obligation to carry out any agency work which it may consider detrimental to its own business. 27. There shall be excepted from the said contract for sale, the share-register, transfer-books, board minute-books, transfers of shares, and other documents relating to the ownership of shares in the selling bank, and also its seal, all of which shall remain the property of the selling bank. All other books of the selling bank shall become the property of the purchasing bank; but, until the. dissolution ofthe selling bank, the purchasing bank shall produce and show, at such times and to such persons as the selling bank shall from time to time reasonably require, such books, documents, and papers of the selling bank passing to the purchasing bank; but the selling bank shall pay any actual outlay occasioned by such production. 28. It is agreed that the selling bank shall guarantee the due payment of all amounts' payable under or in respect of any security mentioned in the memorandum at the foot of the said " C " list as being held by the purchasing bank, and given or executed by any person or company whose name appears as a debtor in the said "C " list; but the said selling bank shall be entitled at any time to pay off and take a transfer of all or any of the said securities. 29. Subject to the payment of the said sum hereinbefore agreed to be paid in cash, the time or date appointed for the transfer of the business of the selling bank shall be the second Monday after the ratification and approval of this agreement, as provided by " The Bank of New Zealand and Banking Act, 1895." 30. If any difference shall arise between the selling bank and the purchasing bank touching these presents, or the construction thereof, or any clause or thing herein contained, or any matter in any way connected with these presents, or the rights, duties, and liabilities of either party in connection with the premises, then, and in either or any such case, the matter in difference shall be referred to two arbitrators, one to be appointed by each of the parties in difference, or by an umpire to be appointed by the said arbitrators. 31. The expression " the selling bank," or any words importing the same meaning, shall extend to and include the liquidator or liquidators for the time being of the selling bank. 32. This agreement for sale and purchase as aforesaid is conditional upon— (a.) The subsequent ratification thereof by resolution passed by the proprietors or shareholders of the selling bank in the manner provided by " The Bank of New Zealand and Banking Act, 1895" ; and (b.) The approval of the Parliament of New Zealand, to be signified as prescribed in the last-mentioned Act. In witness whereof the selling bank and purchasing bank have caused their respective common seals to be affixed to this agreement, written on fifteen sheets of paper, each sheet of which has been signed by three directors of such banks respectively the day and year firstly hereinbefore written. The common seal of the Colonial Bank of New] Geo. McLean. Zealand was hereunto affixed by authority of the I William H. Reynolds. board of directors of such bank, in the presence of] W. Downie Stewart. H. Mackenzie, General Manager. The common seal of the bank of New Zealand) W. Watson. was hereunto affixed by authority of the board oft Walter W. Johnston. directors of such bank, in the presence of — J Wm. Booth. C. G. Andrews, Directors. Acting. General Manager. 39. You have no recollection of my getting it copied and instructing the Secretary to the Treasury to certify to it on 18th October? —No, I did not see the agreement, and I do not know what you did about it. 40. Who had charge of the banking business and banking legislation from the commencement to the finish, or from the commencement to a given date, and from that forward? Will you turn to your letter to the Agent-General of 11th July, 1894: — Sir,— 11th July, 1894. In continuation of my letter—No. 95—dated the 7th instant, on the subject of the colony's guarantee of two millions for the benefit of the Bank of New Zealand, I concluded my. despatch with an expression of hope that you would be able to cable me that the guaranteed capital had been successfully raised. 1 was therefore much concerned and disappointed to receive on Sunday your telegram, dated the 7th instant, pointing out that the deed of settlement of the bank limited the individual holding of shares to two thousand (the deed, I think, reads three thousand), and that, as there was a growing dislike to £10 shares, financial experts could not too strongly urge upon the Government the necessity to make the proposed issue in the form of stock, instead of shares; and, farther, offering the opinion that such an alteration would increase the value of the issue in the money market, by 2 per cent. You also ask if it would be possible to pass an amending;
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Act so as to do away with the share-limit, and to procure the necessary authority for the guaranteed capital to be issued, in the form of stock or otherwise, as suggested. It is greatly to be regretted that this fatal blot of a limit of shareholding was not discovered before the Guarantee Act was passed ; and on consulting our Law Officers, there seems to be no other remedy than for an amending Bill to be introduced. You will, of course, understand that having to go before Parliament a second time is much to be deplored in the interest of the bank, and I cannot be certain that some antagonism will not be shown by parties interested in rival institutions, and by those who consider it their duty to oppose any measure introduced by the Government. Added to the difficulties of the position is the unfortunate fact of my enforced absence from the House, owing to a severe attack of the prevailing epidemic—influenza — which developed into bronchial catarrh, and has compelled me to keep my bed ever since the night of the introduction and passing of the Bank Act. I am, however, rapidly recovering, and think I may be in my place in the House to commence the work of next week. In the meantime, it is admittedly difficult for my colleagues to secure the same attention and consideration for financial matters as would be given to the Colonial Treasurer on his personal explanation. On consulting Mr. Murray, it was decided that he should cable to the London directors with the view of ascertaining, if possible, full particulars of the nature of the stock or debentures which would prove most acceptable to the London money market, and that upon receipt of such information an amending Bill would be at once prepared to embrace the altered position of affairs, and to clear up Or strengthen one or two other points which since the passing of the Act have been pointed out necessary under its operation. I enclose copies of telegrams herewith. I have, &c, The Agent-General for New Zealand, London. J. G. Ward. You will observe I wrote specially concerning my enforced absence as follows:— " Added to the difficulties of the position is the unfortunate fact of my enforced absence from the House, owing to a severe attack of the prevailing epidemic —influenza—which developed into bronchial, catarrh, and has compelled me to keep my bed ever since the night of the introduction and passing of the Bank Act. I am, however, rapidly recovering, and think I may be in my place in the House to commence the work of next week. In the meantime, it is admittedly difficult for my colleagues to secure the same attention and consideration for financial matters as would be given to the Colonial Treasurer on his personal explanation." 41. That was the date of the passing of the Bank Act—29th June, 1894 ?—Yes. 42. From that time have you, and, if not, who has, had charge of the banking legislation and banking matters? —Well, I should say the Premier had a good deal more to do with it than I had. 43. You were incapacitated and laid up after the passing of the Act ? —From the night of the passing of the Bank Bill I was laid up for a week or ten days from overwork, and it became necessary for some one to grasp the position and practically control matters. That duty devolved upon the Premier, and, as far as my knowledge goes, from that time forward he was as familiar with the banking business in every respect as I was. He knew everything that was going on. In 1895 the" Premier had charge of the legislation practically. There is no doubt about that. 44. In 1895 two Acts were passed, one giving effect to the recommendations made by the Joint Banking Committee ?•—Yes. 45. That legislation was the result of the recommendations of that Committee ? —lt was framed on the lines of the report of the Committee. 46. There was a second Act passed, was there not, in the same session?— Yes. 47. Who was responsible for the passing of the second Act in 1895, and what was the nature of that legislation ?—lt was an act following the laying of the agreement on the table of the House, which was rendered necessary, I understood, in consequence of some laches in connection with the previous legislation of the same session. I did not take any part in the drafting of the Bill, or in the drafting or suggesting of any amendments in the Bill. I do not know that the drafting was done by you, but the general control of the legislation was in your hands. 48. Now, it was in that Act where the provision was made, and in which there is no necessity for any lists or accounts being produced in Court, or before the shareholders ?—Yes. 49. What was the first you knew of it ? You introduced that Bill ?■—l introduced that Bill, and that was the first I knew of anything about it. • 50. What was the first you had to do with it; and who gave the information as to the details and necessity for it ? —I moved that the Bill be read a second time upon information furnished to me at the moment by the draftsman. I did not know the contents of the Bill before I introduced it. I did not know what was going to be put into the Bill, neither as to lists nor anything else; neither did I make any suggestions to anybody in reference to it. I moved the Bill be read a second time on the suggestions given to me in notes from the draftsman at the time. 51. Who was the draftsman of the Bill ?—Dr. Fitchett. 52. Did he inform you that that Bill was drafted originally by the bank, and handed in by the bank to the Premier?—l was informed of that by some person. I have a distinct recollection that it was so, and that you sent it to the draftsman. 53. What was the nature of the necessities given to you for that Bill?—-I would prefer, rather than to trust to my memory, to look up Hansard to find that. 54. Look at section 7 of the Banking Act Amendment Act of 1895 ?—Yes. [Act handed to witness.] 55. Will you state to the Committee, after looking at the Act, the provisions made there ?— " It shall not be necessary to produce any of the said lists ' A,' ' B,' ' C,' or ' D,' or any of the aforesaid books and documents, at any meeting of the proprietors or shareholders of the Colonial
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Bank of New Zealand called for the purpose of ratifying the said contract; and the validity of any resolution of ratification passed at such meeting shall, not be affected by the fact that any such list, book, or document was not produced thereat; nor shall any such proprietor or shareholder be entitled at any time or for any purpose to require the production of any such list." 56. Was it pointed out in the memorandum referred to the draftsman that unless some legislation of this kind was passed it would be impossible to produce them where and when required in case of litigation or meetings of shareholders?— Yes, I was told something to that effect, that it would be impossible to produce the bank's books. 57. Then, that legislation was introduced by you at the request of the Premier and to meet technical difficulties that had been found in the Act and which it was necessary to remove in order to give effect to the agreement?— Practically that is so. There is no clause in the Bill which was suggested or framed by me ; neither did I see the Bill in the course of its preparation. Until the Bill was put into my hands to move I knew nothing of the conditions of it at all. 58. Had you anything to do, Mr. Ward, with the appointment of the General Manager of the Bank of New Zealand ?—Mr. Henry Mackenzie ? 59. Yes.—No. 60. Had you anything to do with the appointment of Mr. Butt as Government Auditor ?—I presume at that time I took my part in Cabinet matters, as every Minister did. His appointment was the appointment of a Government official. It is an entirely different appointment from that of Mr. Mackenzie. A bank official is appointed apart from the Government. 61. You have stated that Mr. Coates was offered the appointment of President of the Bank of New Zealand ?—Yes, he was. 62. When refused by him and the Government approached Mr. Watson, in the interim were inquiries made as to whether the Government could get some one else to take the position ?—Yes ; I understood there were feelers put out by the Ministry with a view to seeing whether they could get any other qualified gentleman to take the position. It was not considered desirable at the time to make a second offer to Mr. Watson. There was a unanimous consensus of opinion on the part of the Cabinet in the first instance that, in consequence of the State guarantee to the Bank of New Zealand, no officer in the Bank of New Zealand should occupy the position, so that those officers were barred from the position in the first instance; but there were feelers put out by the Government, as Ministers said they would not hawk the position about. There were two refusals in the first instance, and that rendered the further offer to Mr. Watson advisable. 63. And practically Mr. Watson's acceptance of the second offer relieved the Government from the difficulty connected with it?— Yes. It appeared so at the time, and one gentleman, at all events, told me that he was not at all sure of the position of the bank at the time, and was not prepared to give up a good position to take the presidency. That was another gentleman altogether ; and there was an opinion amongst gentlemen who consider themselves authorities that the position of the bank was anything but assured even at that time. 64. Were there any feelers put out in respect to the auditorship, which was afterwards conferred on Mr. Butt ?—Yes. 65. Was there a difficulty in respect to obtaining an Auditor ? —There was. It was refused by another, as a matter of fact. 66. And these positions now, as compared with the time when we were looking for competent persons, is somewhat different? —Very different. There would not be much necessity to offer them twice to anybody now I should say. 67. It is the difference between a concern which was at that time looked upon as somewhat shaky and one which is now regarded as one of the strongest banks south of the line ?—Yes ; it is the difference between the uncertainty of an institution in the future and the recognition by the people that it has the State at its back and is a powerful institution. 68. Now, during the time you were Colonial Treasurer, were there any details of accounts, or anything connected with private accounts of private companies, corporations, or persons, directly or indirectly—by writing or orally—communicated to you by any officers of the bank ? —There has been nothing furnished to me during my term of office as Colonial Treasurer by any present director, or present officer, of the Bank of New Zealand concerning the private position of any person or corporation's accounts by the Bank of New Zealand. I should like to say upon that pomt —as it is passing through my mind—that I wish it to be clearly understood that my reply has nothing to do with the Estates Company, as, from memory, I think there was confidential information supplied to me in connection with that which might make my general answer not quite correct. But my answer is that there has been no private information concerning any person's account furnished to me by any present officer or director of the bank. 69. What you refer to in connection with the Estates Company is what was stated at the time of the sitting of the Secret Joint Committee of last year ?—Yes, about that time. 70. It did not refer to bank business ?—No. There was no private information about a person's account in the Bank of New Zealand. I have never sought such information, nor has it been offered to inc. 71. I hope you will not consider that I am trespassing upon your indulgence when I put this question : I would like to ask you whether any company or corporation with which you have or may be considered to have been connected personally has had any writings-off, either from the Colonial Bank or the Bank of New Zealand ? —No; I have not myself had any writings-off at any time from any bank, nor have I had any arrangement of any sort or kind with any bank by which a writing-off was to be given to me. Neither has any company or corporation with which I am or have been associated had any writings-off at any time, or had any arrangement with any bank by which any writing-off or concession was to be made. 72. In the face of that reply there were some questions I intended to put otherwise, which, of course, are public property, but which our order of reference will preclude me from pressing any *43—1. 6.
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further under that head. If I were to ask them, probably I should be ruled out of order. However, there is one question I should like to ask, and I think, as some credence has been attached to it, it should be dealt with, and that is in reference to a draft which it has been alleged was sent from the Ward Farmers' Association to Mr. Evans, of Timaru —a draft, I think, for £4,000. It has been stated that a draft was signed, but the draft itself had never been sent forward, but had been used for financing, and that the transaction was an improper one. Are you prepared to tender any evidence in reference to what has been alleged in respect of this Timaru draft ?—This was a matter which affected the personal honour of Mr. Watson in his official capacity. Upon his representing the rumours that were current upon the matter to me, I at once told him that, as far as I was concerned, an exception could be made in regard to the disclosure of private accounts of any transaction between myself and Mr. William Evans, of Timaru, and it was with my concurrence that Mr. Watson referred before the Committee to this private matter, as I had given him permission. lam only too glad to answer your question since it has been referred to. The statement is wholly and absolutely untrue. There is not a vestige of truth in it, and nothing whatever to warrant the covert imputation that was levelled at myself or at the officials of the Colonial Bank in connection with it. I have made inquiries, and find that there never was a draft put in to the Colonial Bank at Invercargill upon William Evans at Timaru for £4,000, or any other amount, and withdrawn at any time. The circumstances which have led malevolent and evilly-disposed persons to give currency to a base lie, I may say, of that sort are as follows : The firm of Spiller Brothers, of Bristol, purchased through a gentleman in Timaru a cargo or cargoes of oats from my firm in Invercargill. The day upon which the payment of the cargo was to be made a draft for £4,000 was put into the bank upon the gentleman referred to — Mr. Mullins — who represented the Bristol firm. The same day his cheque for £4,000 reached our office, and that was paid in, and under such circumstances it rendered the draft which had been legitimately presented for the purpose unnecessary. And it was, of course, withdrawn; precisely in the same way as the crossing of two cheques or drafts—either one or the other would have to be returned ; a double payment for the one transaction could not be made. I have no hesitation in saying that the statement is absolutely a libellous one. It was given currency to, I.believe, by a disrated or discharged officer of the Colonial Bank, who held office in Timaru ; and I can only express my personal regret that these venomous rumours of evilly-disposed persons who may have an antipathy against a superior officer should have been given currency to; and I can only further express my regret that people in responsible positions can be found ready to repeat these rumours on insufficient testimony, and which may cause very serious damage to the people concerned about whom they are made. In addition to what I now state, I saw Mr. William Evans, of Timaru, himself. He told me that a certain gentleman had mentioned the matter to him, and had asked him whether he was indebted to my firm to the extent of £4,000, or whether such a transaction had taken place, and his reply naturally was that he knew nothing about it. And, in addition to that, Mr. Evans stated to me that he had had various business transactions with our firm, and had never received any other than honest and straightforward treatment; and I take the opportunity of saying now that the people who have given currency to the rumour stated it recklessly, and could have on inquiry have satisfied themselves that it was absolutely false. I stated at the time I first heard the rumour that it was absolutely untrue. 73; Did Mr. Evans give you the name of the gentleman who asked him the question ?— He did. 74. Who was it ?—Mr. Maslin. 75. And Mr. Evans informed Mr. Maslin that there was no foundation for the rumour ?—That, as far as he was concerned, no such transaction took place. (Evening Sitting.) 76. Hon. Mr. Seddon.] I was asking you some questions at the adjournment in reference to a draft alleged to be sent to Mr. Evans. How did you become acquainted with the false rumour you have referred to in respect to that draft ? —I was told by a gentleman outside of Parliament in the first instance that that rumour was afloat in the lobbies of the House, and that he had been told it by Mr. Maslin. The same day Mr. Maslin mentioned it to me in the Banking Committee-room, and I also heard of it in connection with the inquiry that was going on in the Legislative Council. I was told shortly after a witness had given evidence that a member of the Upper House Committee had put a question to him upon the matter, and I also gave evidence myself there on that account on that particular matter. I repeat that it is absolutely unfounded, and that no such transaction in connection with Mr. William Evans, of Timaru, ever took place. 77. You have to-day given evidence on certain correspondence which took place between the Government and the Bank of New Zealand in reference to the legislation and the several matters referred to and contained in our order of reference ? —Yes. 78. Is that the complete correspondence which has been covered by the order of reference, and which has taken place between the bank and the Government, and which you as Colonial Treasurer had either forwarded or received ? —I believe that to be the complete correspondence in connection with the banking legislation. There is a further correspondence on record in the Treasury in connection with another matter—namely, the investment of £150,000 in Consols. That is not included in the correspondence that was handed to me to-day. That correspondence personally I should prefer to see laid before the Committee if the Government and the bank are agreeable. 79. With reference to the correspondence in connection with the Consols, do you think it would be wise that the private business of the investors should be made public property ?—I do not say that it would. lam conscious of the vindictive imputations that have been made against me in connection with that £150,000 by political and perhaps other adversaries, and, as far as I am concerned, I should prefer personally, if the Government and the Bank of New Zealand would allow
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it, to have the whole of that correspondence placed before the Committee. It was not an investment made by me, it was made by the whole Cabinet. 80. Would it not be sufficient for you to know that it was not a transaction done by you but by the whole Cabinet ? —lt was done by the whole Cabinet, but I would prefer, personally, to see the whole correspondence placed before the Committee. 81. Will you go through these papers, Mr. Ward, and indicate what they are, and we will check them ? —The first is a letter from the President of the Bank of New Zealand, dated the 23rd July, 1895, to the Colonial Treasurer. It is forwarding balance-sheets of the Bank of New Zealand Estates Company and the Auckland Agricultural Company as at March, 1895, and enclosing a letter from the Government Auditor, dated the 22nd July, addressed to the President, and a letter from myself, dated the 25th July, to the President. Then, a letter from the President to the Colonial Treasurer of the sth August. One from the Auditor to the President of the sth August, and the aggregate balance-sheet of the Bank of New Zealand at the 31st March, 1895, and the same of the Auckland Agricultural Company, and the same of the combined Estates Company and Auckland Agricultural Company. A statement of the balances due to the Estates Company, the book-values and latest valuations, and the list of sundry assets of the Bank of New Zealand Estates Company at the 31st March, 1895, and three enclosures. The aggregate balance-sheet of the Bank of New Zealand at the 31st March, 1895, and the Estates Company at the 31st March, 1895, and the Auckland Agricultural Company of the 31st March, 1895. I also put in a statement of the assets of the Bank of New Zealand in New Zealand, certified to by Mr. J. M. Butt; a letter from the President of the Bank of New Zealand to the Colonial Treasurer of the 20th August; a letter from the President to the Colonial Treasurer, dated the 22nd August, informing the Colonial Treasurer of the withdrawal of accounts from the bank ; a letter from the President to the Colonial Treasurer, giving the amounts of the bank's deposits on the 23rd August; and a letter from the President to the Colonial Treasurer of the 26th August. 82. This is what was given to the Colonial Treasurer during the banking inquiry last year?— Reporting the contents of telegrams that had been wired to head office concerning the position of the bank. A further letter from the President to the Colonial Treasurer advising him of the mischievous character of telegrams that had been sent to Napier. Then, a letter from myself to the President of the Bank of New Zealand, enclosing, for the perusal of the board of directors, the conclusions that had been arrived at by the Joint Committee. 83. Will you look through the other correspondence and see what is next of importance ? — These are letters bearing upon the Joint Committee's report. 84. Well, just glance through them and give the dates and contents of the communications?— Letter of the 23rd October, from the President to the Colonial Treasurer, reporting upon the agreement between the Colonial Bank and the Bank of New Zealand for purchase, and the list of the assets. A letter from Haggitt Brothers and Brent, forwarding certificate for publication in the Gazette. The certificate is signed by the Hon. George McLean, pursuant to Act. From the Secretary to the Treasury to Messrs. Haggitt Brothers and Brent, dated the 18th November; from the Secretary to the Treasury to the President of the Bank of New Zealand, dated the 19th November; and from the President to the Secretary to the Treasury, dated the 20th November; also, from the General Manager, H. Mackenzie, to the Secretary to the Treasury, 29th November. Then an enclosure signed by the Hon. George McLean, Mr. Reynolds, and the other directors of the Colonial Bank and the directors of the Bank of New Zealand. Then a letter from the Secretary to the Treasury to the Auditor of the 18th November, and others of the 19th and 20th November. A letter to Mr. W. W. Johnston from Hon. J. G. Ward, and an acknowledgment of the 18th December; from Mr. Watson to the Colonial Treasurer, the 21st December ; also one on the 6th January from the Colonial Treasurer to Mr. Johnston; the Governor's warrant of appointment; from the Secretary to the Treasury to the President of the Bank of New Zealand, the 27th December; the next is from the President of the Bank of New Zealand to the Colonial Treasurer, dated the 12th December ; the 28th January, the President of the Bank to the Colonial Treasurer ; the 3rd February, the President to the Colonial Treasurer; the 7th February, the Secretary to the Treasury to the President of the Bank of New Zealand; the 11th February, H. Mackenzie to the Premier; R. J. Seddon to the President of the Bank of New Zealand, the 12th February ; Hon. J. G. Ward to Agent-General, London, the 14th February; W. P. Reeves, the 12th April; and regulations under the Share Guarantee Act. 85. Will you now turn up and see the communication with respect to the appointment of Mr. Coates ?—The Ist October, 1894, informing National Bank of New Zealand that the Government will appoint Mr. Coates —that is signed by myself; also, other correspondence on the sime subject. 86. In 1894 we obtained information from Mr. Murray at the conference between him and Ministers?— Yes. 87. That was a couple of days prior to the banking legislation ?—Yes. 88. Was there one or more interviews ?—There was more than one interview. Mr. Murray was at Cabinet meetings, I think, twice on one day, if I remember rightly. There was more than one Cabinet interview. 89. The fact was that he was asked to produce further information?— Yes. He was asked by Ministers to produce further information, and at the subsequent meeting he was questioned by different Ministers as to the position of the bank. One Minister particularly was pretty searching in his questions, and Mr. Murray answered every question put to him, as far as my recollection serves me, and stated the information at his disposal as far as he could get it it was given to us. 90. Have you any reason to believe from what subsequently transpired that Mr. Murray wilfully withheld any information ? — No, I should not like to say that; I do not know what information he had at the time. He appeared to be frank in his disclosures to Cabinet, as far as my observation went; and there is no one but himself can speak as an authority as to any infor-
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mation which he had, and which was not disclosed to the Government. I had no reason to believe he was not giving us such information as he possessed at the time; nor did any other Minister express to me any doubt existing then in his mind on the point. 91. There was a Select Committee of the Legislative Council set up to make inquiry ? —There was, the same night the Bill passed through our House. 92. Do you know the names of the members of the Council who sat on that Committee?— The Hon. Mr. Stevens was on it, the Hon. Dr. Grace, the Hon. G. McLean, the Hon. Mr. Ormond, the Hon. Sir P. A. Buckley, the Hon. Dr. Pollen, the Hon. Mr. Swanson, and the Hon. Mr. Bowen. 93. Who was examined before that Committee ?—Mr. Murray was. I was also there. 94. Were you there and gave evidence ?—I was there during the time Mr. Murray was examined by the Committee. 95. Did you give evidence yourself?— Yes, I gave evidence. 96. And Mr. Murray gave evidence ?—Yes. 97. Was the evidence he gave to that Committee substantially the same evidence he gave to the Government and Ministers?— Yes, it was substantially the same, only I think Ministers were much more exacting and searching in their inquiries in Cabinet than the Legislative Council Committee was. 98. The Committee came to conclusions ? —Yes. 99. Do you remember if any other witnesses were examined ? —I cannot recollect positively from memory. I have an impression that you gave evidence, but I cannot recollect every detail that occurred at the time. 100. At all events, there was an inquiry, and evidence was tendered by yourself and Mr. Murray ?—That is so. 101. Mr. Murray was examined by members of the Committee? —Yes; for a considerable time. 102. What was the result of the investigation ? Did the Committee take any responsibility in respect of it ?—Well, they did not take the responsibility of recommending that the legislation should be stopped. On the contrary, the House put it through. 103. What was the nature of the report ? —I do not remember the actual wording of the report, but it was favourable to the procedure of the legislation. 104. Mr. Montgomery.] Did you ascertain whether Mr. Murray knew the actual position of the Estates Company?— That is an indefinite quantity. There was no way of ascertaining that. AH that we could do was to ask for information concerning the bank and the Estates Company, which we did. He answered the various questions that were put to him, and expressed his opinion that the uncertainty of the actual deficit in the Estates Company was dependent materially upon the realisation of properties when sold and their future values. By memorandum from him, which is in evidence, it is stated that he had been sixteen months previously in control of the Estates Company, and he was the only responsible officer here from whom we could get information. 105. Did he state that he was in a position to tell you the position of the Estates Company? —I cannot tell you that from memory. My answer to that would be that any man in charge or who had control of an institution or company, and who was giving answers to questions about it, should have the information, and as far as we could we got the information from him. 106. Were not his answers rather vague about the Estates Company? Did he not say there was a big hole to be filled ?—That is so ; it was an uncertain deficit—that was the general tenor of his statement to Ministers. He expressed an opinion that a million was enough to cover losses, but that it was dependent upon circumstances which no one could foresee or judge ahead. 107. Did he appear to be withholding information?—He did not appear to me to be withholding information at the time. So far as I know, none of the other Ministers so regarded it. 108. The Premier asked you whether you thought Mr. Murray had information which he had not disclosed ?—I have heard that evidence has been given in the Legislative Council that a statement of the position of the Estates Company by Mr. Hanna was in the posssssion of Mr. Murray at the time. 109. Have you heard it on reliable authority ?—I have heard that evidence to that effect was given in the Upper House Committee. 110. Did you hear it before the Upper House Committee?—No; I was asked a question in the Upper House Committee concerning the report as to whether I had previously seen it, and I replied that I had not. 111. I find here that the finding of the Upper House Committee is that at that time, according to the evidence of Mr. Hanna, the then manager of the Estates Company, Mr. Murray was in possession of information contained in Mr. Hanna's report. (See Exhibit No. 72.) 112. Did you know of that before this inquiry ?— No, I did not. I was asked if I had seen the report which was put into my hands there. I replied that I had never seen it before ; neither do I know whether Mr. Murray had it in his possession in June, 1894. I understand that he does admit that he had it. 113. Assuming that he had, this report would be correct in the Upper House —that it was of importance that the Government should have had it ?—Decidedly, yes, assuming that he had it. The Government most certainly ought to have had it; but I had never seen it before, nor did any member of the Ministry. 114. You first saw Mr. Murray on the Sunday ? —lt was the evening before the interview between the Premier, Mr. Murray, and myself, whatever day of the week that was. 115. But there was no Cabinet meeting until the Wednesday ? —I cannot tell you the actual day from memory.
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116. Was there time between the Sunday and the Friday, when the legislation was passed, to make a much fuller inquiry ? —All I can tell you is that from the time of the interview between Mr. Murray, the Premier, and myself we had no rest until the whole business was through. The date of Mr. Murray's letter was the 25th June, and we passed the Bill on the 29th. The letter was written, I think, on the same day he had the interview with Mr. Seddon and myself. I saw him only for a short time the evening before. He then told me the seriousness of the situation, and he went into full particulars with Mr. Seddon and myself. He wrote his letter that day, and it came before the Cabinet soon after. 117. You had no idea at any time before that that this application would be made?— Not the slightest. I say in a letter to the Agent-General that the application of the Bank of New Zealand as to its position came upon us as a thunderclap, and that is so. 118. With respect to the Consols, I understand you are anxious to have the correspondence about them put in. Can you tell me what objection there can be to any correspondence between the Bank of New Zealand and the Government with regard to the Consols being put in? I can understand an objection on the part of the investors, of course, but not on the part of the Bank of New Zealand and the Government ? —I cannot speak for other people. I have no objection myself. On the contrary, I should prefer to see the correspondence handed to the Committee. 119. I presume you decline to give the nature of the correspondence, or any information about it ? —I do not decline if the parties to the correspondence will give me authority to disclose it. I shall be very happy to do so. 120. Is that confidential correspondence ?—I believe it is. All correspondence bearing upon any matter of private business between the Colonial Treasurer and other people is, as a rule, regarded as confidential, and without the consent of the parties concerned should not be used. 121. Do you know if there is any correspondence relating to the deposit in the Colonial Bank of a similar sum ?—The whole matter is referred to in the correspondence to which I refer. 122. That part of the matter ? —Yes, both as to the investment of the Consols, from whom the application came, and the whole matter. 123. The correspondence with the Colonial Bank: I want to know whether that is separate?— Will Mr. Seddon let me see the correspondence ? Hon. Mr. Seddon : I take up this attitude : that I cannot give up private correspondence without the consent of the Bank of New Zealand. 124. Mr. Montgomery.] Do you know what happened to this deposit when the amalgamation took place? —The only answer I can give you is that I am quite ready, willing, and anxious to deal with this matter of the Consols in order to clear myself; but the legal representative of the bank here informs me that he will not give his consent to have it referred to, so I cannot answer the question, although I want to. And my own counsel here tells me that it would be improper of me to do so without the consent of the bank—that it is their privilege. Mr. Cooper : I cannot advise the bank to allow Mr. Ward to give this information when it is disclosing a private account. 125. Mr. Montgomery.] I ask you, Mr. Ward, whether you know what became of the deposit ? Hon. Mr. Seddon : I object, because there have been no writings-off, and it is a private account. It is outside the order of reference, and I ask you, Mr. Chairman, to rule so. 126. Mr. Montgomery.] Do you know what became of the deposit ?—I can answer that question ; I do not know what became of it. 127. I could not quite gather what you stated in answer to the Premier. Did Mr. Murray negotiate with the National Bank after the legislation of 1894 ? —Yes ; I understood that from him at the time, and I think I am right in saying that has been confirmed by Mr. Coates, the general manager of the National Bank, in his evidence before the other Committee. He was approached both before and after the legislation. That is the position of the matter. 128. Did you consider yourself in any way, as Colonial Treasurer, bound to approve of the amalgamation agreement as finally passed ?—No. 129. Or to inquire into the conditions ?—I considered that was the duty of the whole Cabinet, and, when the amalgamation agreement reached me, I sent it to the Premier by memorandum for the whole of the Ministers to consider. It was for the Cabinet as a whole to decide, not for any one Minister. 130. I do not know whether I am right in asking the question, but I would like to know whether you or the Cabinet inquired into the question of good-will. I will put the question through the Chairman. Mr. Seddon said he knew nothing whatever about the question of purchase ?—I understood the previous questions you just put to refer to the amalgamation agreement of 1894. I did not in my answers refer to the agreement for purchase in 1895. I understood it was the amalgamation agreement of 1894, signed by Mr. McLean and Mr. Murray, which was sent on by me to the Premier for consideration of the whole of the Ministers. I know nothing whatever about the purchase agreement of 1895. 131. I will ask, with regard to the purchase agreement, did you or other members of the Ministry consider it your duty to make inquiry into the terms ?—Certainly not; it was never referred to the Ministry at all for consideration, as far as my knowledge goes. I never heard the terms of the proposed agreement, either as to good-will or anything else concerning it. I was not in any way consulted about it. 132. Do you not think that, as the colony was so largely interested in the bank—practically the sole shareholder —the Government had a very good right to see that this was a good contract ? —If the Government distrusted the whole directorate of the Bank of New Zealand, and the President with his power of veto, and also the Government Auditor, I might have expected the Government to ask for the whole details to be first submitted to them ; but these men were intrusted with the control and management of the Bank of New Zealand, and if they were men of any spirit at all these gentlemen should at once, if the Government distrusted them and attempted
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to usurp or interfere with their functions, have thrown up their positions as directors, President, and Auditor of the bank. The Government had no right to interfere, nor any position whatever in the matter. 133. The House insisted on details, did it not?— Yes. Parliament has the power and the right to do as it thinks proper; but, if you ask me whether the Government ought to have interfered in the conditions and terms as between the directors of the bank and any other person, I should say distinctly, No, because, if they could interfere in the details of that, logically they could interfere in every other case where the country is interested, and that, I think, w T ould be condemned by most people. As a matter of fact, it was not done. 134. The Government were willing for the agreement to be made without Parliament being consulted ?—No; the agreement had to come to Parliament. The Government itself could not interfere with the agreement, but Parliament could do so. 135. You said the Government took up an attitude of non-interference ? —That is so, because the contract was delegated by statute to responsible people in charge of the bank, who were there for a specific purpose, and they had a right to act and to exercise their judgment and functions independently of the Government. 136. Hon. Mr. Seddon.] You said that Parliament had the power to negative the purchase under the Act. That refers to its right to negative by resolution ? —That is so. In the absence of a negative proposal within a certain number of days after the agreement was laid before Parliament it was ratified. If a negative proposal was carried by the House, the whole agreement would be null and void. The Government had no power to interfere so far as the agreement was concerned. Clause 36 of the Act says, "The directors of the Bank of New Zealand and of the selling bank are hereby empowered to enter into a contract for such sale and purchase accordingly." That has nothing whatever to do with the Government. Parliament handed over the full power to the directors of the Bank of New Zealand. Subsection (b) of section 37 is as follows : —" The approval of Parliament to be signified as follows : The contract for sale shall be laid on the table of both Houses whilst Parliament is in session, and unless within ten days after it is so laid on the table, a resolution disapproving of it is passed by either House, such contract shall be deemed to be approved of-by Parliament: Provided nevertheless that if, within the said ten days a notice of motion is given dissenting from such contract, such notice of motion shall be placed at the head of the Order Paper of either House within the said ten days or not later than four days thereafter: and, until the decision of such House on such notice of motion has been given, such contract shall not be or be deemed to be approved by Parliament." Either House of Parliament had the power to reject the agreement. 137. Hon. Mr. Seddon.] The Government had no responsibility in the matter?— The Act gave the Government no power in the matter. 138. Mr. Montgomery.] That was the view at the time ?—Well, the Act stipulates that it is so. 139. You had numerous conversations with Mr. McLean—l think lam right in saying—about that time ?—I had conversations with Mr. McLean. Ido not think I should be right in saying they were numerous. 140. At any of those conversations did he never allude to the terms of the amalgamation ?— He never disclosed to me any of the conditions or details in connection with the purchase. 141. Or the proposed conditions ?—Or the proposed conditions; and that is in his own sworn statement as well, apart from my evidence. 142. You knew nothing of the contents of any list ?—I did not. 143. I will ask the Chairman if it is in order to ask you whether you were personally prejudiced by the way in which the lists were formed. Hon. Mr. Seddon : I object. That is not in our order of reference, and the question cannot be put. The Chairman : I think Mr. Montgomery had better not put that question. 144. Mr. Montgomery.] Do you know the clause in the Share Guarantee Act of 1894 about the book-value being placed on the balance-sheet ?—I do not recollect the terms of it, but I remember the clause about the book-values. 145. Who was responsible for that clause ? —That is in connection with the Estates Company ? 146. Yes. Clause 16 says, "In valuing the shares held by the Estates Company (Limited), or any items which shall take the place of such shares or any of them, the directors and auditors shall treat the same as an account in liquidation, and pending the completion of such liquidation such shares or items shall be taken at the par or book value thereof " ? —The bank was responsible for that clause. 147. Is it not a rather dangerous power to allow a fictitious value to appear in the balancesheet ?—The object, I think, is obvious to any one. As a principle, I should think it is distinctly dangerous. 148. You know there was a similar clause in the Act of 1889 ?—I know of that. 149. With your knowledge of the facts, do you think the operation of that clause has been to cause the issue of misleading balance-sheets ?—I do not know of my own knowledge what the operation has been. I should say of such a law that on the face of it it is highly objectionable. 150. Were you not informed by the bank that we could not legislate in respect of the Estates Company, and that if we did we should be liable for damages ?—We were informed that we should not legislate to prejudice the position of the Estates Company, on account of its being an English company with its head office located in London. 151. The bank was the only shareholder in it, was it not ?—I cannot tell you that. 152. No one but the bank could object if there were no other shareholder?—lf they were the only shareholder I presume that would he so, unless—l am not a lawyer—some of their securities were hypothecated to others to secure the Estates Company's debentures, and that the conditions
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stipulated the face-value should be preserved. In such a case the bank alone could not, I think, validly object; but I cannot, in the absence of detailed information, answer the question with any positiveness. 153. This had nothing to do with the balance-sheet of the Estates Company —this clause 16 of the Act of 1894 ?—Not so far as I know. I do not know that it had any direct reference to the balance-sheet of the Estates Company, but this company was largely indebted to the bank, and was to all intents and purposes part of the bank itself. 154. "In valuing the shares held by the bank." It therefore only applied to the valuation in the bank's balance-sheet of certain shares held by them ?—I should judge that by the clause in the Act. 155. Can you say in any way how that affected the Estates Company as a foreign company, whatever the valuation was put on—even twopence halfpenny ?—lt would, no doubt, hurt the Estates Company if its shares were written down by the Bank of New Zealand, and that would prejudicially affect the debenture-holders of the Estates Company. The debentures, it must be remembered, were guaranteed by the Bank of New Zealand; so that obviously, so far as the preservation of the position was concerned, which was done under the authority of the Act of 1889, however objectionable it may be, without the consent of the parties concerned in England, any legislation which would be regarded as next door to repudiation might be upset; and we were not justified in 1895 in repudiating what was authorised by law in 1889. 156. Were you advised that any action on the part of the Estates Company would possibly arise ?—I could not give you details of that, but I could give you the evidence of a legal gentleman. 157. Have you correspondence on the subject? —I have the evidence recorded here in Hansard of Mr. Montgomery, who supported the clause when it was before Parliament. There were fifty others who voted with you, and I was one of them, and I therefore presume I was right in doing so. 158. Are there any who voted against it ?—There were eight who voted against it. 159. Mr. Hutchison.] You have referred to the Bank-note Issue Bill of 1893 as having been sought for by Mr. Holmes, the general manager of the Bank of New Zealand ? —Yes. . 160. Did any other bank representative ask you to introduce that Bill ?—He was the only bank representative. 161. It would not be correct to say the Government was approached by representatives of every banking institution to introduce it ?—Not to introduce the Share Bill, but the making of the notes a legal tender is another matter. We were by every other banking institution in New Zealand requested to make that legislation. They were all represented at the meeting, and it was discussed in the Cabinet-room with them all present. 162. Did they ask you to call a meeting, or did you call it?—My recollection of the matter is that it was at the time the financial crisis was so acute. There was great uneasiness in banking and commercial circles generally. The meeting was not convened at the instigation of the Government, but by the request of the bank representatives—which of them I cannot tell you. I can tell you that all the bank representatives were present, and all agreed as to the necessity of making banknotes a legal tender, and that none objected to it. 163. Was that proposed by the Government?— The request, in the first instance, came from the Bank "of New Zealand. 164. Can you say that more than one bank suggested that you should hold a meeting of all? — I think, from memory, there was only one request. 165. You acted on that, and they were all represented at the meeting?— They were all there. 166. Do you suggest that Mr. Murray did not refer to the Estates Company when he saw you in June of 1894 ?—I have said he did refer to it. 167. He did; but did he refer to it as in a serious condition?—He referred to the general condition, and stated that one of the troubles of the Bank of New Zealand was the incubus of the Estates Company shares appearing in the balance-sheet of the Bank of New Zealand. He referred to the fact that the Estates Company had retrograded and made losses, and that the disclosure of the losses at an early date in connection with the bank proper would reflect injuriously upon the bank. 168. Are you aware that although the board was in London the whole of the assets of the Estates Company were in the colony? —I do not know that they were. I know that they have a great number of estates in the colony. 169. Was Mr. Hanna in Wellington at the time Mr. Murray was here ? —I think not. 170. The colonial manager mentioned is Mr. Hanna ?—I cannot say what his title is. Mr. Murray was the only one I saw. 171. Did you know that Mr. Hanna was colonial manager ?—I knew he was manager. 172. Did you not ask Mr. Murray whether he had any reports from the colonial manager ? —I do not know whether we asked him specifically for any reports. We asked generally as to the position of the bank and the Estates Company, and, so far as we could get information at the time— we could not get it anything like so fully as we desired on account of the limitation of time, but, as far as we could, we got it at the time. 173. The first interview you had was on Monday, the 25th June, and the next letter is on the 29th —that would be Friday. In that letter of the 29th he speaks of enclosing a balance-sheet. He says, " I have the honour to send you a copy of the balance-sheet of the Bank of New Zealand." Up to what date was that balance-sheet? —The 31st March previously. 174. Was there any other balance-sheet submitted to you, or figures relating to any other matters within the bank itself ?—I said to-day that we got the Gazette notice. In addition to the balance-sheet, we had the Gazette notice disclosing the position of the bank. 175. I ask you to look at it and to say what is the date of the Gazette notice?— For the quarter ending the 31st March. We asked Mr. Murray, in addition, to furnish us with the balance-sheet
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showing the whole position of the Bank of New Zealand, of the Estates Company, and of the Auckland Agricultural Company. That information is furnished, but it was not received before the legislation was put through. 176. I am referring to the letter of the 29th June, in which Mr. Murray says he hands you a copy of the balance-sheet. He does not refer to anything else there, but you say you had before you the gazetted return ?—We had the balance-sheet of the bank up to the 31st March, 1894, and we also had the gazetted return of the same date. 177. Then, after the legislation—viz., on the sth July—the Secretary to the Treasury wrote, by direction of the Colonial Treasurer, to request that Mr. Murray " Will cause a carefully-prepared statement of the position of the Bank of New Zealand as on the 30th ultimo to be furnished to me with the least possible delay." Was that not the next step or specific action taken?—We asked for information to be furnished to us of the latest possible date—the 25th June, as a matter of fact. 178. You asked for that verbally ? —Yes, we asked Mr. Murray ; but he could not get it before the legislation. 179. Can you say when you got it ?—The 25th August. 180. What was it you got then ? In the interval you had directed this letter of July the sth to be sent to Mr. Murray asking for a carefully-prepared statement of the position of the Bank of New Zealand as on the 30th ultimo to be furnished ?—Yes. 181. Did you get any response to that?—l think you will find a letter from Mr. Murray in which he states that, in consequence of the head office being in London, he is unable to obtain that information, and that he had sent it on to the Auckland branch with a request that they should obtain it. 182. Did you get it at any time?—My impression is that it is the balance-sheet which is said to have been recently discovered in the bank; but lam not certain. 183. Would not that be in answer to the letter of the 15th July?— The 25th June, 1894, was the latest date up to which information was furnished. 184. The legislation was introduced on the 29th ?—Yes. It was, practically, the 30th June before the Act was passed. TB4a. Can you throw some light on the statement you made as to something that was discovered by a bank official ? —All I can say concerning that is that I understand a witness made a statement in the other Committee that a balance-sheet of the bank at latest date had been found in the bank—but I think the fair thing would be to call the gentleman who made the statement in the other Committee. 185. I think Mr. Watson has stated that here?—l understand it was Mr. Butt who furnished the balance-sheet referred to. 186. You do not know of any statement of the bank's position between the 25th and 30th June, including the London business, being furnished?— No. We had the London business to the 31st March up to the time of the legislation. 187. I mean a letter?—l do not know of it. 188. You said, in answer to Mr. Seddon, that you had " conclusive proof" that unless the bank was assisted it must be closed. Do you refer to the statement of Mr. Murray as conclusive proof? —No; we knew from confidential sources outside the colony that such was likely to happen. 189. That unless this assistance was given which was sought the bank would close ?—Yes. 190. No one knew outside until the day you introduced the Bill ?—lt w r as not in this colony I heard that; but it was confidential. 191. It was out of the colony? —It was from beyond the colony. I will not disclose confidential information. We had confidential information that the bank would close unless State assistance was rendered. 192. Have you the cable messages from London to Mr. Murray?—l do not know what they said to him. 193. What was said to you on their behalf?— The two courses represented by him were perfectly clear—that, in the absence of Government assistance, the only alternative was for the bank to close. 194. That is how he put it ? —That is, I assume, what he got from his directors. 195. Reverting to what I was asking you a few minutes ago, have you seen that balance-sheet, dated September [Exhibit 58] ?—I have not seen this before. 196. What is the date ?—lt is dated "Bank of New Zealand, Bth October, 1894. Details received in the colony, 15th October, 1894." Initialled " W.W." 197. That you did not see probably until now? —No. 198. And the bank explains that that was discovered in the bank without any record of its having been forwarded to the Government ?—I understand that this is the statement of assets and liabilities and position of the bank in London as at the 25th June, 1894. This information, so far as I know, was not furnished to the Government until it was forwarded recently. 199. Until it was handed to this Committee ?—I do not know whether it has been handed in. I never heard of its existence until after the appointment of the Committee. 200. Touching the Consols. There is no secret, is there, that the Bank of New Zealand inscribed £150,000 out of the second million. That is stated in the Financial Statement of last year ?■ —There is no secret stated in the Financial Statement. 201. You are aware that it was so stated?—l should like to see the Financial Statement. 202. As a fact, was not the sum of £150,000 of the second million invested in New Zealand Consols? —£150,000 was invested in Consols. 203. By the Bank of New Zealand ?—The Bank of New Zealand. 204. Out of the second million ? —I do not know that it is so. 205. Will you look at Return B -10, 1895. Under the head of " Deposit Receipts "of the Colonial Bank, among the securities sent to London, on page 7, you will find reference to six amounts of £25,000 each. That aggregates £150,000, does it not ?—Yes.
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206. Payable at intervals on deposit receipts ?—Yes. 207. That indicates public money deposited in the Colonial Bank, does it not ?—Yes ; but it does not say whether it was the second million or not. [Extract put in.] "Deposit Receipts.—From the Colonial Bank of New Zealand. £ No. 11467, for £25,000, due 29th May, 1896 ... ... ... 25,000 No. 11468, for £25,000, due 29th August, 1896 ... ... ... 25,000 No. 11469, for £25,000, due 29th November, 1896 ... ... ... 25,000 No. 11470, for £25,000, due 28th February, 1897 ... ... ... 25,000 No. 11471, for £25,000, due 29th May, 1897 ... ... ... 25,000 No. 11472, for £25,000, due 29th August, 1897 ... ... ... 25,000" 208. You were, in 1894, managing director of the J. G. Ward Association?— Has this Committee been set up to inquire into the Ward Farmers' Association ? The Chairman: No. Witness : Then I shall not answer questions referring to it. 209. Mr. Hutchison.] I ask whether, in 1894, the witness was managing director of the J. G. Ward Farmers' Association. Hon. Mr. Seddon: I say that we have no more right to ask this question than to ask any member of the Committee about his private business. The Chairman : I simply rule that the question is not within our order of reference. 210. Mr. Hutchison.] I further ask whether, in 1894, the Ward Association The Chairman : I rule against any questions concerning companies or individuals being put, unless writings-off have been shown against them. Mr. Hutchison : I claim that my question shall be put down, whether it is answered or not. The Chairman : I have ruled the question out of order. Witness : I should like to say personally that I have no objection to answer any question about my private affairs, but I am advised by my counsel that it would be improper to do so, as it is outside - the powers contained in this Committee's order of reference. I should like to say that I have before the Legislative Council Committee, where the order of reference is not so restricted as it is here, answered questions bearing on my private affairs unreservedly, although no other person's private affairs were allowed to be gone into there ; and it is not because I object to my private affairs being inquired into by this Committee that I now decline, but I object to be singled out for special treatment here. I think very few would care to have their private affairs inquired into as unreservedly as mine have been before the other Committee, and I would not object if persons I can allude to would give me the same right. But I object to be made an exception of by any member of this Committee. If my private affairs are inquired into, then other person's private affairs should also be inquired into by this Committee, and if that right is conferred upon me, I shall have no objection to answer Mr. Hutchison's question ; but I shall ask that I also shall have the right to ask questions upon private matters of Mr. Hutchison. Mr. Hutchison ; I claim my right to put the question. My last question was whether the J. G. Ward Association was doing business in 1894 wdth the Colonial Bank? The Chairman : That question is out of order. 211. Mr. Hutchison.] Can you tell us when you left the colony to go to England—the date ?—At the end of January, I think it was 1895. 212. What was the date of your departure from England to return to the colony? —It was in the month of June, but I do not remember the exact date. 213. Will you give us your definition of what is a " writing-off" ? —Yes ; aperson who receives forgiveness of a debt would have received a writing-off. 214. Supposing a sum of money is credited to a larger sum, what would you call that?—l would call it a crediting of a sum of money to a larger sum. 215. You would not call it anything else but a credit in that case ?—I have given my answer. That is exactly what I would call it. 216. In reference to the banking legislation of last session, did you introduce the several Bills ? —I introduced two Bills. Perhaps I should say I moved the second reading of the Bills. 217. You moved the second reading of the two Bills last session—one based upon the report of the Committee, and the other dealing with the lists ?—The one based upon the report of the Committee, and the other which was asked for by the Bank of New Zealand as necessary to give effect to the legislation contained in the first Bill. 218. When did you know of the amount that was to be paid as good-will to the Colonial Bank ? It is in the 1895 agreement with the Colonial Bank ? —I cannot tell you the date. I heard of it, I think, a considerable time after the session. 219. Did you know that the Government had a minute on the 21st October on the subject ?— What sort of a minute ? 220. A statement? —I should like to see the statement, if the matter is referred to in any particular statement. Ido not remember any particular statement. 221. Do you know whether you saw a statement like this [Exhibit 61] two days after the agreement was laid on the table, and some days before the rejection of the motion dissenting from the proposed contract. [Document handed to witness] ?—I do not recollect having seen this before at all, and I do not profess to remember every document which has passed through my hands. 222. Is that addressed ?—lt is not addressed at all. 223. Whom was it sent to ? —I cannot tell you. 224. You were Colonial Treasurer at the time, and had your name on the Bill?— Yes. I cannot from memory locate everything. I may have seen that; but, if I did, it has entirely slipped my memory. *44—1. "6.
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225. Do you remember that an inquiry was made in the House at the time as to the amount paid for good-will ?—I have a recollection of something upon it. 226. You made no statement as to the amount, did you ?—lf I did it is recorded. Ido not know from memory whether I did or not. 227. We have been told, as to the agreement of the 18th October, an element inducing it on the part of the Bank of New Zealand was a guarantee by the Colonial Bank for two sums of £20,000 and £5,000. Are you prepared to tell us anything about those sums ? My question has reference to a matter we have already had in evidence. —All I can tell you is that I knew nothing of such circumstances of any sort or kind. 228. Of any guarantee ?—No. 229. Are you now aware that a guarantee was given of such amounts—one of £20,000 and another of £5,000? —Only what I have heard. I know nothing concerning them beyond that. 230. Mr. Maslin.] When I came in this afternoon you were referring to this alleged draft of £4,000. When I gave you the information in my possession in respect to this draft, did you or did you not tell me that that was the first that you had heard of it ?—I do not know whether I led you to believe that it was the first I had heard of the transaction, because I had heard of it that morning outside of the House. I might have said to you that I had not heard of it before that day. I had a telegram sent to Invercargill on the point after you spoke to me. 231. Do you remember any conversation which took place when I gave you the information ?— You said that you thought it was a matter which in my interest should be cleared up. 232. I made it plain to you that the reason I gave you the information was that you ought to have time to investigate it ? —Yes, you also stated that, and showed me a type-written letter from the party who made the communication sent to you. 233. So that you might ascertain the facts ?—Yes. I have since communicated with the persons concerned, and satisfied myself that the statements made were absolutely untrue. 234. I have a question about the Consols to ask. The rate of interest received on the Consols by the Bank of New Zealand was per cent. ?—Yes, that is so. In brief, the country made a profit of i per cent on it. 235. £750 a year ?—£7so a year. 236. If the bank was paying 4 per cent, it would lose that £750? —Not necessarily. 237. If the Bank of New Zealand deposited £150,000 with the Colonial Bank, which afterwards came back to the Bank of New Zealand, the result would be that the Bank of New Zealand would lose £750 a year ?—That is not so, because if such an operation as that took place it would come out of the reserves, which makes all the difference in the world. 238. Yes; but they pay 4 per cent, on the deposit of £150,000 received from the Colonial Bank ? —I, of course, can only express an opinion on a matter of that sort. 239. Major Steward.] You and I, Mr. Ward, have known each other for a matter of nine years ?—That is so. 240. You were for three or four years Colonial Treasurer?—l was Colonial Treasurer for a period of years. 241. During those years this legislation took place with regard to the Bank of New Zealand and the Colonial Bank ?—With regard to the Bank of New Zealand it did. 242. You occupied the position of a Minister of the Crown, and you occasionally outside your important portfolio as Colonial Treasurer are trusted with the money of the taxpayers for the time : is that so ? —I was one of the Ministry that were the custodians of the people's purse. 243. Were you influenced as a Minister by any private consideration with regard to that legislation which came before the House in 1894 and 1895 ?—I was not. On the contrary, if I had studied my own interests the first legislation should never have been put through, because I knew I was doing something which was absolutely inimical to my own interests. 244. I ask the question for your own sake. Did you prompt or assist to prompt, or support, that legislation with a view of personal profit or interest ?—No, I did not; and it did not result in any personal profit or interest to me whatever. 245. You had no such motive at the time ?—Certainly not. 246. Did the legislation that took place benefit you in any way ?—ln no way whatever. 247. Is it likely to benefit you in any way ? —No, on the contrary. 248. Mr. McGoivan.] You stated in evidence that the bank's reserves were not adequate. What led you to that opinion ? Was it by examination of the balance-sheet, or was it by information supplied by the President of the bank ?—I think that was in October, 1893. The position of the bank's reserves were not what they should be and we knew they ought to be. I accordingly wrote to the General Manager of the bank. 249. Did you take any further action ?—He replied and gave in detail the position, which is on record—the position from the bank's point of view, the reserves in Australia and New Zealand— and after consideration in Cabinet, and considering the acute nature of the financial troubles and the stoppage of the Loan and Mercantile Company—which was a very large account in the Bank of New Zealand—it was thought inadvisable to press the bank to restore the reserve, because it might result in trouble at the moment. 250. In short, you took no further steps to press the law ? —For the reason stated, it was thought injudicious to then press them in view of the disturbed financial world, and on that account it was considered inadvisable to press the institution at that juncture to raise its reserves; but it was not intended to allow matters to rest there. 251. Do you consider that Mr. Murray's statement to you or to the Government with reference to the position of the Bank of New Zealand has been at all borne out by the subsequent information that the Government has obtained since?— Well, in answering that I should say that the present directors of the Bank of New Zealand issued their balance-sheet in March, 1895, and without having then, as far as the Government knew, discovered the position of the bank, which
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was reported by memorandum to the Government in July the same year. The fact of it being a new directorate, with the opportunities they had of practically confirming the position as disclosed by Mr. Murray, it makes one doubt very much, although he has been abused by some people for it, whether there was any desire on his part to withhold the position from the Government; and I have no way whatever of forming an accurate opinion better than any one outside the Government could form an opinion as to whether his statement was borne out by actual evidence in the bank or the Estates Company. 252. Are you still of opinion that the purchase of the Colonial Bank was a wise transaction on the part of the Bank of New Zealand?—l know the Bank of New Zealand could not have paid its way and provide for the £50,000 to the Realisation Board without an equivalent amount of business such as it got from the Colonial Bank—from the purchase of the Colonial Bank or some other bank; and I should say, looking at the matter quite impartially, that it was a very excellent thing for the Bank of New Zealand and the country that the bank was able to obtain the business of another bank. 253. Do you think the Bank of New Zealand was justified in giving so large an amount as is in evidence for what is termed the good-will of the Colonial Bank ?—My opinion distinctly is that the Bank of New Zealand was quite justified in giving it, and I base that opinion on the cost it would have been to the bank, which would have been the alternative if they had not obtained it, of having to find in open competition an amount of business equal to what they got from the Colonial Bank. My opinion is that £75,000 would have been lost to the Bank of New Zealand in an effort to get that business in a very short time; and I should say, looking at the matter from a Bank of New Zealand point of view, that it is a very good thing for them, and the colony that they got that business. 254. Hon. Mr. Seddon.] Touching the first question put to you, Mr. Ward, by Mr. Hutchison or Mr. Montgomery, in reference to the clause in the Act which enacts that the book-value of the shares shall be maintained. What was the amount of shares held by the Bank of New Zealand ?— £1,850,000. 255. And the amount of the guarantee given was £2,000,000 ?—Yes. . 25.6. If the shares had been written down, that would have weakened the position of the bank correspondingly with the amount written down, would it not ?—Decidedly so. Its balance-sheet would have shown the altered position. 257. On the one hand it would have strengthened the bank, and on the other hand it would have written down its capital ? —lf the amount of the shares had been written down the bank's assets to the extent of the writing-down would have been reduced, and its position on the face-value of its securities weakened to that extent. 258. There was a question put by Major Steward which you answered, I thought, rather quickly and without consideration. You said, " The legislation of 1894 was inimical to my interest, and I knew it." What did you mean by that? How could the banking legislation of 1894 be inimical to you, and you knew it ?—What, perhaps, I should have said was what I stated practically in my evidence in the other House, and that was that but for the fact that I realised it was in the interests of the country that it was desirable for the State to come to the rescue of the Bank of New Zealand I should ten thousand times have infinitely preferred that the State should not have guaranteed the bank at all. While looking at it as essential, under the circumstances in which the colony was placed, that it should have been aided, at the same time, my personal inclination was to allow all banking institutions to work out their own destiny on level terms, and I considered that in giving State aid to any bank we were laying the foundations of a very powerful monopoly which might have very powerful effects on the future of this country. In that respect I recognised that we were creating a powerful monopoly which was far from desirable if it could be avoided, and but for my strong conviction of the disastrous effects the closing of the bank would have had upon the colony, and the ruin it would have entailed on many thousands of people, I should not have favoured the Government's interference. I knew at the time I was creating many powerful enemies by my action. 259. You were not referring to your private affairs? —No, not to my private business affairs. I did not trouble about them at the time at all. I quite recognised at that time that I would probably create a number of powerful enemies, whose interests were antagonistic to the bank, in consequence of the legislation for that institution, and this has proved to be too true; not only have many of these persons been hostile to me, but their actions in many cases have been positively brutal. 260. Mr. Montgomery.] You say to have put these shares down at actual value would have weakened the position of the bank ?—lf you have £1,850,000 in a balance-sheet which it represent in assets, and you write it down, it is obvious that you weaken the position of the balancesheet, and that is what the public judge and estimate the credit of an institution upon. 261. But, as a matter of fact, the public knew the shares were not worth the money?— When it is said the public, you know you have always to realise the fact that that only means the comparatively few men who are keeping their eyes open, and who realise the position as it exists; but it is quite clear that if the shares were worth only £900,000 it would in a balance-sheet alter the position very much. 262. Do you see any reason, now we have gone to the bed-rock and know the values, why that clause should not be repealed ?—I understand it is repealed by the legislation of 1895 inferentially.
Monday, 21st September, 1896. William Brown Vigers sworn and examined. 1. Hon. Mr. Seddon.] What is your name?— William Brown Vigers. 2. What are you ?—One of the liquidators of the Colonial Bank. 3. What were you prior to becoming liquidator of the Colonial Bank ?—I was inspector of the Colonial Bank.
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4. How many years were you inspector of the Colonial Bank ?—About one year. 5. You succeeded whom?— Mr. Watson. 6. You had an intimate knowledge of the Colonial Bank prior to and since its purchase by the Bank of New Zealand ?—Yes. 7. You remember that, in purchasing the Colonial Bank, the Bank of New Zealand took a certain amount for cover—£327,ooo ? A certain cover was taken by the purchasing bank from the selling bank with respect to the accounts in the " B " and " C " lists ? —That is so. 8. In your opinion, does that cover too much?—l think there should be a surplus. 9. You are aware, also, that the condition was that the Colonial Bank should go into liquidation under the Act ?—Yes. 10. Has the position, by the purchase, and terms and conditions of the legislation, of the Colonial Bank shareholders and its clients been prejudicially affected ?—I think most prejudicially affected. 11. Will you explain to the Committee what leads you to come to that conclusion?— The loss of time, the Court expenses, and the fact of our having to go before the Court, and getting the evidence published no doubt deters a number of people and their friends coming forward to make offers. 12. You think the arrangement of the accounts could be done much more profitably by the ordinary course if the bank had liquidated itself?— That is, if the liquidators had full power, Yes. 13. Do you find the hands of the liquidators tied in any other respect—with regard to the nursing of accounts, as it is called in commercial circles—by the arrangement ?—Yes. 14. It has been sworn here by Mr. Butt and Mr. Watson, that, in working the accounts, if greater latitude were allowed, these accounts would probably pay 20s. in the pound by being nursed; whereas by the existing arrangement there will probably be less. Do you concur in that view ? —I think that many would pay 20s. in the pound, and that some which would not pay 20s. in the pound would turn out much better by being nursed. 15. Has notice been given by you as liquidator to any persons in the "A," " B," and "C" lists ? —We had nothing to do with the " A " list. 16. .Have you given notice to the customers in the "B" list, where cover is taken, as to whether they are in the "B" list?—We do not give notice to the customers. Any notice we should give would be to the Bank of New Zealand. 17. As a matter of fact, the Bank of New Zealand is working the accounts; but do not you direct in respect of these accounts?— Under our supervision. 18. As supervisors of these accounts, have you as liquidators given notice to the clients who are in the " B " list of the fact that they are in that list ?—No. 19. Are you supplied periodically by the Bank of New Zealand authorities with statements showing the position of these acciounts?—Yes. 20. How often are you supplied with these statements ?—The last Monday in each month. 21. For the purpose of my next question I will take an account's position as an example. At the time the accounts were taken to be worked by the Bank of New Zealand, say a hypothetical account in the "B" list had had an advance amounting to £20,000; in the course of a month or two, or three months, that advance was reduced to £15,000. If the Bank of New Zealand wanted to go beyond the £15,000, and not to even exceed the original advance of £20,000, can they do so without your sanction or consent ?—Yes. 22. At whose risk would that be done ?—There is no risk. So long as they do not exceed the figures at the date of purchase there would be no risk at all. 23. That is your opinion of the working of the account—that they could do that?— Yes. Necessarily the accounts vary from day to clay. An account may be down to-day and up again to-morrow on account of cheques coming in. 24. Have you given a general notice that accounts are not to be exceeded where accounts have come down below what they are in the list of accounts taken over ?—We have given notice in several cases that we want accounts liquidated. 25. It is after you have given that notice, that they cannot go beyond the amount you have given notice of ?—lt would be at their own risk if they did. That is my opinion. 26. Has there been any difference of opinion in respect to this—any expostulation on behalf of the Bank of New Zealand in respect of this?— They wished us to take responsibility which we did not wish to take, in the direction of assisting accounts. 27. Owing to this difference of opinion between you and the Bank of New Zealand authorities, in the meantime the clients, whoever they may be, are between the two parties and are injured ?— It is not necessarily a difference of opinion. We probably agree that that is the proper thing to do ; but we do not see that we have any power to do it. Therefore the client probably might suffer. 28. That is owing to the construction you put upon your agreement and position as liquidators under the Act, and that constrains you to take this course?— That is the view we take of it. 29. Have you approached the directors of the Bank of New Zealand, or been approached by them, in respect to closing the whole of the accounts, with a view to your selling right out, and winding up the whole of the accounts ? —That has been done informally. 30. If such a course were pursued, do you think it would be in the interests of the shareholders of the Colonial Bank, the clients of the Colonial Bank, the Bank of New Zealand, and the colony? —I do. 31. Will you please state to the Committee the ground on which you based that conclusion?— It would be a benefit to the shareholders of the Colonial Bank, because the liquidation would be sooner over and the expenses would be saved. It would be a benefit to the customers, because the Bank of New Zealand would in all possibility, like any other bank, nurse the accounts. It would certainly be a benefit to the colony. If you keep a lot of people going instead of putting them through the Court, I think that would be a benefit to the colony.
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32. How would it benefit the Bank of New Zealand ?—They would retain probably all the accounts that would be payable accounts; also, these people have connections and friends, and the bank would, no doubt, retain a lot of their accounts which might otherwise be closed. 33. This course, in your opinion, would give a greater value to the Bank of New Zealand for the good-will which has been paid than the course which has been pursued ?—I think so. 34. In other words, the legislation which has been passed, forcing the Colonial Bank to go into liquidation under the Act, has been prejudicial to the shareholders and clients of the Colonial Bank ?—Most decidedly. 35. Were you, as an officer of the Colonial Bank, consulted as to that clause which was put into the Act determining this mode of liquidation ? —I had nothing whatever to do with it. 36. You were not consulted l —No. 37. Had you been consulted, would you have expressed the opinion that it would be against the interests of the bank to permit that? —I cannot say that. I would not have known so much about it as I do now, probably. 38. At all events, you have had considerable banking experience ?—Twenty-two years. 39. And in your opinion, as an expert, that mode of liquidating the bank under the circumstances you have given has been disastrous ? —I think so ; most decidedly. 40. Representations were made in respect of the purchase of the Colonial Bank by the Bank of New Zealand. Were those representations, in your opinion, fairly accurate and truthful?— Yes. 41. Were you consulted as to the accounts or called upon to verify the accounts which were submitted during the process of the negotiations ?—No, I had nothing whatever to do with it at all. 42. I presume your duty would be to advise the General Manager as to the position of accounts ? —Yes. 43. And through him the information would be given to the Bank of New Zealand—that is, the purchasing bank ?—I was not specially asked at this particular time. I sent my reports in on the various accounts in the ordinary way. 44. Were you surprised when the Bank of New Zealand demanded £327,000 in respect of this cover?— Yes. - 45. Under ordinary circumstances, do you think so large an amount of cover was fairly warranted ? —I thought the amount asked for was excessive. That was my opinion when I first saw it. 46. What is your opinion now ?—I still think so. 47. I suppose in the working of the accounts under the system adopted there would be losses entailed, and that they will take more than if they were worked or nursed in the way you have indicated?—l think so, most decidedly. 48. And to that extent it will go to show the cover was wanted; but you think that greater loss is entailed, owing to the manner in which the account would be worked ?—Yes. 49. Do you think the sooner an end is put to that the better ?—The better for the shareholders and customers. It will not be so good for the lawyers. 50. Then, there is a lot of legal expense in every account? Where you are asking for a submission to the Court, there are heavy sums to be paid by somebody? —Yes. 51. Then, if this method of winding up continues, in your opinion, like many other things done by the Legislature, it means that the lawyers come in for a good share of the good things going?— Yes. 52. It is the unfortunate shareholders and clients who suffer ?—Yes, you never get the same value in liquidation. 53. You are giving evidence which, I suppose, you know is very much against yourself. You are recommending us to cut your own position short ?—Yes, I recognise that. 54. But still you believe, in the interest of all concerned, that it ought to be done?— Yes. 55. When was the last balance-sheet of the Colonial Bank prepared prior to the purchase by the Bank of New Zealand? What is the date of the annual balance-sheet?— The half-yearly balance-sheet is the 28th February and 31st August. 56. There was a balance-sheet published on the 28th February ?—Yes, 1895; and the 31st August, 1895. 57. Are yon aware whether these balance-sheets were before the directors of the buying and selling banks at the time of the negotiations ?—I could not say of my own knowledge. 58. You have seen these balance-sheets yourself?— Yes. 59. In your opinion, did these balance-sheets fairly represent the position of the Colonial bank, of which you were inspector at the time? —I. had nothing to do with them. They were outside my department. 60. Who is responsible for the balance-sheet ? —The accountant at the head office. 61. Who was the accountant ?—Mr. Adam. 62. You say the cover taken, in your opinion, was too much?— Yes. 63. And you are still of that opinion ?—I am still of that opinion ; but, of course, the method of liquidation has, in my opinion, reduced the values. 64. And by reducing values the accounts will take so much more of the cover to make them good?— That is so. 65. And whatever is taken by that means will mean so much less for the shareholders of the Colonial Bank?— Yes. 66. Has the Bank of New Zealand lost any good accounts that were in the "A " list ? You know the accounts that were in the " A," " B," and " C " lists ? —Yes. 67. Have any accounts in the "A" list left the Bank of New Zealand and gone elsewhere?— Some are sure to have gone. Ido not know what went since the liquidation. I know what went over. 68. Some went over from the " B " list ?—Yes; there are some gone over to other banks.
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69. You gave notice, I presume, to the bank to take them over ?—I recollect one case where we asked the Bank of New Zealand to take the account over, and the parties went to another bank. 70. You say that there are some accounts in the "B " list which have left the Bank of New Zealand and gone elsewhere ?—Some few. 71. Now, the fact of another bank or banks taking these accounts up would go to show that they were satisfied that these accounts were good, would it not?— Yes. 72. Any other bank taking them over, from a banker's point of view, is in a more unfavourable position than the Bank of New Zealand, is it not ? There is more risk?—l cannot say that. 73. Well, the Bank of New Zealand, which was working the account, would know more about the account than any other bank taking it?— Yes, possibly, in a case of that sort. 74. And possibly the bank taking the account up would be at a disadvantage?—To that extent. 75. And notwithstanding that some accounts have been taken up by other banks?— Some few. I do not say there are a great number. 76. Would it be to the advantage or disadvantage of the clients if the corporation or person were told that they were in the " B " list, and that they would within a certain time be required to improve their position or make some arrangement either with the Bank of New Zealand or with some other bank ?—That would depend upon circumstances. If a client were urged to make an effort good might come out of it, but if he lost heart it would be a disadvantage. 77. At present a sword is hanging over his head, and he does not know it ?—That is so. 78. Supposing you as an inspector knew of an account where an advance was required, and probably the advance was rather higher than you thought was warranted, would you give that customer a hint as to what he ought to do to put his account into a better position ?—As inspector of the bank, while it was going on, most decidedly. 79. In this case you cannot do it because you are the liquidator; and I suppose the bank will not do it unless you tell them to. Have you done that in any cases?—No; we have not told them to tell the customers they are on the " B " list. 80. There are two years, are there not, in which these accounts are to be worked ?—Two years; 81. At the end of two years, what then ?—A washing-up, I suppose. 82. You are supervising the accounts in your own mind with that idea, that at the end of the two years there would be a washing-up ?—We should like to see it finished as soon as possible. By a clause in the agreement we might arrange for a further term if necessary. 83. But in the meantime the cost of liquidation is going on ? —Yes. 84. What do you think it will cost per annum for liquidation—roughly; I do not want any details ? Under the present process, with the Court expenses and everything concerned, what do you think it would cost per annum ? —I have not gone into the matter; but, speaking roughly, I should think it would be between £6,000 and £7,000. 85. And that is coming out of the pockets of the unfortunate shareholders?— Yes. 86. Then, you yourself are favourable to a clearing up by sale of the accounts ? —Yes. 87. Would any such sale of the accounts have to come under the notice of the Court, and every account that was sold or transferred also be required to be put before the Court ? —We should have to put the matter before the Court; but as to whether the Judge would pass them without the particulars, I am not in a position to say. 88. In your opinion, would it be competent for the Court to demand every detail of the accounts, under cover and otherwise? —We are only the servants of the Court, and have to satisfy the Court. If it asks for particulars we have to give them. 89. Would such a position be in the interests of the Bank of New Zealand, the colony, the clients of the Colonial Bank, and the shareholders of the Colonial Bank ?—That full particulars should be given ? 90. Yes; the details ? —No; on the contrary. 91. It would be injurious to all concerned?— Yes. 92. And that is the present position?— That is the position. 93. Could you suggest to the Committee how this could be done and the injury you have just now mentioned might be obviated ?—To my mind, the best thing to be done would be for the Bank of New Zealand to buy everything that remains at a value that might be mutually arrived at, and so close the thing. That would certainly be in the interests of the shareholders and the customers too ; and I am pretty sure it would be in the interests of the Bank of New Zealand. 94. But that could not be done without legislation, and an alteration in the position of the liquidators ? —As far as the liquidators are concerned, the Court might consent, and, probably, might not insist on these details being given. If the details were insisted upon I take it that no offer would be made. 95. Has it ever struck you that if you or your co-liquidators were put in the same position as the Colonial Bank under the deed of settlement it would be an advantage?—lt would be an advantage. 96. That would be a very simple way of recovering the lost position, and to save these vexatious proceedings ? —lt would not recover the lost position, but it would be better for the future. 97. Under the deed of settlement, if the Colonial Bank had liquidated itself and put you in your position now as liquidators by legislation, it would be absolutely confirming what could have been done by the directors and shareholders of the Colonial Bank under its own deed of settlement ?—I believe they had that power. 98. In fact, that means voluntary liquidation?— Exactly. 99. Under existing arrangements the Colonial Bank is being wound up under an enforced liquidation with all its attendant evils ?—Just as if it was a bankrupt concern forced by its creditors into liquidation.
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100. That is exactly the position ?—Yes. 101. I suppose, during your experience as a banking expert, there have been cases where banks have been forced into liquidation by creditors, and the result has been, as you say it is in this case, expensive and injurious ? —Yes. 102. You have no doubt read the reports which have appeared in the Press of our proceedings here ?—Yes. 103. I suppose you have had some slight interest in what has been going on ?—Yes, I have taken great interest in it. 104. And you have no doubt read the evidence of Mr. Booth ? —Yes. 105. You have read the evidence of Mr. Watson ? —Yes. 106. And Mr. Butt ?—I think I have read all the evidence as far as I have seen it in the local papers. 107. And I have no doubt you also read the evidence of Mr. J. G. Ward, late Colonial Treasurer ?—Yes. 108. Now, each of these witnesses has sworn that there have been no writings-off in respect of the J. G. Ward Association, or Mr. J. G. Ward. Do you confirm that evidence?^—l do. 109. You know Mr. Mackenzie, the General Manager?— Yes. 110. He was your superior officer?— Yes. 111. You are now entirely independent of him in your position ?—Quite. 112. In reading these reports of the evidence as to his competency or otherwise, can you tell the Committee what your opinion is of Mr. Mackenzie as to his fitness, integrity, and capability for his office?—lt is a delicate question, because Mr. Mackenzie has had a great deal more experience than myself; but I have no objection to answer the question, and give my opinion for what it is worth. I consider Mr. Mackenzie is a very clever banker, a very capable man, and, of course, as to his integrity, there is no question. 113. You know the business of the Colonial Bank, and what it was doing while you were inspector?— Yes. 114. We will take the good-will as being fixed at £75,000. Do you think that the business of the Colonial Bank was worth that amount to the Bank of New Zealand ? Did the Bank of New Zealand make a good or bad bargain in giving £75,000 for good-will? —I think they got a good bargain. 115. You have seen also that they paid £125,000 for the landed property and premises, &c. ; a total, taking the £125,000, and the £75,000, of £200,000?— Yes. 116. And, notwithstanding this large amount for the premises and landed properties and goodwill, do you think they made a good bargain? —Yes; I think they got a good bargain, taking everything into account. 117. Have you any idea as to the net profit, under ordinary circumstances, that the Colonial Bank would be making prior to its purchase—in round numbers ? —I could not give the figures without reference. They varied, of course, like any other business. 118. If we were to say they would make under ordinary circumstances £30,000 a year, would that be correct ?—I should think that would be within the mark. 119. And as a going concern, with a business such as is shown in this balance-sheet of August 31st," 1895 (balance-sheet produced, page 99 of 1.-6) ? What were the deposits?— The deposits are shown here as £1,947,921. 120. That does not show the advances or number of customers; but that is all in the asset or liability side of the account ?— The amount I have mentioned is the money on deposit, either fixed or at call. 121. To have a large amount on deposit, I suppose, is a profitable thing for a bank? —Yes; banks generally like to get deposits. 122. And you think that, with £200,000 paid for a bank which could show that amount on deposit and that volume of business, it would be a very good thing for the Bank of New Zealand ?— I consider that they got a good bargain. 123. Looking at that balance-sheet, and the profits made for the year, do you still think, under ordinary circumstances, that the purchasing bank would make £30,000 a year? —I think so. 124. If anything, that is a low estimate ? —Yes. 125. With the accounts being worked under a disadvantage by the Bank of New Zealand, do you concur in the estimate that has been given, of £25,000 to £30,000, seeing that it would be more economical for the two banks to be worked as one concern, as there would be less expenses and correspondingly greater profits ?—That is so. 126. If it has been contended that £26,000 a year is a fair estimate of the profits of the Colonial Bank, do you agree with that ? —I think it was a very fair estimate. I would consider it rather under than over. 127. That being the case, then, £200,000 for the landed properties and premises and goodwill, under those circumstances you think the Bank of New Zealand made a very good bargain ?—I think so. 128. And the sufferers, in your opinion, are the shareholders, and to some extent the clients, of the Colonial Bank ?—The shareholders, and to some extent the clients. 129. The effect, then, of the Bank of New Zealand getting into a mess, and the colony having come to its rescue, has prejudicially affected the shareholders of the Colonial Bank ? —Yes. 130. There was nothing to compel the Colonial Bank to sell ? What has been done they did with their eyes open ? —They were not compelled to sell. 131. Taking all the circumstances into consideration, in your opinion, would it have been better for the shareholders of the Colonial Bank if the Colonial Bank had gone on as it was, notwithstanding the position in which you found it since you became liquidator ?—I believe ultimately it would have been better for the Colonial Bank shareholders if it had been allowed to go on.
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132. Will you further elaborate that answer by giving us your reasons for thinking so ?—My reason is this : that they had a good business ; and although it would have been a very bad time, and no doubt the shares would have depreciated in value, and probably a call would have had to be made, still, ultimately, it would have been to their benefit. I believe they would have had a good business, and ultimately it would have been better. I cannot guarantee that that would be so, but that is my opinion. 133. There was pretty keen competition between the Colonial Bank and the Bank of New Zealand, was there not?— Yes. 134. And in that competition the usual sequence would have followed, known to bankers: they would have been free in their advances, and losses would have been made that might have been avoided ?—Yes ; in this keen competition customers get very often more than they should. It is like any other business. 135. What position were you in in 1893 ? Were you aware of the colony coining to the rescue by passing legislation authorising the guarantee of the note issues ?—I only knew what I saw in the papers. 136. Did the financial crisis in Australia in 1893-94 detrimentally affect New Zealand : was it felt here ? —Yes ; there is no doubt of that. 137. In your opinion, was the guaranteeing of the note-issue an advantage to the banks doing business in New Zealand?— Yes. 138. If the Bank of New Zealand had gone into liquidation in 1894, was the Colonial Bank, or any other bank in the colony, in a position that time to take up the whole business of the Bank of New Zealand and the Government account ? Could the Colonial Bank have done it ?—No; I should say not. 139. If the Bank of New Zealand had gone into liquidation, do you think the Colonial Bank or the other banks would have been detrimentally affected ?—Yes ; most decidedly. 140. I suppose it would have taken as much as they knew how, to keep open themselves, in a crash like that ?—Yes ; in a time of panic like that it is impossible to say what might have happened. 141: The whole of them had been somewhat weakened owing to the financial panic in Australia?— Most of them, I think, had lost deposits. 142. And otherwise, in banking terms, their position would have been weakened? —That is so. 143. If the Bank of New Zealand had gone into liquidation at this juncture it is very hard to say where the disaster would have stopped ?—ln a time of panic no man can say what is going to happen. One concern brings down another, and you do not know where it is going to stop. 144. You have read about the position of the Bank of New Zealand and the number of clients it had—you have seen that reported?— Yes. 145. You have seen the amounts that were on deposit ?—Yes. 146. You have seen that the colony had involved the public accounts also ?—lt is in a general statement under the different headings. 147. Had the Bank of New Zealand gone into liquidation, would it, in your opinion, have been a financial disaster to the colony ? —Yes. 148. Do you think, with your experience of twenty-two years as a banker, and knowing the circumstances as a banker would know them at the time, that the colony was justified in coming to the rescue of the Bank of New Zealand to avoid disaster? —I think so. 149. Mr. Montgomery.] You have said that you think the liquidation is prejudicial to the Colonial Bank shareholders ? —The form of the liquidation—the liquidation as at present carried out. 150. The liquidation was part of the agreement, and provided for?— Yes. 151. The shareholders ratified the agreement ?—Yes. 152. They had full knowledge of its clauses ? —I do not suppose the shareholders understood it as you do-. 153. Copies of the agreement were left at all the branches of the bank so that they could examine them ?—I really could not say that. It is quite possible. 154. You know that 719 shareholders voted to ratify the agreement, and that only forty-three were against it?—l could not quote the figures from memory. I dare say that is correct. There was a big majority. 155. Therefore, if the shareholders are put in an awkward position or are prejudiced, they put themselves into that position, did they not? —Yes. 156. With their eyes open ?—I do not think their eyes were open. 157. It is their fault if they have done it?— They have done it. 158. I suppose Mr. McLean is likely to have known what would have been the effect of the agreement? —Yes. You asked about the liquidation. That is in the Bill —it is not in the agreement, I think. 159. Clause 12 of the agreement provides for the closing and realising of the accounts ?— That is only individual accounts. There is nothing about the form of liquidation of the bank. 160. And the same in clause 16 : The liquidation of accounts in the " B " list ?—That is only about accounts, not the form of liquidating the bank. 161. That is all you are doing now —liquidating the accounts? —Yes ; but this speaks of individual accounts, but does not mention the form of liquidation. 162. You would not suggest that the agreement contemplated that the bank was to be carried on ?—No, I do not think so. 163. The only way to stop the carrying on of a bank is to liquidate it ?—Yes ; but you asked about the form of liquidation. 164. I ask you whether, as far as the agreement is concerned, it contemplated a form of liquidation ?—Certainly. 165. The agreement contemplates that the bank shall cease to carry on its business ?—I speak as an ordinary business-man, and not as a lawyer; I say, Yes.
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166. Do yoirisuggest here that the Act does not carry out the terms of the agreement ?—I did not make any suggestion to that effect. 167. You said it was in the Act andjnot in the agreement ? —Section 41 provides the machinery for the liquidation. 168. That is merely carrying out the intention of the agreement, is it not ?—For myself, I do not see anything in the agreement to say what form of liquidation it was to go in. 169. But it was some form of liquidation ? —That is so. 170. And the Act carries out the intention of the agreement. Do you suppose it does not?— Well, to my mind there is nothing in the agreement to say under what form the bank should be liquidated. 171. Do you suggest that clause 41 does not carry out the agreement ? —I do not say so. 172. Clause 41 is the machinery to give effect to the agreement ?—Yes, I suppose so. 173. You told us that to take over the " B " list would be in the interests of the shareholders, the clients, and the Bank of New Zealand? —Yes, I think so. 174. As far as the shareholders are concerned, that would depend upon the price the Bank of New Zealand paid for it, would it not ? —The more the Bank of New Zealand paid for it the more the shareholders would get. 175. Their interests would depend upon what the bank was willing to give for it. You suggested that there would be a surplus?—l said, I think so. If the Bank of New Zealand only gave as much for it as we could realise, it would be a benefit to the shareholders, because we should save expense. 176. Just the expense ?—lf they gave as much as we could realise, the only difference would be the expense. 177. The shareholders are in this position better, are they not: that they have not to pay any more calls ?—I never heard that before. If a call was necessary, I take it that they would have to pay it. 178. If a call was necessary? But you suggested that there would be a surplus?—l should not like to say there would be any call, but if there were they would have to pay it. - 179. Do you suggest that there is likely to be any call ?—I could not say. 180. If the shareholders get no more from the Bank of New Zealand—that if the accounts were not taken over, and there was nothing left after realisation, it would be no benefit to them for the accounts to be taken over ?—No ; that is so. 181. Then, you said you had no power to nurse the accounts. As a matter of fact, you have power to extend that two years to twenty, have you not?—l suppose so. That is not the way I meant in speaking of working the accounts. Sometimes a man might want to buy raw material. 1 Well, in that case we take it that we have no power to buy raw material; and then, if the Bank of New Zealand will not take that responsibility, the man must suffer. 182. That is so ; but there is no necessity for you to wind up the account in two years ?—I do not say it is absolutely necessary, but if it goes beyond two years there are expenses. 183. You said it would be in the interest of the Bank of New Zealand to take over the " B " list —with the cover, presumably. Do you know that the basis of the agreement, so far as the Bank of New Zealand directors were concerned, was that they should only take over good business ?— I understand so. 184. The business in the " B " list is not good business, is it ? —All of it ? 185. Well, the majority of it ?—A great number of the accounts at the present time I would not consider worth 20s. in the pound. 186. On the whole, if it would require £327,000 against the £703,077, it would appear that the accounts are not worth more than about 50 per cent, of their face-value?— Not on the face of it. 187. I would be correct in saying they are not good accounts?— That is so. 188. And it was not the good business that the directors contemplated taking over ?—I understand that is so. I did not suggest that they should take them over at 20s. in the pound. 189. If any of these accounts were good, other banks would take them up, would they not ?—■ Not necessarily. 190. Another bank would be in just as good a position to take them up as the Bank of New Zealand ?—Yes, if they got them at the same price as the Bank of New Zealand. 191. Looking at it from a Bank of New Zealand point of view, and not from a liquidator's point of view, supposing you were interested in the Bank of New Zealand, do you think it is advisable to load the Bank of New Zealand, with or without cover, with a large number of accounts that are in a precarious position, and which will require, as you say, nursing for a number of years ?—lt is a mere question of price. 192. Is it not better to confine the bank to clean, secure business ?—A great number of these accounts would be clean business if taken over at a reduction. 193. A number would be? Could you give us anything like the proportion ? —I could not quote figures without having the accounts before me. 194. When you agreed with Mr. Seddon that the bank might take over the "B " list, did you mean that they might take over all the accounts ?—Yes. 195. All of them, in globo ? —Yes. 196. And as to the cover, you suggest that they might take them over at the cover provided now ?—My suggestion is that they take each account separately and value it. 197. You are not suggesting that they should take them with the present cover? —I am not suggesting that. 198. Do you suggest that they should take them with a less cover ?—Yes. 199. They should be allowed to arrange what cover they should take ? —lt would be a matter of mutual arrangement * 45—1. 6.
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200. Do you know that some of the bank directors—l think it was Mr. Butt who said it—said that there was not £1,000 one way or the other ?—I saw that in the paper. 201. You do not agree with him?—l cannot say that. Mr. Butt may have some means of knowing ; but I do not know how any man can say that. 202. What proportion of the "B" list has been taken over by the bank, what closed, and realised, and what not dealt with ?—I cannot say that, as it means going into accounts. I could not make any estimate. 203. You could say whether anything like a quarter or a half was taken over?—l would not care to give a reply like that without going through the books. 204. Could you provide us with a statement ?—I have no means of doing that. 205. You did not bring your papers with you ? —I did not bring a list of the "B " accounts. 206. But you have to bring all papers relating to the order of reference ? —Yes. 207. Does not that relate to the order of reference? —I did not take it so. 208. Can you not by telegraph ascertain how far the accounts in the " B " list taken over by the Bank of New Zealand have been closed and realised and not been dealt with ?—As near as I can tell you there is not a great number of " B " accounts which have been taken over. 209. Can you give me anything like the proportion, because that might mean anything?— Roughly, I would not think it should be more than a dozen. 210. I was rather asking for a percentage of the total ? Mr. Cooper : The Bank of New Zealand decidedly objects to that information being given. The Chairman: Does the Bank of New Zealand object because it is disclosing private accounts ? Mr. Cooper : On the ground that it is impossible to give the details, as the accounts are in different stages of liquidation. 211. Mr. Montgomery.] As to these lists. Did you have anything to do with the preparation of them ?—Nothing whatever. 212. I suppose we may take it for granted that you will disclose nothing referring to them?—l could not give any information relating to private accounts. 213.. How many accounts are there in the " C " list? Mr. Cooper: On behalf of the Bank of New Zealand, I object to that question. The Chairman : I think the question is out of order. 214. Mr. Montgomery.] Have there been any writings-off in the "B " list ? The Chairman : You must specify the particular account. I rule that the general question is out of order. 215. Mr. Montgomery.] I will ask one question with regard to the appointment of Mr. Mackenzie. You have told us that he is a first-rate banker, and that as to his integrity there is no question. I ask whether he is not a good deal influenced by the President ?—I could not say. They are very friendly. 216. Do you consider he is a strong man ? —Physically ? 217. No, with force of character ?- —Yes. 218. Mr. Hutchison.] You have given us your opinion as a banker of twenty-two years' experience on the policy of the banking legislation : Do the twenty-two years embrace all the time that you were in any bank ?—Yes. 219. As a clerk, and so on ?—ln all grades.' 220. Then, the twenty-two years include a considerable time when you were only a clerk ?— Naturally. 221. How long were you a clerk out of the twenty-two years ? —I was asked that question, and gave my opinion for what it was worth. 222. You gave your experience as a banker. I ask you how many years of that time you were a clerk ?—Seven. 223. And your next position?— Accountant. 224. How many years were you an accountant ?—Five, perhaps—somewhere about five. 225. Seven and five are twelve. After that ?—Manager. 226. For how many years ? —Nine. 327. That makes twenty-one. And Inspector ?—One. 228. That is how you make up the twenty-two years ?—That is roughly. 229. You and your two co-liquidators made an affidavit which was filed in the Supreme Court in June last?— Yes, we filed several affidavits. 230. I refer to one in June last ? Hon. Mr. Seddon : I object to this question until the Committee know whether it is inside or outside the order of reference. 231. Mr. Hutchison.] I am going to ask you to listen to an extract from an affidavit which you and your co-liquidators made. Did you, as one of the three liquidators of the Colonial Bank, file an affidavit containing the following two paragraphs—first: that the J. G. Ward Farmers' Association, Limited Hon. Mr. Seddon : I object to this attempt to get on record newspaper extracts. The Chairman : I can only say again that the Committee is precluded from inquiring into the accounts of private persons or corporations unless writings-cff have been shown in evidence before this Committee. Witness after witness has sworn that there have been no writings-off in this account, and this witness has also sworn distinctly that there have been no writings-off. Therefore, I say the question is out of order, and I cannot admit newspaper extracts to be recorded here. 232. Mr. Hutchison.] As liquidator of the Colonial Bank you have custody of the documents and papers ?—As liquidator ? 233. Yes?— No. 234. What have you then as liquidator; have you no documents at all?— Only certain documents ; we have some.
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235. I assume you have not many here; but as liquidator of the Colonial Bank?—We have the share register, the transfer-books, the Board minute-book, and the seal of the bank. 236. While Inspector of the Colonial Bank, you were sent by the general manager to Invercargill to arrange as to a certain account, in June The Chairman : That is surely again going into private business. 237. Mr. Hutchison.] Do you know of a cable message which was received by the Colonial Bank in May or June last year, in reference to a credit which you afterwards arranged in Invercargill ? Hon. Mr. Seddon : I object. I say you cannot ask Mr. Vigers about a cable message received by the Colonial Bank. Mr. Cooper : These documents, if in existence at all, are the property of the Bank of New Zealand, and I, on behalf of the Bank of New Zealand, say you have no right to go into private matters connected with the bank. Mr. Hutchison : I am reading the text of a cablegram. The Chairman : I shall not allow questions to be read which are extracts from a paper.
Tuesday, 22nd September, 1896. William Downie Stewart, M.L.C., sworn and examined. Hon. Mr. Seddon : I would suggest that the Hon. Mr. Stewart make a statement in reference to the matters contained in our order of reference, as it would save time, and we can ask him questions afterwards. Hon. Mr. W. Downie Stewart: I suppose you refer to the last negotiations. Hon. Mr. Seddon : Yes. Hon. Mr. W. Downie Stewart: I may state that I was a director of the Colonial Bank for some four or five years before the bank was sold. Certain negotiations occurred in 1894 between the Bank of New Zealand and the Colonial Bank, but these ultimately lapsed. After the passing of the first Banking Act Amendment Act of 1895 negotiations were renewed for the purchase of the Colonial Bank. The Bank of New Zealand applied to have all the books and documents necessary to enable them to ascertain the exact position of the Colonial Bank placed before their officers. The general manager of the Colonial Bank was instructed to place all these books and documents before the Bank of New Zealand officers to enable them to ascertain the true position of the Colonial Bank, and he also gave, as far as I know, every information which he could give in reference to the Colonial Bank. The negotiations extended over some time, and we were anxious to sell the Colonial Bank as a going concern out and out. The Bank of New Zealand's representatives stated that, owing to the wording of the Act passed last session, they could not purchase under those terms. Finally the amount to be paid for goodwill was arrived at. Some of our directors wanted a much larger sum, but in the end £75,000 was agreed upon, and the terms of the agreement were ultimately arrived at. The Bank of New Zealand bought our business account by account, and they prepared, I believe, these lists—the " A," " B," " C," and "D" lists—with, I presume, the assistance of some of our officers. Ido not exactly know how they were arrived at. When these lists were prepared we entered into this agreement. I may state that we had nothing practically to do with the preparation of that first Act, and that clause-41, which placed the Colonial Bank under the provisions of '■' The Companies Act, 1882," has been a very unfortunate, unsatisfactory, and disastrous provision so far as the Colonial Bank is concerned. I should say that it has been a loss to the Colonial Bank shareholders of at least £50,000, and that it will continue to be a loss to us so long as the bank is under the provisions of that Act. This agreement was entered into in good faith with the Bank of New Zealand. We knew, of course, that they would have a large control over these "B" accounts, but we relied on the good faith of the Bank of New Zealand in seeing that they would take over these accounts and arrange to work them on satisfactory terms. I may say that lam not at all satisfied with the way in which the Bank of New Zealand has conducted the management of the "B" list, for they seem to treat the customers in the "B " list as practically enemies of the bank, instead of them being, as I consider, very valuable constituents. There is no doubt, from the manner in which the "B" list is being worked, that it will prove unsatisfactory to a large number of the Colonial Bank's customers, and also to the Bank of New Zealand. I think that a most suicidal policy has been adopted in many instances through the working-off these accounts, coupled with the attempt wdiich is being made by the Bank of New Zealand to charge interest on money which they have not paid. That is to say, supposing there is an account of £10,000 for which security has been retained to the extent of £5,000 : We have only got from the Bank of New Zealand £5,000 cash of that account, and they charge interest on the whole £10,000, instead of on the £5,000. The proposal seems to me to be a perfect outrage; but I believe that has been attempted, and that they will succeed I cannot believe. If they do succeed, I am quite satisfied that it will be a bad business, because they will lose far more than the interest. Under this system, instead of having separated the amounts of what they have paid us, they have charged us interest on the total amount of the customer's account, although we have not got the whole of the money. In some instances it comes to a charge of 15 and 20 per cent., and sometimes to 30 per cent. The great difficulty with regard to bringing us under this Companies Act is that customers make no effort, unless they can pay 20s. in the pound absolutely, to come to terms with the bank. They simply say, "We may as well go through the Court as have all our affairs disclosed on affidavit in the Supreme Court " ; and that has deterred to a very great extent either the customers or their friends stepping forward and arranging their accounts. It is perfectly well known that a bank will not take over an account simply because it is solvent. Every one of the accounts in the " B " list might be worth 20s. in the pound, but the bank will not take over the account, though absolutely liquid, simply because it is solvent. The customer must have a margin
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of 30 or 40 per cent. It does not follow, because a man is solvent, that a bank will take over his account, and the bank of New Zealand will not take him over except on terms, simply because they do not want to run his business at their own risk. Moreover, if you liquidate any business, although it may be perfectly solvent, a shrinkage amounting to 20 per cent., and in some instances to 50 per cent., of the assets may arise. If a man is driven into liquidation, which practically means bankruptcy, his estate, which under proper management and working would probably work out to 20s. in the pound, will not pay more than 7s. or 10s. in the pound. It was not foreseen at the time the Banking Act was passed that its effect would be practically to set aside our deed of settlement. When the bank went into liquidation its affairs had to be wound up ; that is, the directors had to realise all the assets, and the proceeds of the assets were to be divided among the shareholders. The Judge of the Supreme Court had, no doubt, power to appoint some of the directors as liquidators of tbe bank. But that has not been done in this instance, although our principal inspector was appointed one of the liquidators. Ido not know what further information is required from me. 1. Hon. Mr. Seddon.] You have been a director of the Colonial Bank for five years?— Yes, four or five years ; I forget the exact time. 2. When, to your knowledge, were the first proposals mentioned in respect to the amalgamation or purchase of the Colonial Bank with the Bank of New Zealand?— Some time towards the end of 1894. I am not quite certain as to the month, but about the time the Government came to the assistance of the Bank of New Zealand, as far as I can recollect. 3. Of your own knowledge, you are not aware that there had been an approachment some time previously to this ?—No. When I came to know of these negotiations I opposed them very strongly, simply because I did not know the position of the Bank of New Zealand, and I declined to entertain the question of amalgamation with an unknown quantity. 4. That refers to 1894 ?—Yes. 5. Do you remember the accounts of the Colonial Bank being overhauled by Mr. Butt, the Government Auditor of the Bank of New Zealand? —I do not know absolutely that he examined them, but they were overhauled by officers of the Bank of New Zealand. Ido not know what part Mr. Butt took in the examination of the accounts. I know he took an active part in the preparation of the agreement. 6. You said the purchase took place on the basis of account by account being gone into and decided upon?— Yes. 7. When was the last balance-sheet published by the directors of the Colonial Bank prior to the negotiations for purchase ?—-It would be up to the end of February, 1895. I mean the one prior to the purchase negotiations. 8. There was one on the 25th August?— There was one up to the 31st August, and that was not issued until some time in September—the 25th September, apparently. 9. Then, the balance-sheet upon which the basis for purchase was arranged would be the balance-sheet of 28th February ? —I am not prepared to say that. The balance-sheet up to the 31st August was the one that was referred to in the agreement. I do not know what effect the one issued in February had. 10. Then, although that balance-sheet was given by the bank in September, it was practically the balance-sheet at the time the agreement was made ?—Yes. 11. Does the position of the Colonial Bank as ascertained during the negotiations and that balance-sheet vary to any considerable extent ? —I do not think so. The Bank of New Zealand knew, I fancy, probably quite as much about the position of the bank as any of us knew at the time the sale took place. 12. The Bank of New Zealand, in reference to these accounts which you say were settled upon account by account, took cover for no less than £327,000? —Yes; I presume they took it upon a liquidation basis, which, even assuming these accounts to be solvent, I suppose they thought there would be a considerable shrinkage. Ido not know exactly what influenced them. 13. Were you present at the negotiations ?—I was present at two or three meetings. 14. Were you present when the Colonial Bank agreed to give cover to the extent of £327,000 ? —Yes, I believe I was. Ido not know that it was specifically put in that way. They prepared these different lists, and these " B " and " C " lists showed the cover they wanted, and we did not object to it because we relied upon the good faith of the Bank of New Zealand in working out these accounts, and we could not see that we should suffer more than by their absolute sale, which I should personally have preferred very much. 15. Did you concur, then, in the views of the officers of the Bank of New Zealand when they demanded this cover for these accounts? —I thought they were very extravagant in their demand in regard to the cover, but we believed it would be only a question of a comparatively short time When the whole matter would be brought to a close. It did not seem to us that anything practically hurtful to our bank would take place if these accounts were worked and nursed in a businesslike way, instead of being allowed to drag on in the way they have since been, except, perhaps, a few. 16. You, as a director of the Colonial Bank, assumed that, and said: "You can take this cover, and we shall get it back by-and-by "?—I expected to get a considerable sum back. Ido not know anything about the working of these accounts during the last few months, except that I know there has been a general growl all round. 17. Do you think the officers of the Bank of New Zealand, after what you state, are trying to make the accounts work out so as to prove that they were right in the amount they took for cover ? —I am sorry to say that I have a conviction that such is the case. I heard of an offer by a party to settle his account for which security was held, and I understand that one officer said, " We had better take the amount unsecured, quite irrespective of the merits of the case." 18. That was refused ?—I understand so.
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19. As things are going on it means a heavy loss to the shareholders of the Colonial Bank ?— It means a heavy loss to the shareholders of the Colonial Bank, and a wrecking of the accounts in the "B " list; and also a loss to the Bank of New Zealand, because not only do they drive away a good many customers, but they are alienating many of the customers' friends. It means that part of the money they paid for good-will will be practically lost. I am satisfied that the "B " list, if worked in this disastrous way, will be a loss to all concerned. If I had understood the way in which the " B " list was to be worked I never would have consented to sell a stick of the Colonial Bank property. 20. Who is responsible for the clause in the Bill causing the Colonial Bank to be liquidated under the Companies Act ?—lt was prepared by the Bank of New Zealand's solicitor, Mr. Hosking, and I understand that his explanation is that he did not wish it to appear what bank it was intended to buy. The National Bank or the Colonial Bank might be bought. He thought that the constitutions of these banks were different, and that it would be better to apply the Companies Act. The National Bank is an English bank : but the clause was inserted entirely at the instance of the Bank of New Zealand's solicitor. 21. Did you, as a director, or any of your directors, during the negotiations object to this ? You had the Bill before you ? —I personally really took no part in it. I made a suggestion with regard to the first Bill, but it was disregarded, and I took no further interest in the Bill. The particular bearing of this section 41 was not foreseen at the time the agreement was entered into, or at the time the second Bill was passed in 1895. The fact was that at this time we had either to accept the Act or leave it alone, and in any case the unsatisfactory working of this Act, in having to go before the Judge on every occasion, was not foreseen. 22. As the result of the legislation, and the colony coming to the rescue of the Bank of New Zealand, the Colonial Bank from the first was prejudiced?— Very seriously. In the first place, we were taxed out of all fairness. The Colonial Bank paid more taxation than any other bank, and superadded to that, of course, there was the crisis in Australia; but when the Government came to the assistance of the Bank of New Zealand in 1894 it further injured the Colonial Bank, and caused a feeling of distrust and want of confidence generally on the part of every one in the colony in respect to banks. 23. What remedy do you suggest for the present unsatisfactory state of things ?—I think the bank should be placed under its own deed of settlement, and wound up under that deed with all its powers. It ought never to have been brought under the Companies Act. The deed of settlement provides that the directors may wind it up, but I do not see how that can be done as the liquidators are now appointed. Powers should be given to the directors of the Bank of New Zealand and the liquidators of the Colonial Bank to come to such a modification of this agreement for sale as may be in the best interests of all parties. I understand that the directors of the Bank of New Zealand, feel hampered, and that the liquidators consider that this agreement is of too cast-iron a character to meet particular exigencies from time to time. I think it would be very much better if they had a free hand to go to the liquidators and arrange that the directors shall work out the agreement in a manner which both parties consider to be in the best interests of all the parties. I think the sooner the liquidation is brought to a close the better, as it will be in the interests of all the parties, because the expenses will be out of all proportion to what is necessary. Mr. Vigers estimated the expenses at £7,000 a year. I reckon them at £10,000 a year, and nearly all that could be saved if a fair and equitable understanding could be come to between the directors of the Bank of New Zealand and the liquidators, so as to close up this liquidation with ail convenient speed. 24. Then, I understand from what you now say in regard to the agreement and legislation that it would have been very different if the bank had been liquidated by the bank itself ?—I am satisfied it would have been very different, as far as the shareholders are concerned. 25. In other words, if you had that time to go over again, you would not sell? —Not with the knowledge I have now of the way in which things have turned out and have been managed. I never would have consented to the sale. It was believed by us that a very much better condition of things would have resulted from the sale than the prospect justifies us in hoping for now. 26. You received £75,000 for the good-will of the Colonial Bank. What was the sum first demanded? —The sums varied. One of our directors wanted £150,000, and two or three wanted £100,000. The general feeling was that we should get £100,000. 27. What were the profits of the Colonial Bank?— Well, over £30,000 per annum. 28. You have received £125,000 for the buildings and premises ?—Yes. 29. That was the book-value of the properties and Colonial Bank premises ?—Yes. 30. Taken under that head by itself, you sold the bank properties and premises very well to get the book-value for them ? —That is a matter of opinion. I think the property in Dunedin is one of the best stands, and is really worth more than we got for it. I have no personal knowledge of some of the other properties in the colony. Speaking generally, I have seen some of them. Some of the properties, as far as my recollection goes, are worth more than what we got for them under this balance-sheet. 31. Then, although you received from the landed property and bank premises and the good-will £200,000, you think the Bank of New Zealand got the best of the bargain ?—I think they got a very good bargain, but it would have been a very fair bargain for us if the result had come out as we expected; that is to say, if our anticipations had been anything like realised I should have regarded the sale as in the interests of the shareholders. 32. Who were your principal officers in the Colonial Bank at the time of the sale ?—Mr. Henry Mackenzie was general manager, and Mr. Vigers was chief inspector. There were, I think, two other assistant-inspectors with the general staff throughout the colony. 33. You say you were five years a Colonial Bank director; and, as we have to inquire into the conduct and fitness of the officers, I now ask you what is your opinion of Mr. Henry Mackenzie as general manager, and as to his capacity, fitness, and integrity ? — Mr. Mackenzie is a man of
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considerable experience. I should put him down as a first-class banker. He knows all the ramifications of finance and banking business generally in a very complete way. He has had considerable experience. He is a man of the highest integrity. As far as I can judge, I should sa,y he is a thoroughly honourable man. 34. Although you found the position of the Colonial Bank (of which he was the chief manager), gauged by the present position and outlook, in that there is above £400,000 lost or gone or strayed away, you still think the chief officer was not responsible, and that is a satisfactory state of things ?— Of course, there are various causes which contribute to a result of that sort. If the bank could have been carried on by writing down its securities and some of the accounts I do not think the outlook would have been anything like what it is now with regard to the prospect of loss. 35. You think it is by the legislation and the results of that legislation that the losses you have mentioned have been occasioned, and not by bad management?—l think it is chiefly through the legislation and the terms of sale, and the manner in which the liquidation has been carried out. 36. And if provision had been given to nurse the accounts in the "B " list there would be a much better result ? —I do not think any nursing will be satisfactory under the dual management. The Bank of New Zealand will not take any responsibility in regard to these " B" accounts. Looking at the matter in the light of the practical working of this agreement, I am satisfied that they will never be satisfactorily worked under the dual management. The Bank of New Zealand officials keep, of course, within the letter of the agreement, and any slight responsibility they want to throw on the liquidators; but the liquidators do not want to assume any responsibility, because they have no direct control over the management. Practically, matters are brought to a standstill, and the result is very unsatisfactory to the customers. I felt quite satisfied that many of these accounts, if handled by one mind, would work out to a very satisfactory result, as compared with the dual management which exists now. 37. You know Mr. Willam Watson, now President of the Bank of New Zealand? —Yes, I know him pretty well. 38. He was chief inspector for the Colonial Bank?— Yes, for some three or four years when I was there. 39. I will put the same question to you with respect to him as I did in respect to Mr. Mackenzie, as to his fitness, capacity, and integrity ?—Yes ; I do not suppose you will find any one in the colony better qualified than Mr. Watson to investigate an account, and to ascertain the true position of it, and he is a man of thorough integrity, as far as I know. 40. It has been stated here that Mr. Watson by himself is a very good officer, and that Mr. Mackenzie by himself is a very good officer ; but in the case of Mr. Mackenzie, as they stood formerly—Mr. Watson being junior and Mr. Mackenzie the senior officer —it was a case of the tail wagging the dog—Mr. Watson dominates and Mr. Mackenzie gives way. What is your experience ?— I have never been brought directly in contact with them when there has been any difference of opinion, but Mr. Mackenzie knows very well what he is about, and I think he is quite competent to exercise his own judgment in matters which come before him. 41. You did not think when Mr. Mackenzie was general manager that it was Mr. Watson who was general manager ?—No ; Mr. Watson was a very active inspector, and he is a man of an active turn of mind generally; but internal matters between them did not come directly before us ; but I should not think Mr. Mackenzie would allow himself to be unduly influenced. 42. Touching the second Banking Bill of 1895 : We have had evidence here given that that Bill as first mooted was drafted by the Bank of New Zealand and handed to the Premier, and by him to the law draftsman. Do you know anything about it ?—I know nothing beyond this : When this agreement was placed on the table of the House on the 18th October exception was taken by one or two members that the lists did not accompany the agreement,, and the question arose then whether the Act had been complied with as to the contract being laid on the table of the House in the absence of the lists. I had a conversation with Mr. Button about two days after the contract was laid on the table of the House, and we discussed the matter generally, and we thought there was room for doubt, and necessity for an Act to remove the doubt. Mr. Button prepared a Bill or draft to a certain extent, and I was anxious to save the Colonial Bank from any proceedings in case cheques were presented to the Colonial Bank and the customer had funds at his credit and his cheques were dishonoured. I suggested to Mr. Button that a clause should be inserted protecting the Colonial Bank, and providing that the cheques should be presented to the Bank of New Zealand, in the place where cheques or bills were payable. I may state that I asked the chairman of the Colonial Bank to telegraph to the general manager, who was then in Dunedin, to submit the agreement to Mr. Haggitt, and ask whether he was satisfied with it, or whether he had any suggestions to make ; and the general manager telegraphed back that Mr. Haggitt was satisfied with the agreement, but thought some provision should be made whereby the lists should not be producible before any shareholder if he chose to demand an inspection of them. I discussed this telegram with Dr. Fitchett, the draftsman, and I do not know whether be acted on the suggestion or not. But the second Bill is the joint result of Mr. Button's labours and Dr. Fitchett's, coupled probably with the suggestion that I made. I had nothing to do with the preparation of the Act directly, except, as I say, discussing it with Mr. Button and Dr. Fitchett. After it had been submitted to me, I suggested one or two amendments in it, which he agreed to. The second last clause of it, as to placing the Colonial Bank under the Auditor as a banking business, I objected to; but he pointed out to me that it was necessary in the interests of the colony that it should be done, and I did not oppose it further. 43. And that Act was absolutely essential and necessary to remove difficulties of a technical character that arose under the provisions of the legislation and agreement itself, and to render what had been done workable ?—Yes, it was so considered. 44. If it has been stated that the legislation was to favour any particular client of either bank, would that statement be correct or otherwise ? —lt would be undoubtedly incorrect, as far as I know,
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because there was nothing passing in the minds of any of us at the time leading in that direction. It was purely to remove what were looked upon as technical difficulties, and also to prevent the production of these lists, which could not, of course, in the interests of the Bank of New Zealand or the Colonial Bank, be made public, because if people came to know it would affect the results. I know there was one customer who wrote to ask what list he was put in, and when he came to know that he was in the "D " list he thought less should be accepted than he owed because they had formed such a bad opinion of him. He offered some £1,500 less than his debt, and the manager was directed to make him pay up. 45. Did the Colonial Bank give notice to any of its customers as to what list they were put in ?—No. There was a good deal of speculation amongst the customers as to what list they were in, and some may not know yet. 46. Do you think it was fair to keep them in doubt ?—Well, the difficulty was this : that if you told them they were in the " B " list some would be inclined to make friends with their other creditors, and when the bank came to press they would go into the Court. Some would leave the bank to get the money the best way it could rather than make any effort, by their friends or otherwise, to pay up. lam not prepared to say precisely what effect it had on the customers. 47. Still, without your own knowledge, to be put in a position of that kind is a disadvantage ?—He has only to pay 20s. in the pound and remove his account right away. My experience is that in this colony there are very few business-men who are able to give a cheque for exactly what they owe on a day's notice. 48. We have had Mr. Watson, Mr. Booth, Mr. Macarthy, Mr. Butt, and Mr. Vigers upon oath, and all have sworn that there have been no writings-off in respect of the J. G. Ward Farmers' Association, or of Mr. J. G. Ward, by the Colonial Bank?— Certainly there has been no writing-off. On the contrary, we have endeavoured to get every sixpence we could out of that account. 49. As far as you know, were the representations made by the selling bank fairly accurate ?—I think so. There is nothing connected with the Colonial Bank, as far as lam concerned, that need not be published on the housetops. I repudiate any suggestion that I, as a director, have been a party to anything which I am ashamed to mention publicly in every paper in the colony. The instructions to the general manager of the Colonial Bank were simply that he was to give whatever information in his judgment would be necessary to enable the Bank of New Zealand to get a thorough knowledge of the business of the Colonial Bank, and to give every information they wanted. I believe they went into the whole matter very exhaustively, and formed their own opinion as to the business generally. 50. Was the agreement come to as between yourselves and the directors of the Bank of New Zealand without reference or interference in any way by the Government ?—There was no interference or reference on the part of the Government except upon one point, with regard to the furniture, on which we could not agree, and you were called upon to act as arbitrator. Beyond that I am not aware of any interference whatever. The question of the furniture and the London business were matters which we could not agree upon for a time. 51. As far as I was concerned, the furniture was the only matter I had anything to do with?— That, I think, is strictly correct. Our accounts were closed in London as at 31st May, and the balance-sheet here was the 31st August. There was a loss on the London business, which was purely a deposit and exchange business. There was a slight loss on that—indeed, always a loss on the London business—and that was set off in the agreement against the nominal value of the furniture, which was fixed at £6,250. I think that was the question you had to decide. The Bank of New Zealand did not want to take the furniture, and we did not wish to have it left on our hands, and you assessed it. 52. But there was no agreement at that time? I was not shown any agreement at that time. The question was only about the furniture ?—Quite so. We could not agree about the furniture. We came to a standstill for the time being, and it was decided to refer the matter to you, and I think you heard what the parties had to state. Of course, the furniture might not have been worth the book-value to the Bank of New Zealand, but we did not want it, and the question was what was to be done with it. 53. At any rate, the Government were not consulted as to the lists or accounts or anything of that sort?— Certainly not. 54. Mr. Montgomery.] You thought the cover was too much in the "B" list?— Yes, very considerably. 55.. How much ?—Well, I had not gone into the matter; but it struck me that, as we were not consenting to that being written off in any way, and that the amount they were wanting was too much even approximately of what the actual amount should be. 56. W T ould £200,000 be a sufficient cover, as a going concern, for these accounts? —As security, I should think very much less. I should think £130,000 to £150,000 would have been ample cover. 57. lam speaking of the "B " and "C " accounts?— Yes. 58. And the " D " list, what were they? —Some were perfectly good accounts, but, in banking parlance, they were inoperative accounts. 59. What were they worth for cash ? —I am not prepared to say on a liquidation. 60. Were they worth £50,000 ? —I should think so, but lam not prepared to say. There are certain securities there which may turn out well, and others which may not. 61. Do you think, yourself, from your knowledge, that £50,000 would be about their value?— I would not say. I have examined the "D " list generally, but I clo not know the value of the securities held there. 62. You would not say they were worth £100,000. lam not prepared to express any opinion as to the actual value of the "D " list. Many of these securities practically belong to the bank, and, if they realise more than their nominal value, the bank would get the benefit of them.
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63. Will you take the balance-sheet of the Colonial Bank as at 31st August, 1895 ?—Yes, t have it. 64. Have you noticed that the sum of £1,731,589 Bs. 7d., which is put down under the head "Bills discounted and all other debts due to the bank," is the exact total of the " A," "B," " C," and "D " lists ?—Well, probably so. I never studied it from that point of view before. 65. Have you any doubt of it?—l have no reason to doubt. 66. That is to say, in the Colonial Bank balance-sheet of the 31st August, 1895, every one of these assets —every permy —were put down as good?— Yes ; estimated to be so. 67. And you yourself said just now that the " B " and " C " lists would require £150,000? — That is on a liquidating basis. But, as a going concern, Ido not know what would be required. Some customers might not be able to pay their accounts, and might have to go into liquidation, and in a matter of that sort it would be provided for. 68. Are you prepared to say, as a logical conclusion, that the accounts in the " B " and " C " and "D" lists were good assets for the full amount?—lt is impossible to say what they would realise on realisation. For instance, plenty of these properties you could not state, short of realisation, what they would bring. The property might be worth £10,000, but not realise more than £7,000 or £8,000 if put to the hammer. I know that securities which have been looked upon as absolutely good up to the last moment, when a sale has been brought about have turned out very unsatisfactory. 69. In signing the agreement you practically stated that all the accounts were good ? —Good, as far as was known with the information disclosed. 70. Then, you had no reason to suppose that all these accounts were otherwise than perfectly good —every penny ? —Of course, this balance-sheet was brought up on the report of the manager. I did not know the particulars of the accounts. You have to rely on the officers. The balancesheet is brought up on his reports, and I did not go over the colony to see whether a tin of kerosene was in this store, or a bag of sugar in that. I say upon the reports of our responsible officers that balance-sheet was treated as correct. 71. You put the responsibility on the officers. Do you think the directors have no responsibility ?—We have responsibility to say how we shall manage generally the bank ; but I do not consider it the duty of a director to run all over the colony to see what the managers and inspectors are doing, and to see that every customer's goods are in his store. 72. Would the directors have knowledge of, say, Ryley's Account?—We would not have knowledge of the details of it. 73. About how it is managed—l am not asking anything about the account, but I want to know if the directors themselves knew how it was managed ?—We had no knowledge of the details in the working of an account of that kind. We left all that to our managers, to see that the customer was keeping good faith. I did not go into individual accounts. If a man chooses to be guilty of fraud I do not look upon myself as a director as responsible for that fraud. 74. The General Manager would be responsible in a particular way? —Only in a general way. He could not go into details. 75. Who would be responsible, then ?—The local manager of the bank, coupled with the inspector, who makes a periodical inspection. 76. As a matter of fact, if these balance-sheets had been correct, is it not very curious that the shares of the Colonial Bank should be down to something about half their value ?—No ; it is very curious they were not down further in some respects, because for some time back they were selling for over par, but there was a sudden drop in them after the panic in Australia took place, and every one was afraid of a call, and did not know what contingencies would be brought about. And that was one of the reasons which ultimately induced me to agree to the sale of the bank. The shareholders said, " We have a certain amount of money in the bank, and we are prepared to lose that, but not to pay a call" ; and we would have to say whether we would avert a call. 77. A call was almost probable ?—No, I will not say probable. A bank is like any other trading concern, and if a shareholder goes into it he goes into a trading concern, and takes a risk. 78. There was a good deal of suspicion about the position of the bank?—l suppose there was suspicion about every bank in the colony at that time. 79. I would like to call your attention to the chairman's address at the meeting of the Colonial Bank shareholders on the 27th March, 1895 : " As far as I can see, there is not the slightest necessity for a call at the present moment. I never dreamt that any one looking at the balance-sheet would think of such a thing " ?—Yes ; at the time we had more money than we could use. There was keen competition about the letting out of money at that time, but we had more than we could utilise. 80. Do you think that gives a good idea of the general position of the bank ?—I do not know what you refer to. 81. I mean the properties and accounts? —Well, a man may have a good operative account, which may be kept on as a going concern, and pay up to 20s. in the pound, but put into liquidation it would not be worth 10s. 82. Some one has to make an estimate of the value of the accounts?—Of course, you can make an estimate of the value of an account, but when a man has five hundred different customers owing him money his position is dependent upon those who owe him that money. 83. But you have to make an estimate somehow ?—You have to make an estimate of the general position of the customer, but I do not know that any one can go into these matters with mathematical accuracy. 84. Had there been any writings-off of debts in the Colonial Bank for previous years ?—Yes ; liberal provision had been made every year for bad and doubtful debts. Of course, as I say, a bank is a trading concern. If you lend no money there will be no loss, but if you go into competition as a trading concern losses are inseparable. Directors do not guarantee against losses.
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85. You have paid dividends for the last fourteen years, have you not ?—I think they passed their dividend once or twice. I have been a shareholder of the bank from its very foundation, and I increased my holding of shares within fifteen months or so before the bank was sold, and one of the directors is the third largest shareholder. 86. Seven per cent, dividends have been paid?— Yes; the shareholders have had a very substantial return in the shape of dividends. 87. You have a more accurate knowledge of the accounts now than you had before the purchase ?—Possibly so. We have discovered frauds in two or three cases. 88. How do the accounts stand now ?—I absolutely know nothing about them now, because they are in a state of chaos. 89. Some have come before the Court ?—Yes, and some should not have come before the Court. 90. But you know more about them now than you did before ?—Perhaps I do. I knew the general position of the accounts before the bank was sold. 91. Individual accounts ? —I do not say individual accounts, but I knew the general business accounts. Of course, there are many of these accounts which if you allow them to go on without nursing will go to the bad; and if you do not pay attention to a customer for a week or a fortnight his account may go bad very rapidly. 92. From your knowledge of the accounts, do you think the directors were justified in paying dividends year after year?— Yes, certainly. What I say is this: At the time the dividends were declared we honestly believed them to have been earned. There was nothing which came to my knowledge which would lead me to alter my opinion in that respect. 93. I see that the landed property and bank premises were kept at book-value in the books of the bank ?—I suppose so. Ido not know what the property-tax values were. 94. Was it not £109,000 ? Did not the officers of the bank inform you of that ?—I do not think so. I have no direct knowledge of what the property-tax was. 95. Did you, or did you not, know that the properties were overvalued in the balance-sheet ?— lam not aware that a single property has been overvalued one penny ; and as far as the Dunedin property' was' concerned, it was worth more. But any one will see that it is impossible to raise and lower the value of property, because there is no absolute valuation until sale. A property may be worth £20,000 and might only bring £15,000. There is no absolute test short of a sale, or some negotiations. Many people have been under the impression that they have been very wealthy on account of their property, but when it has been realised they have found that instead of being wealthy they have been in debt. 96. I only ask you whether you, as one of the directors, thought the properties worth the money ? —I can only tell you this : that I had no reason to doubt the values of these properties. 97. Well, in making the agreement for the purchase, did you not estimate that the Bank of New Zealand would lose considerably in selling these properties?—No, I did not know. If they sell them wisely, I think they ought to make a profit over the Dunedin property. 98. Do you not think the realisations hitherto have been between 30 and 40 per cent, under book-values ?—I do not know of any absolute sale. I know that properties in the centre of Dunedin have realised more than was considered their value, and properties in the country have only realised half of what was considered their value. There is no absolute test of the value of property short of realisation. I know a property in Canterbury which cost £7 or £8 an acre. I had to sell it for a company lam connected with, for about £2 15s. an acre. It was put down in the books of the company at £5 or £6 an acre. 99. Do you know the property at Lawrence ?—I have seen it, but I cannot speak of its value or area. 100. It was put down at £2,559 in the Colonial Bank's books, and has since realised £1,009, a good deal less than half?— You must bear in mind that Lawrence is not a place where there is much demand for such property. 101. Do you know the Wanganui Bank premises ? —I was up there some time ago, and I could not locate the place, and could not get any one to show it to me. 102. Do you know a Marton property which was valued at £265 and has since been sold for £25 ? Do you know anything of that? —No ; I never heard of it before. 103. This is Exhibit No. 22, handed in by Mr. Booth. Do you know of a property at Normanby, valued at £69 and since sold for £3 ? —I do not know that particular property, but there is no demand for land in that district at the present time. Everybody is looking forward to a considerable rise in the value of land, and that land will be very valuable there by-and-by, but that by-and-by has not come yet. 104. You have told us, I think, that you do not think the Bank of New Zealand would be paying too much for the bank premises ?—I did not have any knowledge of the premises outside Dunedin, Oamaru, Christchurch, and Wellington. Outside of these places I had no knowledge of the property held, or anything about it, in fact. 105. Were you present at the negotiations between the two banks concerning the good-will?— Yes, I think I was present at every meeting which was held. 106 Was it not stated by some of the directors of the Bank of New Zealand that they knew they were paying too much for the bank premises ?—I think some of the directors stated that they Were giving more for the bank premises than they would realise, or were worth to them. 107. Was it not stated at £30,000 or £35,000? —I do not know that any amount was stated. Of course, they do not require all these places. I think there need be no very serious loss on these properties, if loss at all, if properly managed. Of course, there is no demand for a bank or bank premises every day in the week if they have to put them up for that particular purpose. If you want to convert them into a store you have to alter the buildings. 108. Did you have the premises taken into valuation ?—I suppose the Bank of New Zealand was satisfied at their values in the books. * 46—1. 6.
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109. You know it was said it was too much?— Some said it was too much, and it was said by some, " We are giving more for the premises than we consider they are worth" ; but, at all events, we stipulated that they were to get them for what they were on the books. 110. In the previous agreement, in 1894, it was proposed to get them valued?— That was a different agreement, and the Bank of New Zealand's was also to be valued. It was a case of partnership we were going to enter into with an unknown party, and I did not care about it. 111. Would the Colonial Bank agree to a valuation in 1895 ?—That point was never discussed. It was agreed that they should take them for what they stood in the books. 112. Did not the Colonial Bank insist that they should be taken at that price?— Yes. It is just possible that the valuation might have come out against the Bank of New Zealand in some respects, and in their favour in others. 113. With regard to the " B " list and the form of the liquidation, your suggestion is that the bank should be liquidated as in a voluntary liquidation, as provided by the deed of settlement? —Yes. 114. And not under the direction of the Court ? —Quite so. 115. Am I right in saying that practically the difference in a voluntary liquidation is that the liquidators have power to accept a compromise as they think fit, and to nurse an account some time longer ? There need not be any going into Court ?—I do not see how you can go into such a liquidation except by statute now. 116. Is it practicable for us now to amend the Act to change this into another form of liquidation ?—Certainly. 117. How do you suggest it should be done ?—Simply by stating that the liquidators shall wind up the bank under the provisions of the deed of settlement, which would entail upon them the realisation of the assets, and they would have the same powers as the directors to realise —in fact, power to do anything under the sun almost in the interests of the shareholders. 118. If we gave them specific powers it would come to the same thing ?—I do not see how you well could without the deed of settlement. 119. Would you draw up a clause to submit to us at the next meeting ?—I do not know that there is much to draw up. All you have to state is that the liquidators shall liquidate the bank under the deed of settlement and have all the powers of the directors. I do not see that any elaborate code for this particular winding-up is necessary. Both the Bank of New Zealand and the liquidators should have full power to modify this agreement in the interests of all parties, by mutual consent, of course. 120. Would it benefit the Bank of New Zealand in any way ?—I think it would benefit the Bank of New Zealand if they had power to secure permanently those customers now in the " B " list. 121. How could they do that unless there was a change as to the cover?— That is a matter of arrangement. Each account would have to be considered. Take an instance : The liquidators might say to the Bank of New Zealand directors, "Here is an account for £5,000; are you prepared to take it " ? If they were, the liquidators would say, "On what terms " ? 122. There is no power for the Bank of New Zealand to take over the accounts with the cover ? —No. 123. And it is desirable, you consider, that in the case of specific accounts there should be power to take them over with an agreed cover? —Yes, with any modified cover; quite so. 124. Have you any other suggestions to make if we are going to have amending legislation?— No ; I have full confidence in the two bodies that they should have ample power to arrange these things and bring them to a close. As I say, this dragging along interminably of the proceedings is against the interests of all the parties concerned, and I think ample power should be given to the parties to modify them. 125. Without the consent of the Government ?—I think the Bank of New Zealand fairly represents the Government. I think the directorate is fairly representative of the Government, with its President and his veto. It is not as if millions were at stake. The whole of the B list could be settled in a fortnight if properly gone about. I have no doubt that if it was left to the Premier he could settle it in a week to the satisfaction of all parties. It is a very simple thing.
Wednesday, 23rd September, 1896. Examination of Hon. W. Downie Stewart, M.L.C., continued. 1. Mr. Tanner.] In your opinion, has ample facility been given to the Colonial Bank liquidators to liquidate the accounts of the bank in a manner satisfactory to the shareholders?— Well, the liquidators do not liquidate the "B " list. That has to be liquidated by the Bank of New Zealand, under the supervision of the liquidators. Of course, as I explained yesterday, the terms of that agreement were somewhat awkward, because the Bank of New Zealand will not take any responsibility in connection with the working of those accounts outside the strict meaning of the agreement, and the liquidators will not take any responsibility, because they do not wish to create any liability ; and the result of the winding up is very unsatisfactory for that reason. 2. Late shareholders of the Colonial Bank have complained to me that their interests have been largely sacrificed by the arrangements which have been entered into. Are you of opinion that that is correct ?—Well, the arrangement entered into was ratified by an enormous majority of the shareholders of the bank. 3. In that case, it is the complaint of a minority?—-Well, I do not know those gentlemen, and whether they were opposed to the ratification of the agreement or not. As I say, the winding up is not satisfactory, and I have just as much reason to complain as those who bought in lately, because they will not suffer so much, as they bought in at less than par value of the shares, while those who bought before paid more.
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4. Does that dissatisfaction arise from the manner in which the winding up is conducted, or is it in consequence of any development taking.place which they had not anticipated?—l cannot say what their expectations were. There have been unforseen developments, I have no doubt. 5. You have already made suggestions for further legislation in connection with this, have you not ?—Yes. 6. Hon. Mr. J. McKenzie.] With regard to the cover that the directors of the Colonial Bank gave the Bank of New Zealand in connection with the accounts in the "B " list. lam not going to ask you about any special account, but will put a supposititious case to you. Supposing there is £30,000 in an account, and you have given cover to £10,000 on that: Is that cover in ca,sh in the Bank of New Zealand?—lt has not been paid to us, and they retain the £10,000. 7. Do they charge interest on that £10,000? —They want to do so. I think it is a perfect outrage, but they propose to do that if they can. As I explained yesterday, it will not be a gain to them in the end if they succeed in this. 8. Suppose a client is able to pay the interest: is this not asked for ?—They ought only to charge us interest on the difference between the amount of the account and what they have not paid us for that account. What they want to do is to eat up all this reserve by charging interest, and then we should only get interest at the bank rate on the surplus, and perhaps there would be no surplus. In some instances the interest might amount to 20 or 30 per cent. 9. You do not mean to say that they are charging 20 or 30 per cent, in interest ?—lt w r ould amount to that in some cases. 10. Are you aware that there is a good deal of dissatisfaction expressed among the old clients of the bank who are in the "B " list ?—I do not know at present absolutely what list they are in; but I know the agreement is not being worked out satisfactorily to anybody. 11. Are you aware that some of the clients have found out that they are in the " B " list, and have guessed it from the action of the Bank of New Zealand towards them ? —I cannot speak from my own individual knowledge as to that; but I have no doubt some do know very well what list they are in. 12. Mr. Maslin.] In respect to the Bank of New Zealand charging interest on the gross amount of the accounts remaining in the "B " list: Was it not contemplated, when the agreement was entered into, that the bank would charge interest on the debit balances of the separate accounts?— They may charge the customers with that, but not charge interest to us on money of our own on hand. 13. In the good-will, did they contemplate paying an equivalent in cash for the whole of the accounts purchased ?—The agreement says they are not to be paid cash at once. 14. If they were to allow a rebate of interest on these separate accounts, it would be tantamount to paying you cash ?—They should only charge interest, I take it, on cash that would be paid to us, and whatever is not required in the right-hand column of the list; of course, we should get interest upon that from the time it was retained. 15. But when you entered into the agreement you never contemplated cash ; these accounts were to be held in the " B " list ?—But supposing the cover is not wanted at all, we would have to pay interest, and get nothing in return but bank deposit interest. 16. I suppose you would get the amount refunded to you without interest ?—With interest. Paragraph 15 of the agreement says, "An equitable adjustment shall be made of the interest due and to be allowed to the selling bank on any amount standing in the said right-hand column of the said " B " list which may ultimately be found to be in excess of the amount necessary for securing the debts mentioned in the said " B " list, and the rate of such interest shall be based on the current rates of interest for fixed deposits for twelve months paid by the purchasing bank." But they insist, in the meantime, that that money in the right-hand column shall be debited with interest— that is, on money they have not paid us. 17. But you understood this would be done, no doubt, when the agreement was entered into ?—-- Emphatically not. It was never contemplated that the accounts would be worked out in that way. I do not know how any sane person can imagine that we would pay interest on that money, which is our own. 18. Why was not the account taken over when the guarantee was taken over ?—lt was retained in the meantime ; but they should not debit us with interest on money which they have not paid us. 19. A question has been asked with respect to the Colonial Bank sending a notice to its customers. Did they send a notice to the customers stating the condition of their accounts, and that they would be taken over by the Bank of New Zealand ? —I think a circular was sent, but it was an executive matter, which I had nothing particular to do with. If my memory does not deceive me, a circular was sent out intimating the credit or debit balance of the account, and stating that the account would be worked by the Bank of New Zealand. Mr. Cooper: I might state that a friendly suit is about to be instituted to settle the rights of the parties. The Bank of New Zealand does not wish to act inequitably at all in this matter. John Martin Butt, Government Auditor of the Bank of New Zealand, recalled and examined. Witness : Since I gave evidence last before the Committee certain reports and estimates have come to hand with reference to accounts in the Bank of New Zealand which require me to modify my statement that the balance of the Contingency Fund will be sufficient to meet probable losses. It is possible that the fund will yet be found sufficient for the purpose, but I cannot say with confidence that in my opinion it will be. If the statements I refer to are borne out, there will be a further sum of £40,000 or £50,000 to provide for. The present management are not responsible for that. It affects a part of the business of the bank in existence prior to the passing of the legislation, and provision was made for possible loss in calculating the amount required for the Contingency Fund. That is all I have to state.
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20. Hon. Mr. Seddon.] Is that an Australian, London, or New Zealand account?—A New Zealand account. With regard to the banking legislation of 1889, I find that that legislation was the outcome of a series of resolutions passed by the shareholders of the bank in October, 1888. 21. Mr. Montgomery.] Was this £40,000 or £50,000 in excess of what is estimated to be the deficiency on this account ?—Yes. It appears to me now that that may be required in addition to what was previously set aside. 22. Hon. Mr. Seddon.] That means that, instead of a total of £200,000 being required for the Contingency Fund, £300,000 was required. You have already taken £48,000 from the Profit and Loss Account of this year?— Yes. 23. Then, in round numbers, the Contingency Fund ought to have been £300,000 instead of £200,000?— It appears so. 24. Mr. Montgomery.] Have you reason to suppose that this will be the last discovery made, or to believe that more will he required yet ?—lt is possible, because all these statements are the results of estimates. The most we can do at any time is to make the best estimate we can. I believe now the estimates we have made are reliable. 25. Does this new amount come in this year's working or last year's working?— That will depend upon the future of the account—upon the further reports and the way in which the account is dealt with. 26. It cannot come into last year's account ?—No, certainly not; it will have to go into future accounts. 27. Hon. Mr. Seddon.] Well, whilst your answer the other day gave relief owing to its definite nature, your answer now to the question put by Mr. Montgomery made the position as bad as ever it was. He asked you whether there is anything more to come, and you say there is. What do you think it is possible may come in ?—I think the estimates we have now made, with this increased £40,000 or £50,000, will be found sufficient. That is my honest opinion. As regards this particular matter, I am now going on expert reports. 28. What you say is that there are other accounts to come in, but that they will be met by the Contingency Fund, with this increased estimate to-day ? —That is so. .29. Mr, Montgomery.] Can you say who is responsible for this account ?—The previous management. 30. Can you give us the dates ?—Oh, it had been going on for a great many years. 31. That is one you have been cleaning up? —Yes. 32. The Chairman.] Had this account previously been reported upon to the directors, and had provision been made against it ?—Yes, but not under the same circumstances and with the fullness that it is now. 33. It was not reported on so as to enable you to give the information you have now given to the Committee ? —No. 34. Hon. Mr. J. McKenzie.] I asked you a question the other day—if the whole truth and information about the bank had been given, and your reply was that, with the assistance given, so far as the position of the bank was concerned, it was. Is that not so?—-To the best of my belief it was. 35. Then, some forty-eight hours after my putting the question to you you made this discovery. Is that so ? —That is so. 36. Had you no doubt about the accounts or account when you made your reply the other day? —We had already made provision which we thought was sufficient for it up to that time. 37. What is the balance of the Contingency Fund ?—£171,000. 38. And now that will be all absorbed and another £40,000 or £50,000 with it ?—I think it is probable it will all be required, not in connection with this one account, but in connection with possible losses the bank will have to meet. 39. How can you account for not having the information from the directors and officers of the bank that this account was in such a bad position ? —Well, it was only when I attended the board meeting, after leaving the Committee here on Wednesday, that the General Manager referred to the reports and information I have mentioned. 40. It was information you did not have before?— Yes, not before. 41. What induced you to make that reply to my question? —The directors had instructed inquiry to be made some time previously. 42. That means that the directors had some doubt about this account or accounts ?—Yes. 43. And then they thought it necessary to make further inquiries ?—Yes. 44. And do you not think you should have been more guarded when you stated that the bank was now clean, knowing that this inquiry was going on ?—Well, a little while before we had the report of an inspector of great experience who had gone into this question as fully as possible, and I was relying on his report. My evidence has been all through to the effect that it is impossible to say that the position of an account is so-and-so. You can only make the best estimate you can of an account. I think that has been the tone of my evidence throughout. 45. Can you rely upon that inspector in the future to give a proper report, seeing that he has been discovered making a mistake this time ?—Well, he was not able to get the information that the subsequent report was based upon. 46. Do you think, then, that you have got to the bottom of it now ? —I think so. 47. Is it not possible there might be a good many more such accounts in New Zealand, Australia, and Fiji ?—I do not think so. 48. And that you have not sufficient information ?—lt might be so. 49. Was there not a thorough investigation last year when you came to Parliament, or the directors of the bank came to Parliament, for assistance ?—Yes, we went into it as fully as we could. 50. And this deficiency, or likely deficiency, had not been discovered ? —No, we did not know the extent of it.
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51. Of course, you are not at all sure that you may not have another call on us next year?— I do not think it is likely. 52. The other day you spoke quite positively when you said you had got to the bed-rock, and then within forty-eight hours you said you had not, and that you are not even sure now that you have got to bed-rock? —I am as sure as one can be who relies upon estimates. 53. Mr. Montgomery.] How much of the Contingency Fund has been allocated to this account ? —The Contingency Fund has not been allocated definitely. 54. How much will be allocated to it from the Contingency Fund?—lt depends upon how the thing turns out. The Contingency Fund is a species of reserve, which it is desirable to retain intact so long as there are large accounts undetermined. 55. What is the estimated loss on this account by last report ? —I am afraid I cannot state that. 56. You mean that you decline for some reason ? —I do not think I ought to be called upon to reply to questions of that kind involving the business of the bank. 57. Mr. Maslin.] Your statement that no further sum will be required is based upon the reliability or otherwise of the reports and estimates made to you ?—Yes, based on expert reports in this case. 58. The best experts sometimes make mistakes? —Yes, I suppose they do. 59. And if the accounts have been overestimated there may probably be some further loss that you cannot estimate at present ? —I do not think it is probable, but in the nature of things there must be a possibility of it. 60. Mr. Guinness.] In making up the total of the Contingency Fund you had to estimate the probable loss on different accounts ?—We estimated the probable loss on different accounts, and then we considered it would be desirable to have a further sum not specifically allocated. 61. To any particular account? —No particular account. 62. What amount was estimated would be lost on this particular account ?—That I do not think I should answer. 63. The Chairman.] But, in addition to that amount, whatever it may be, you anticipate now you will require £45,000 more ?—Yes, £40,000 to £50,000. 64. Hon. Mr. J. McKenzie.] I put a question to Mr. Butt the other day as to what his opinion was with regard to the confidence people in New Zealand would have if there was any more of this mystery. I ask now if you think the evidence you have come back to give is calculated to give confidence to the people of New Zealand as to the truth—the whole truth—being now known?— No, I do not think it is. Hon. Walter Woods Johnston, Director of the Bank of New Zealand, sworn and examined. 65. Hon. Mr. Seddon.] Would you like to make a statement, Mr. Johnston, or would you prefer to be asked questions ?—On what subject ? 66. On the position of the Bank of New Zealand since you have been connected with it, and your relationship to it ?—The position of the Bank of New Zealand is rather a large subject to make a statement upon. I prefer to answer questions. 67. The Bank of New Zealand was in financial difficulties in 1888 and 1889 ? —Yes. 68. You were one of what is known as the shareholders' committee ?—Yes. 69. You brought up a report at that time to the bank which was read at a shareholders' meeting?—No ; I was not one of the committee which brought up that report. I was elected one of the committee despite the fact that I was going Home, because it was held that I might be useful in England, and on this condition I consented to act. After being elected, I think all the advances made by the bank exceeding £500 were shown to the committee as well as the securities held, and after looking at the reports on the securities held the committee issued an interim report at once, saying that, in their opinion, the bank was in a stable and sound position. To that interim report I attached my name. 70. What was the interim report based upon ? —lt was based on the valuation of the securities held by the bank. 71. Were the reports all in before that time, and would the information contained in the reports be fairly correct ?—Well, the valuations had been taken by experts in different parts of the colony, and they were shown to us. According to these valuations, I think the advances exceeded the estimated value of the securities by some £800,000, and that left intact of the shareholders capital some £700,000, and upon that we reported we were satisfied the position of the Bank of New Zealand was sound and stable. 72. Well, there was a proposed alteration of the deed of settlement at that time, and a meeting was held for the purpose of making the alteration. This is from the report of the proceedings : —"The Chairman then moved the following resolution: 'That the directors be authorised to increase the capital of the bank by £1,000,000 by the creation of 100,000 further additional shares at £10 each, and that the board of directors be and are hereby empowered to issue, dispose of, and allot 5,000 shares, or so many of them, as they see fit, on such terms and conditions and payable at such time, and either with or without premium, as the board of directors may determine.' "?—I dq not know anything about those proceedings. 73. You were not present at the meeting ?— I was not present. Soon after the preliminary report of the shareholders' committee was issued I went to England. 74. You were not in Auckland on the 11th October? —No. 75. Were you supplied with a copy of that report of what took place at that meeting?— No. 76. You were at Home, and were asked to take steps to assist in raising additional capital for the bank ? —That is so. 77. Were you not placed in the position, if not with the fullest information, to state the latest ascertained position of the bank ? When did you go Home ?—ln May, 1888.
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78. When did you return to the colony ?—Early in 1889. I cannot say what month. 79. Were you not supplied with a report of the proceedings where the shareholders were asked to raise more capital, and which you were at Home to raise ? Would it not be reasonable to suppose that you would be supplied with the report of the proceedings seeing that you were in a position to be called upon to state the bank's position? For instance, there was a report signed by Mr. T. B. Gillies, Captain Colebeck, and Mr. John McLean, on the 3rd October, 1888?— Do you mean supplied in England ? 80. Yes. —Yes; the deputation sent Home to raise capital obtained, before further capital was applied for, a summary of the committee's report. The general manager telegraphed to London information as follows : " Report states losses owing to depreciated securities not faced ; irregular advances Auckland ; bad management Australia. Board of directors and general manager changed. Full provision requires write off £3. Necessary create 100,000 shares in order to give confidence. Issue 50,000; 20,000 London guaranteed. Prospects encouraging; steady dividends; shares valuable ; magnitude legitimate business London; Australia referred to. Prospects New Zealand excellent. Borrowing regime ended. Inform London board." That was the information, Sir. 81. Who is that signed by?—lt is a telegram from the general manager of the Bank of New Zealand to Mr. Butt on behalf of the deputation. 82. " Bad management Australia?" That wouid refer to Mr. Holt? You are aware there was a very large loss made by Mr. Holt, the manager in Sydney?— Yes; I have heard of it. 83. You have also heard of the Auckland business, which is referred to in the cable message as "irregular advances Auckland." The shareholders' committee did not say that the directors took the shareholders' money, but they say, " And, finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." According to this they had been dividing the ■bank's money between the directors, by way of advances, to the extent of £160,000. If that was in the report, the cable would refer to that as the bad business in Auckland. What does it say in reference to the colony ? —" Irregular advances." 84. • And if there had been advances to the directors, and a loss of £160,000, that remark in the cable would apply to it ?—I could not say. ' 85. You do not question that the cable was accurate in this respect ?—No. 86. Were you surprised to find there had been irregular transactions in Auckland and bad business in Sydney ? Did it take you by surprise or shock your nerves ?—Prior to the examination of these accounts by the committee I did not know anything about them. But, having seen them, I do not think that phrase is too strong. 87. " It is obvious to us that for years past the bank has been paying a rate of dividend which ought not to have been paid." I suppose you concur in that, too, after the investigation has been made ? —Yes. 88. Do you think the cable message referred to that as " steady dividends " ? —I think that part of the message has relation to the future : " Prospects encouraging; steady dividends ; shares valuable." I understand that to mean that there was a prospect that in the future dividends would be paid. 89." "Finally, as regards the bank, it should be borne in mind that the ordeal of such an investigation, at a time of depression so extreme, is one which would be trying to any institution. Other banks, now strong and prosperous, have had trying episodes in their history, and the trenchant character of our report may be taken as evidence that we have determined to face and disclose all the facts. The good-will of the bank's business is of great value. It has in the past divided among shareholders, over and above 10-per-cent. dividends, sums which aggregate nearly double the amount of the capital we now find to be lost; and, while desiring to guard against the creation of unduly-inflated expectations, we are in a position to say, from the figures of the half-year just closed, that even now the bank's legitimate business is capable of yielding good dividends, notwithstanding the serious drawbacks under which it has of late been working." Now, coming to that interesting passage in the cable message, "No more borrowing." You are aware of the transactions which took place in forming the Globo Company ?—No, lam not. I know nothing whatever specially about them. I know that Major George went Home and floated the Estates Company. That is all I know about it. 90. Do you know anything about the flotation and the loss of money borrowed and other losses entailed? —Yes; that figures in the balance-sheets of the Estates Company put before the Joint Committee last year. I think the cost of issuing the debentures was over £187,000, and preliminary expenses nearly £14,000, making together over £200,000 loss in that item. 91. From the time you were Home until you became a director now as representing the colony in the Bank of New Zealand—that it so say, from 1889 to 1894 you were clear of the bank?— Yes. 92. At whose suggestion and desire did you become a director ?—Mr. John Murray's. 93. You also became an attorney of the Estates Company ?—Yes. 94. And subsequently you were nominated to the Bank of New Zealand as the representative of the Government —in January ? —Yes, as a director. 95. Now, first as regards the bank itself. You know Mr. Watson, the President of the bank? —Yes. 96. And you know Mr. Mackenzie, the General Manager?— Yes. 97. Have you anything you desire to say to the Committee in reference to either the President or General Manager's capacity or fitness ?—No ; there is nothing I desire to say. 98. Then, as regards the accounts. We are precluded by our order of reference from inquiring into accounts unless writings-off have been shown. I have asked Mr. Watson (the President), Mr. Booth, Mr. Mackenzie, Mr. Butt, and Mr. Vigers this question: " Have there been any writingsoff in the accounts of the J. G. Ward Farmers' Association or of Mr. J. G. Ward," and all those
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witnesses have said there has not. Do you confirm their evidence, or otherwise?—l confirm that. There have been no writings-off by the Bank of New Zealand. 99. You have had to do with the working of the Bank of New Zealand since the purchase of the business of the Colonial Bank?— Yes. 100. Is it working satisfactorily, and has the Bank of New Zealand made a good or bad bargain in that purchase ?—I think the Bank of New Zealand made a satisfactory bargain. 101. You paid £75,000 for the good-will ?—£75,000. 102. And £125,000 for the premises ?—Yes. 103. Notwithstanding that you anticipate a loss on realising the premises you think you got a good bargain?— Notwithstanding that I think the bargain was a satisfactory one. 104. As to working the accounts, you have, no doubt, read the evidence that was tendered? —Yes. 105. It has been said that the working of the accounts is prejudicial to the clients and unsatisfactory to the liquidators of the Colonial Bank, and will entail loss on the shareholders of the Colonial Bank. What is your opinion in reference to that matter?—l confess that I heard with some surprise the evidence given on that matter by the Hon. Mr. Stewart. I think he went so far as to say that the Bank of New Zealand looked upon the customers of the Colonial Bank as enemies, and treated them as enemies. Of course, the greater number of the customers have their accounts in the " A " list, and all customers with well-secured advances, like the customers in the " A " list, are highly valued. It is impossible that there could be any dissatisfaction in their minds, because they could change their accounts at any moment. With regard to the customers in the "B" list, by the agreement under clause 9 the accounts of those customers are managed under the supervision of the liquidators, to whom accounts are furnished monthly. The policy of the bank in respect to these accounts is determined by the liquidators. If, unfortunately, there should be any among them who think they are not well treated, the responsibility lies upon the liquidators, and not upon the Bank of New Zealand; and for that reason, if the late directors of the Colonial Bank and the present liquidators desire that the liquidators should have greater latitude in working those accounts, I think it would be an advantageous thing to give it to them. I gathered from what the Hon. Mr. Stewart said that the-action of the liquidators in their supervision of the accounts in the " B " list is to some extent governed by the fact that the selling bank and its affairs are to be wound up under the Companies Act. If greater freedom could be given as to the treatment of these accounts the Bank of New Zealand would be pleased. Another matter the Hon. Mr. Stewart referred to, and that was the way in which the Bank of New Zealand charges interest on these accounts, despite the fact that it holds a large amount of cover. What the bank bought was a series of advances, amounting in the aggregate to £604,000, and all these advances were bearing interest, and it was understood that they would continue to bear interest; and the only modification which has been made is a reduction in the rate of interest charged. That is the only modification the Bank of New Zealand has made in the treatment of these accounts. When to secure the Bank of New Zealand a sum of money— £272,000 —was deposited with the Bank of New Zealand to make these accounts safe, it was said to us at that time, " If we are going to deposit this money with you, you should allow us the current rate of interest on fixed deposit "; but the Committee will see that that is disconnected from the question of the propriety of continuing to charge interest on the advances taken over. On discussing the suggestion to allow interest on the security an agreement was finally come to, which is set out in clause 15. 106. Now, as to the earning-power of the bank. Do you think the bank, under ordinary circumstances, will be able to earn sufficient with the business as it now stands to meet the interest charges and what is entailed under the arrangements fixed by legislation ? —Yes, I think so. 107. For last year you showed a profit of £52,000, in round numbers?— Yes. 108. You took £54,000 out of the Profit and Loss Account for last year to meet ascertained losses ?—Yes. 109. You left £171,000 in the Contingency Fund of £200,000 ?—Yes. 110. Since then it has been ascertained that there is more required ? —Yes. 111. How much of the £54,000 was wanted for accounts that were supposed to have been provided for in the £200,000 Contingency Fund ? —I could not say exactly, but I should say nearly £50,000. 112. You were here to-day and heard Mr. Butt say there is another £45,000 wanted ?—Yes. 113. Had reasonable efforts been made to ascertain the position?— Yes. 114. Prior to this discovery ?—Yes. 115. What led to the full knowledge being obtained as to the larger amount being required? Have there been any sudden losses, or had losses occurred which have not been ascertained ?—I should rather say that a fuller knowledge of the assets shows that they are not so valuable as in all probability we had had at first reason to believe. 116. It is by a fuller investigation that you have discovered that a larger amount will be required ? —Yes. 117. Mr. Butt said here this morning that there might possibly be more losses. Do you think now that, having stated that £50,000 more will be wanted, we have got down to bed-rock, or will there be further investigations and further losses ascertained ? These constant discoveries and changes all lead to doubt when you come to make up your balance-sheet. If there is to be. a further additional sum taken out of the Profit and Loss Account, what you have just now sworn to with regard to earning sufficient to meet all liabilities may be all set aside ?—I believe it is down to bed-rock now. 118. I suppose this is a sum which has been referred to as exceptionally situated?— Yes, exceptionally situated. 119. And there is no reasonable possibility of other accounts being similarly situated ?—No ; 1 believe the total amount of £171,000, plus this further amount, will be sufficient.
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120. You were one of the attorneys of the Estates Company? —Yes. 121. And you visited many of the estates ? —Yes, most of them. 122. In company with whom ? —Mr. Booth. 123. Did you find that these estates were well managed, or were you of opinion that improvement could be made ?—We did not think they were well managed. 124. And a change was made in the management ?—And a change was made in the management. 125. And Mr. Foster was appointed general manager?— Yes. 126. Have you seen the adjustment made by Mr. Butt as Auditor under the Act ? —I know the amounts. 127. Have you seen Messrs. Smith and Kember's adjustment ?—Yes. 128. Did you as attorney ever give instructions to distribute £54,000 —what is known as the difference under Mr. Hean's valuation—over the sheep on the different stations? —No. 129. When did you first become acquainted with the fact that that had been done? —I think you told me. I think that was the first I heard of it. 130. Do you think that was a proper thing to have done, or otherwise ?—I do not see any object in doing it. 131. It is just one of those stupid things which get done sometimes, and one does not know how they are done ?—Yes. 132. But if done and continued in that fashion it would show the sheep on each station in a bad light, and throw doubt on the evidence tendered last year ?—Well, this £54,000 was represented to the Committee last year, but it might have just as well remained in the books as it was. 133. Your policy has been to dispose of the estates since you have been an attorney ? —Yes. 134. A number of the trading concerns went back, or are to go back, to the Bank of New Zealand ? —On liquidating the company they are to go back to the Bank of New Zealand. In the meantime, they remain with the Estates Company. 135. Are you realising these as fast as you can ?—As fast as we can. 1361 In'what have been realised so far, have the estimates submitted to the parliamentary Committee of last year been made ?—Yes. 137. There have been some complaints made by the flour-millers of the colony in respect to the way the bank have conducted the business of the flour-mills. It has been said that you have been unduly competing and are not disposing of the mills at a fair value ?—We are quite prepared to dispose of them at a fair value. That is our function. 138. You are not unduly competing?— Not at all. We are trying to get as much as we can for the flour produced. 139. Have you any knowledge of the £81,000 paid for the Matamata Estate, and who was party to that transaction ?—A debt due by the Loan and Mercantile Agency Company to the Bank of New Zealand was satisfied by a transfer to the Bank of New Zealand of a series of assets from the Loan and Mercantile Company. Part of these assets consisted of a half-share in the Matamata Estate. These assets collectively were valued at £120,000, of which the half-share of the Matamata Estate and stock was valued at £81,000. 140. And you simply said, " Square " ?—The board in London simply took these assets and said, " Square." I may say that at that figure it has not turned out badly to the Realisation Board, since the net profits have been a little over £7,000, or nearly 4-£ per cent, on twice £81,000, and as the Assets Board's debentures bear only 3-| per cent, interest, it has not been, so far, a disadvantageous purchase. 141. You have had some experience in the management of stations : have you seen the way in which growing turnips and sowing grass-seed was charged in the Estates Company ? Would you put down growing turnips under the head " Permanent Improvements " ?—No ; I should put it down as part of current expenses. 142. £42,492 was charged against stations as advances on the 31st March last year?— Yes. 143. That was not submitted to the Committee?—lt was not. 144. As against this £42,492 there was charged these turnips and sowing grass as improvements. Mr. Smith says, "We consider these unreliable, impossible to be correctly stated, and to a great extent unrealizable." Do you think they should be charged, or, after charging them, should they not be put down as assets on the other side ?—I think that the area of turnips on the Ist April, when the Assets Board took charge, was about seventeen thousand acres. Of course, that had occasioned considerable outlay to produce ; and it is quite plain that seventeen thousand acres of winter feed is a very valuable advantage for the management of the Assets Board to enter upon. I do not think the cost of it would have been an unreasonable charge to make. I am unable to say how much of the £42,000 would be represented by the cost of growing these turnips. 145. I think lately they have agreed to a lump sum of £30,000 altogether, as against the £42,000 ?—Yes ; I have heard so. 146. £90,000, produce shipped to London; that was not drawn against?—lt was not drawn against. 147. Is it usual in a case of this kind to send a large shipment away like that when outgoings require to be made and in the incomings there is no money to meet them with. Was it a usual or unusual transaction ?—Of course, this £90,000 would be wanted in the course of the year for outgoings, and would be drawn against from time to time as funds were required. It was a great surprise to me when I heard that, in the opinion of the legal adviser whom Mr. Butt consulted this produce so long as it remained unsold and not drawn against could not be looked upon as incoming within the meaning of the statute, and therefore could not be taken into account when making the statutory adjustment of incomings and outgoings, and consequently that the whole of the outgoings could not be covered, and the outstanding liabilities should be met by an issue of
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debentures instead of by the proceeds of the produce. I confess that, having, whilst acting as an agent, always looked upon wool as an incoming, it made me " sit-up " when I heard this; and if I had known that such was the law I should certainly have suggested to the Board the advisability of making the estimated value of the wool an incoming by drawing against it. 148. As it is now they are in this fix: If that legal opinion stood it is not an incoming, and the incomings practically, then, from the Estates Company for the year would have dropped by £90,000, as shown by the balance-sheet ? —Except that it is in London now. 149. I take it this way :In 1894 the incomings are shown to be £115,000. Of course, by the balance-sheet these estates are only £ , while better prices have been obtained than previously; but as shown there they are only £25,000 for the year if you exclude that £90,000? — That is only another ridiculous aspect of the whole position. 150. Interest was to be paid on the debentures of £2,000,700? —Yes. 151. That has not been paid ?—No. 152. That would be an outgoing?— That would be an outgoing. 153. It has to be paid by law ?—Yes. 154. It would make it very warm if the Assets Board had to pay interest for two years?— No ; you have the proceeds of two clips this year—one held in London now, and one clip to be shorn in November. 155. Then, if there is £90,000 for the clip of this year—equal to last year—there would be £180,000, and the two years' interest will come out of that?— Yes. 156. It will make this outgoing, of course, abnormally high this year, and the incomings abnormally high, both being brought to credit ?—Yes, that is so. Supposing the wool is drawn against this season, you will have the proceeds of the clip of last year plus the clip of this year. 157. I suppose the difficulty was due to getting the estates handed over to the new Board?— Yes; I think the expectation was that the Board would take the company over in January, but it was not taken over in March. But if it had been taken over in January the Assets Board would have drawn or not as they pleased. 158. In the opinion of the bank, is it working satisfactorily ?—Yes. 159: In "your opinion, under ordinary circumstances, and with good management, do you think the colony will make any great loss in having come to the bank's rescue?—l do not think there is any likelihood of the colony losing a penny. 160. Mr. Montgomery.] Referring to the shareholders' committee in 1888. You issued an interim report as a member of the shareholders' committee in the afternoon of the 26th April ?—Yes, that is so. 161. In which you said, " In case our appointment should create uneasiness in the minds of any shareholders we think it well to state, without delay, that carefully-compiled and certified returns prepared by the bank's staff, supported where necessary by independent valuations, and which we have examined, satisfy us as to the soundness and stability of the bank." What were those returns —were they prepared for the occasion? —They were prepared for the occasion. 162. Did these returns substantiate the balance-sheet that was put before the committee on that date—the 26th April?—l am not able to say whether it was a balance-sheet of the 26th April. I take it that this balance-sheet puts the assets down at their full book-value, whereas this examination we made showed they should be written down by something like £800,000. No ; the reports evidently did not show that, because you were satisfied of the sound position of the bank. What did the inspector's report say ? Did they support the balance-sheet or not ?— What we issued our interim report upon was the statement showing the advances made by the bank exceeding £500 in each case, together with the statement of security held against each advance and an appraisement of the securities. That is all we could see that afternoon. I think that appraisement of the securities showed a deficiency as compared with the advances of something over £800,000. 163. Do you tell us that the shareholders' committee knew in the afternoon that there was a deficiency of £800,000 ?—Something of that sort. 164. And, after knowing that there was a gap of £800,000 between the balance-sheet and the actual position, they issued an interim report stating that they were satisfied of the soundness and stability of the bank ? —Because that left £700,000 of the shareholders' capital intact. I think that was the effect of the information submitted to us. Of course, it is a long time ago ; but that is the impression left on my mind. 165. But the committee was several months making this examination ?—Yes; but you are speaking of the report made that afternoon. The amount named is the final conclusion they came to, and I am not quite satisfied that I am not mixing up the final conclusion come to and what was put to us that afternoon. 166. They were several months finding out this big deficit. I want to know whether the reports you had before you in the afternoon showed this deficiency, or whether the committee had discovered this was a fact from the reports afterwards, and found that the deficits were much larger than the reports stated. Could you say that ?—No, I could not say that. You see it is a long time to charge my memory with what was submitted to us that afternoon. I remember the list of advances. I remember that there were reports by valuators and so on. Perhaps I am wrong in saying that the exact amount of depreciation was stated to the committee on that afternoon. 167. Supposing it was known, the directors knew of it at that date?— Yes. 168. And the directors, knowing there was a deficit of £800,000, proceeded to pay a dividend of 7 per cent. ?—Yes. 169. You were not a director at that time, were you?—No; at that meeting I had been nominated upon the board of directors, and.-my nomination was confirmed; but I had not accepted the position at that time. * 47—1. 6.
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170. But as a shareholder, would you approve of paying a dividend of 7 per cent, when £800,000 of bad and doubtful debts were not provided for ?—No. 171. You did not take part in this investigation ?—Not further than the interim report. 172. Did you subsequently become acquainted with the evidence on which the finding of the committee was based ?—No. 173. Did you succeed in raising that capital in London?— Yes; we raised part in London, and part was raised in the colony. 174. Did you issue any circulars in respect of the condition of the bank as agents ?—I am not certain how far the finding of the committee was made known. 175. What was the date on which you got the shares taken up? —It would be early in October, 1888. 176. The committee's report is only dated the 3rd October ? —This telegram is dated the end of September, giving the conclusions at which the committee had arrived; so that the invitations for new shares would be made in London at the beginning of October, when we knew what the finding was. 177. Do you not think that when this discovery was made that there was this enormous Globo Assets Account, amounting to £3,500,000, it would have been better to have liquidated the whole concern and wound up the bank in 1890 ?—ln whose interests—in the interests of the shareholders ? 178. In the interests of the shareholders, in the interests of the colony, and in the interests of the clients ?—No, Ido not. I think the liquidation of the Bank of New Zealand would have been a very serious thing for the colony at any time. It was the apprehension of that which, I think, caused the Parliament to intervene last year. 179. You think they were right in forming the Estates Company and carrying on, knowing all you do now, instead of liquidating ?—I do not quite understand what you mean by " right." I think, according to the deed of settlement, if half of the subscribed capital of the bank was gone the bank ought to liquidate. In the light of the final outcome of the Estates Company they ought to have liquidated, but on the basis of Mr. Hean's valuation there was no obligation to liquidate; and, on the other hand, looking at the interest of the shareholders and the public, they ought not to have done so. I think on the whole that it has been advantageous to the public and the shareholders that they continued. 180. How long were you a director—in 1889 ?—Only until I went Home. I resigned when I started for England. 181. Are you able to speak as to the formation of the Estates Company and the arrangements made then? —No ; I know nothing whatever about it. 182. Were you in favour of Mr. Mackenzie being appointed General Manager?—l was not in favour of it when the matter was under consideration. 183. And your reasons?—My only reason was the unsatisfactory outcome of the management of the Colonial Bank. 184. Was that opinion also shared by other directors ?—lt was shared. 185. Did you subsequently consent ? —I subsequently consented. 186. What induced you to consent? —Well, looking at the very large interest the colony has in the bank, we determined that we would submit this matter to the Premier, with his permission, and ask him what he thought about it. We had no name to suggest then amongst our own officers. He thought the experience of the Bank of New Zealand in introducing some one from England had been very unfortunate, and he was of opinion that it would be better to appoint Mr. Mackenzie, subject to a short notice of three months, and if we were not satisfied with his services we could dispense with them ; and so it was settled in that way. 187. Was there any other inducement for you to change your attitude on the subject ?—No further inducement. 188. Have you seen since any desirability for altering your opinion with regard to appointing one who has been connected with the management of the Colonial Bank ?—I think in some ways it has been unfortunate that both the President and General Manager should come from the Colonial Bank; otherwise, taking Mr. Mackenzie's management by itself, I have no fault to find with it. I think he is a very competent person. 189. Do you agree with Mr. Maccarthy, who stated in evidence that it is desirable that these gentlemen, under the circumstances you have related, should be separated ?—I think the advent of both President and General Manager from the Colonial Bank would create —and, as a matter of fact, did create —a certain amount of uneasiness throughout the whole service, as it was thought that the officers introduced into the service from the Colonial Bank would receive undue favour. That has been one reason why it was thought to be undesirable—and it seemed to be—undesirable to have both gentlemen in the Bank of New Zealand. That feeling has become less strong as time goes on and as the Colonial Bank officers get more incorporated into the service of the Bank of New Zealand. Another reason is that the President and the General Manager have worked together for so many years that I think the President has, and will always have, a very considerable amount of personal influence on the General Manager ; so that for that reason we do not get, I think, the exact mind of the General Manager so fully and so simply as we would do had it not been for those prior relations. 190. He is apt to reflect the opinion of the President ?—I think he is apt to reflect the opinion of the President. 191. Do you think the appointment of two gentlemen who had been connected with a bank which had proved unsuccessful, and who must have been responsible largely for the management, would improve public confidence in their management of the Bank of New Zealand ?—There is every evidence that the public has full confidence in the Bank of New Zealand, and a growing confidence, as is shown by the increasing business both in the deposits and advances, so that the bank has suffered no damage in that way.
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192. As to the good-will paid for the purchase in 1893. You told us that the amount was £75,000 ?—£75,000. 193. The amount paid for the Colonial Bank's premises was £125,000 ?—£125,000. 194. Altogether £200,000 ?—Yes. 195. What do you expect to realise from the Colonial Bank's premises ?—We estimated we might and probably would make a loss on that purchase of, say, £30,000. 196. And that they would realise about £90,000 or £95,000 ?—Yes. 197. That would leave the good-will at about £105,000 ?—Well, if the good-will had been the only thing we had obtained for the price that would be so; but we got the good-will plus a guarantee, which we thought a good thing to have. 198. What was the value of the guarantees ?—£25,000. 199. How much consideration would you have given to a commercial man to indorse that guarantee ? What was the value of it to the bank ? —I never considered the matter from that point of view. 200. I want to arrive at the good-will. I want to subtract the value of that guarantee and see what the good-will was ?—lt would be a very difficult thing for me to say, for this reason: these things were satisfactory because they were guaranteed. What would have been the outcome if they had not been guaranteed I confess I have not conjectured, and would not like to give an opinion. 201. You thought these particular advances required guaranteeing?— Yes. 202. Was there likely to be a loss if they were not guaranteed ?—We thought so. 203. Can you give us any idea what you conjectured the loss might be?—No, I could not say. There would be no computation of that nature. 204. We have had it mentioned that two accounts were guaranteed : one of £20,000 and one of £5,000. Were there any other accounts guaranteed ?—No, nothing further. 205. Taking the "B " list. It has been suggested that the Bank of New Zealand should take over the "B" list with a cover to be arrived at by arrangement. Do you think that would be advisable ? —lf we were satisfied with the cover we should be very glad indeed to take them all over; but the crux would come there. We think so-and-so is necessary; perhaps the liquidators think somewhat less is sufficient. If the liquidators would do this : guarantee the whole of these accounts and take back their £272,000; that would be the simplest way of getting out of the difficulty, and we would be glad to have the guarantee. 206. They could not do that as the law stands?— No. That was the first suggestion we made ; but they preferred this other arrangement. 207. It is a dangerous thing to take over accounts without cover that are not very sound, is it not ? —lt is not dangerous if the cover is sufficient. 208. But it is always difficult to ascertain whether the cover is sufficient?— Yes. 209. Take, for example, the account mentioned this morning. I suppose none of you guessed that loss would be made?—lt is difficult; that is quite right. 210. And some similar occasion might arise if you took over the Colonial Bank's "B " list? —We are in this position : that we cannot get more than £272,000. We consented that that should be the maximum. 211. As a matter of fact, there have been accounts in the " B " list whicn have turned out worse than was estimated?— Some have turned out better and some have turned out worse. 212. On the whole, do you think the cover is too much, or too little, or about right?—-I think it is about right. 213. You do not agree with the Hon. Mr. Stewart that £150,000 would more than cover the whole ? —lf the law would allow us to make this arrangement, and they would take back their money and give us the guarantee, we should be exceedingly pleased. 214. For how long do you propose to require the guarantee?— Any reasonable time. 215. Ten years ? —I should not think it would take so long as that with a guarantee by the liquidators to work out these accounts. 216. Have there been any negotiations with a view of bringing an arrangement of this sort about? —Yes. The officer in charge of the accounts in the "B " list told me within the last few days that Mr. Vigers had seen him to discuss whether a sum could be agreed upon at which the Bank of New Zealand could take over the whole of these accounts. 217. Do you agree with what one or two witnesses have told us, that there is great hardship inflicted on "B " list clients by the legislation?— These accounts under the agreement are managed under the supervision of the liquidators. If they have found themselves constrained in terms of their functions under the statute to impose any hardship on any holder of an account in the " B " list, I think it is a desirable thing that the law should be modified to allow them more discretion in dealing with the accounts. 218. Have many instances come within your knowledge?—No; there have come one or two. 219. Were they cases of great hardship ?—I do not think so. The hardship rather comes in the restriction of further accommodation. Under the agreement, if any increase of indebtedness is allowed by mutual consent between the selling and purchasing bank, the selling bank shall, if required, provide a further guarantee to secure such increased indebtedness. I can quite imagine that this makes the liquidators unwilling to give further accommodation. On the other hand, if the purchasing bank shall allow any increase which may not be so mutually agreed upon, it does that at its own risk. So I have no doubt that the accommodation on some of these accounts is not so liberal as it would be under some other arrangement. I can quite see that there would be many advantages in the making of the alterations that have been suggested. 220. I have gathered from the evidence that the Bank of New Zealand has been called upon to realise a number of these accounts ?—Not a number; it has some. 221. A large proportion ?—No. 222. Where that has been done, would it be avoidable if the accounts had been running with the bank, or would it be desirable in any case ? —lf excessive advances had been given to clients by
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the Bank of New Zealand they would determine as respects each such amount whether it would be better to close it at once, or whether there was any hope of the account becoming better if further time were given. It is very difficult to make a general answer. But you will quite understand that when of advances amounting to £604,000, £272,000 is held to be excessive, there may be cases where an extension of time can be of no assistance to the customer. 223. Hopeless ?—Yes, hopeless. 224. Should any of the " B " accounts have been in the " D " list ?—Not so far as the information at that time went to show, but some of them have since become defunct accounts. For instance, I heard that two of the accounts have gone to South Africa. There is a case which I only give as an illustration. 225. Mr. Guinness.] Is there security given for each account in the "A " list ?—Each account, whether it had or had not security. I could not say how many of the accounts, when the inspectors of the Bank of New Zealand were going through them and marking off all that were absolutely sound, were held to be sound without security or because they were adequately secured. 226. Where each of the accounts in the " B " list secured by guarantee or mortgage of property ? —I think each one was either secured by guarantee or mortgage of property. Each one had certain securities attached to it. 227. The reason you took cover for the accounts in the " B " list was because you thought these securities were not ample ?—That is so. 228. Hon Mr. Seddon.] You have given evidence, Mr. Johnston, in respect to the position in which you found the bank of New Zealand unfortunately, and the position in which you found also the Colonial Bank. Now, do you attach any responsibility to the officers of the Bank of New Zealand for the unfortunate position in which it was found—the higher officers? —Yes. 229. To what extent do you attach the responsiblity ?—I think that all these advances, amounting to over four millions, could not have been made without the concurrence—even if not upon the recommendation—of the general manager. The head office must have been responsible to a large extent for these advances. Then, the magnitude of the loss arising out of the advances no doubt was very much affected by the depreciation in the value of produce and property. 230. On investigation of the accounts and the state of things even since the Estates Company was formed, there have been very large advances made which should never have been made ? —Yes. 231. Do you attach responsibility to the officers for these advances?—To the general manager, yes. 232. For such information the general manager would rely upon the inspectors?— When an application is made for an advance, the general manager has the opinion of the local manager, and can obtain, if desirable, the opinion of an inspector. Then he makes a recommendation to the directors, and the application is considered. 233. The general manager of a bank who had had no previous knowledge of the working of the bank, or of colonial accounts, would be to a very great extent dependent on the inspectors, would he not ? —One would imagine so. 234. Such was the case with Mr. Holmes, was it not, who had had no experience of colonial business or experience of the Bank of New Zealand before he came here ?—No. 235. Are there any officers in the bank now who you say were responsible for the bank's difficulties ? Do you not think it would be a good thing for the bank, if so, if all were cleared out and you were to make a fresh start ? —I would not like to say that. If one saw the recommendations of these officers, if any, as to the accounts on which losses have been made, and if one saw that Mr. Holmes had been led astray by reports through these officers, then, perhaps, their conduct would require consideration. But, on the other hand, it might turn out that Mr. Holmes was guided by, and came to a decision for, other reasons. I do not know what determined the decisions of Mr. Holmes. 236. Then, the inspector of the Colonial Bank would be in the same position as the inspectors of the Bank of New Zealand; he would not know what the directors determined ?—That would be the case until he learnt their decision. 237. The same would apply to the general manager. For the Board to be able to express an opinion as to how far he was responsible or culpable it would want definite information on this head ?—Yes. 238. And you have not been able to get information from either bank as to how far they are responsible or culpable ?—So far as the Colonial Bank is concerned, we have had no opportunity. We have not sought it. With regard to the Bank of New Zealand, I confess I have not looked into its past history. 239. Then you are not in a position to-day to express any opinion owing to the fact that you have not the information ?—I have not specific information. 240. If any opinion has been expressed, and the information upon which it is based was no more than you had, it is a kind of haphazard opinion, and is without sufficient warranty ?—I should rather speak for myself. lam not able to express an opinion based on information. 241. Now, in respect to the guarantees. You have stated that there was a guarantee given by the Colonial Bank for £20,000 and £5,000 outside the cover. I think you said that was all that was guaranteed ?—Yes. 242. Do you remember anything about an amount in transitu ? —That is in the agreement. 243. What you were alluding to is outside what was specially mentioned in the agreement?— Yes. 244. Your answer was not clear. There is a general clause in the agreement which would cover that guarantee too ?—Yes. 245. Mr. Montgomery.] Do you suggest that there is not a large responsibility thrown upon the general manager of any bank ?—No ; on the contrary, I think there is a very large responsibility.
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246. And if that bank goes to the bad, do you not think the responsibility must rest to a considerable extent on the general manager ?—Of course, a bank can only go to the bad by a series of accounts going to the bad one by one, and how far the general manager has been responsible for the over-advances on any one account it is impossible to say without examination. It is very difficult indeed to give general answers to questions of that sort. 247. In answer to the Premier, you said there was a probability that that might happen with one particular account ? —lf you have in your mind the reason which made me say that in the first place I objected to the appointment of Mr. Mackenzie, it was simply that the result created a feeling against him. Ido not know how far his recommendations may have aided in bringing about the result, or how far the result was arrived at, perhaps in defiance of his recommendations, for all I know. 248. But as a business-man, how would you consider it ? The point is : The general manager of a bank is one whose management —possibly not from his own fault—has been unsuccessful. That was the reason expressed in other words, was it not ?—Yes, that was the reason. With regard to this particular case, the President of the Bank of New Zealand gave us the strongest assurances of the competency of Mr. Mackenzie, and, since he was our President, his assurances had no doubt great weight. We had nothing opposed to them except the feeling of dissatisfaction, with the result of the management of another institution. 249. You did not base your opinion upon evident facts, but upon the general result of the management of the Colonial Bank ? —Yes. So the final conclusion was that Mr. Mackenzie was not given a permanent appointment, but an appointment determinable at three months' notice. 250. Hon. Mr. Seddon.] Did you, or anybody in the Bank of New Zealand, gauge the officers of the Bank of New Zealand on the same lines, and say that they were free from blame? Applying the same argument to them, owing to the position of the Bank of New Zealand which you found, and for which legislation had taken place, if the Colonial Bank management was bad that of the Bank of New Zealand was ten times worse ?—Much worse. 251. Then the same argument would apply that the officers of the Colonial Bank are ten times better fitted for their office than any officers in the Bank of New Zealand?— Applying the same argument, they would be as well fitted. 252. I have no doubt that you and your co-directors considered as to whether there was a possibility of getting any one outside the bank capable of taking the management of the Bank of New Zealand?— Yes; and we knew of no one. 253. Mr. Montgomery.] I want to know if there was any talk of appointing Mr. Mackenzie during the negotiations ?—Not that I know of, but as forming part of the negotiations. 254. Was there not some question of getting a man from England at the time ? —No, not seriously discussed. It was a question mooted, but put on one side because prior experience had not shown that that was a very advantageous way of obtaining the General Manager.
Thursday, 24th September, 1896. Hon. George McLean, M.L.C., late Chairman of the Board of Directors of the Colonial Bank, sworn and examined. 1. The Chairman.] Would you prefer to make a statement before being asked questions?— Whichever is the pleasure of the Committee. 2. Then, will you be good enough to make a statement on the subjects within our order of eferenco of which you have knowledge. 3. Hon. Mr. Seddon.] Go back to the time when the Colonial Bank came to the Government with the request to have a portion of the colony's business, then to the proposals for amalgamation, and onward ?—I presume you would like me to go back to the time when the Bank of New Zealand first got into difficulties. 4. Yes ?—When the Bank of New Zealand first got into difficulties they were not able then to meet the requirements of the Government with their finances, and after Sir Harry Atkinson, then Colonial Treasurer, applied to others he came to me on my coming to Wellington and asked my assistance. He said the Bank of New Zealand had sold debentures which they held only as securities for advances taken from them by the Government, —afterwards, I understand, these were brought back, —that the colony's interest was coming due, and that they must have assistance, and he asked me what I could do. Having been a colleague with him in the Government before, and, when that Government was formed, finding ourselves with insufficient funds to carry on with, I went to Sydney, ostensibly to a cable conference, but really with a view to borrow money for the Government. I succeeded in getting £500,000 from the Bank of New South Wales, and I presume it was because I had effected these negotiations that Sir Harry Atkinson was anxious I should help him again. He told me he had on this occasion applied to the Bank of New South Wales, but that they would not help him. We then discussed the matter of the accounts, and it was agreed that if the Colonial Bank helped him it was to get a share of the Government account. I went home, consulted the directors, and proceeded to cable London, and the Colonial Bank raised then several amounts up to £700,000. I may say that the colony's credit was not very good then, because the public were aware of difficulties arising. Immediately we got the money the fact became known in London, and the Government's credit was all right. For this assistance we were to get a share of the Government account when the Bank of New Zealand got into a condition that it was safe to take it away. We got a share of the remittances for some time when we wanted them, but by-and-by these were stopped. I was approached by several about amalgamation between the Colonial Bank and the Bank of New Zealand. It is not very easy to make use of conversations one had with people now dead, because there is nothing to substantiate the matter. However, in looking through my papers I got hold of a memorandum of a proposal for amalgamation submitted to me by the late
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Mr. George Buckley; and I may say that, in addition to that, Judge Gillies at one time was anxious the amalgamation should be brought about, and also Mr. John McLean. The late Mr. George Buckley did not see how the Bank of New Zealand was to carry on. 5. What is the date of that ?—I left the memorandum with the Upper House Committee. I see in the printed copy of my evidence it says 1887, but I think that is a misprint. I think it must be somewhere in 1889. This is what Mr. Buckley says : " I send you a rough memorandum and note as to amalgamation of the bank; look at them and think it out. Failing this, I see no hope of carrying on the Bank of New Zealand; liquidation is bound to come at last." Then, in another letter : " Are you prepared at all to take advantage of the misfortunes of the Bank of New Zealand, because Ido not really see how the inevitable can be well avoided in the end?" That is the 29fch August. I think this 1887 must mean 1889. Why I fixed the date without getting hold of my papers is this : that I knew Mr. Buckley was protesting against the amount that was going to be paid for the floating of the Estates Company, and he said he would rather shut the doors than submit to it. In another letter he says, " You have my authority to ask Sir Harry Atkinson to show two letters of mine to him, which will enable you to judge of the position." I may say that Sir Harry Atkinson discussed this matter with me, and urged me strongly to take up this question of amalgamation; and, as I have said, I believe the difficulties of the Bank of New Zealand were the cause of Sir Harry Atkinson's illness, and led, in my opinion, to his death. The present Premier, doubtless, is a man vigorous in mind and body, but it is very possible the present banking worries may —and I dare say they will —tell on his constitution, strong as it is. I could not see my way at that time to take up the question. I always told them that the only way to get amalgamation was to start a fresh bank altogether, and, if our directors had agreed, we would only have taken what was good in the Bank of New Zealand, leaving out all properties and dead accounts which in each bank must be liquidated by its own shareholders ; and these were the only conditions under which I would consider the matter. Then, by floating the Estates Company the Bank of New Zealand got over portion of their trouble, and after that we called upon them to supplement the agreement with Sir Harry Atkinson, and give us a share of the Government account. We could get no satisfaction. Sir Harry Atkinson, I know, pressed it on the bank ; then later the Colonial Bank petitioned Parliament, asking that Sir Harry Atkinson and I should be examined before the Public Accounts Committee on this matter. Unfortunately, after that petition arrived in Wellington Sir Harry Atkinson dropped dead, and could not be got as a witness. However, the matter was investigated by the Public Accounts Committee, who said the colony was under obligations to us, and awarded us a third of the remittances, the Government carrying out this recommendation. I am also quite aware that most members of that Committee believed that we were entitled to a third of the Government account as well. That was in 1892. We got a third of the remittances from the Government, and enjoyed that, but were still urging for a third of the Government account; but Mr. Holmes and Mr. Glyn, I believe, called to see Mr. Ballance at Wanganui, and gave the Government extraordinary terms for their business, which I calculated to be a concession of somewhere about £8,000 a year in order to retain it, and, of course, the account was not worth hunting for after that. However, I thought the Government would behave fairly even if they made that bad bargain. However, we still kept urging it year after year until this two-million business turned up. The first I knew of that proposal was this : I was coming out from lunch at Bellamy's, and I met Mr. Ward going into the House, and—l think it was when the Address in Eeply was going on —I told him I was going to review the proceedings of his friends the Bank of New Zealand, and that I was going to show in the Council what they were doing. He asked me not to do so —that he wanted to see me. He asked me to come up to his room, and he then told me that the Government were going to give this assistance of two millions. 6. Mr. Montgomery.] Can you give the date?—lt was the morning of the night of the banking legislation. I went up to see him, and for the first time I knew that the two millions was to be granted. I protested against it—said it was unfair to us—that we had carried on business in opposition to the Bank of New Zealand, and now they were going to get this two millions. I could do nothing with Mr. Ward to induce him to desist. I then waited on the Premier to persuade him not to do it. I warned them both that they did not see the end of what they were going to do, that it was far better to meet the emergency and pay the money—which they could do—retaining security under the Crown Debts Act; that if they paid the bills in London—and let us see how they stood —as that appeared to be their difficulty. The feeling I had at the time was this :In granting the two millions of money they were entering on an operation they could not possibly know the end of. Besides, by throwing two millions of money into the bank's coffers it could only be looked upon as a loan, and would not help to clean up the balance-sheet. No doubt they wanted a certain amount of money, but throwing money into a bank does not clean up a balance-sheet, and that was where I saw was bound to come the trouble when they came to wash up. However, I think the same afternoon I was up in Mr. Ward's room, when Mr. Murray opened the door and looked in. Mr. Ward asked me if I had any objection to meet Mr. Murray. I said, " Not the slightest, in a case of this sort." Then, afterwards, the Premier came in, and we discussed this matter backwards and forwards. Mr. Murray suggested amalgamation, and I said that at present was impossible. However, I was willing to discuss the matter, seeing the position that the Bank of New Zealand was in, to see what could be done. I think the Government were just as anxious to see a scheme of amalgamation as anybody. Mr. Murray and I set to work and drew up this scheme for amalgamation, and submitted it to the Government. The Government finally made conditions in it which our directors would not agree to, and negotiations then dropped. The last correspondence is contained in the report to the shareholders of the Colonial Bank. 6a. W 7 hat were these conditions ?—We quite agreed that they should put anybody in to examine the affairs. That was the main point. When the question of granting the two millions to the Bank of New Zealand was under consideration—and my urging liquidation instead—Mr. Ward asked me what they were to do with the Government account —how was it to be conducted ? I
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told him that the Colonial Bank had pulled them out of a hole before, and could do so again ; that they could put anybody they wished in to examine the Colonial Bank's affairs, and any account objected to our shareholders would pay up, so that they would have a clean, unmistakable foundation to start from, and then could use the Colonial Bank to liquidate the Bank of New Zealand. They did not see their way, fearing their money being locked up in the Bank of New Zealand ; but they had power to go to the Bank of New Zealand and, under the Grown Debts Act, take out all the money that they had to their credit in their account. I must say, with regard to the scheme of amalgamation then proposed, that I am satisfied now that it would have relieved the colony of every difficulty, and so set up a strong institution not troubled with politics, and having a large list of colonial shareholders. The Government have since been compelled to do what they were asked by that scheme to undertake, and, had they done so, they would have avoided further banking troubles. The bank would have prospered; it could have paid large profits, and worked itself up into such a position that it could later on have floated capital of its own, and paid the colony off its two millions. That is my opinion. However, they did not agree to that, and I went in to help them all I could. Having decided on their policy, they had no further obstacle from me, and I only put on record when the Bill was going through the Upper House my own views. I said the Government were responsible to the people of the colony, and I was not going to throw any obstacle in their way. The Government had the almost unanimous sanction of the Legislature. There was nothing further occurred after that until, a year later, we came to this Committee of investigation into the Bank of New Zealand, and on its recommendation legislation was then produced giving the Bank of New Zealand further assistance, and part of the scheme required them to procure a considerable deal more earning-power. We were then approached for the purchase of the Colonial Bank. What the directors of the Bank of New Zealand first proposed, if I remember rightly, was that they themselves were to liquidate all our accounts, and pay us out all our capital, leaving our shareholders under liability for deficiencies. 7. Guaranteeing accounts?— Yes. We positively declined that. We would not look at it. What we wanted was this : that they should examine all our affairs and value all the accounts, say what sum they would give for the business, and allow us to offer that amount to our shareholders, and see if they would accept it. And my opinion now is that that course should have been pursued both in the Colonial Bank's interest, the Bank of New Zealand's interest, and in the interest of everybody concerned ; and I think that all concerned are finding that out now. They would not agree to this. I may say that the negotiations then were virtually broken off. After consulting with my co-directors, I sent the general manager with all the papers back to Dunedin. However, the matter came up again. I cannot remember rightly how. I then made this proposal to the Bank of New-Zealand : that we must have an end to our shareholders' liability, and on no other conditions would we entertain the proposal. They could go through our accounts, take over everything they felt no doubt about, and any accounts they felt a doubt about they could retain a reserve against, and if any of these accounts showed a loss they had the money in their own hands to meet it. Had we adopted their proposal they would have had the whole working of our accounts, and might have mulled them as well as their own, and the result would have been a call on our shareholders for money ; and for that reason we determined whatever amount they required they could keep out of our funds, so that they could not possibly lose ; but that was to be the end of the liability on the Colonial Bank shareholders. And I may say that they did take what I considered extravagant amounts against those accounts. First of all, they took over nearly a million —£900,000 odd—of undoubted accounts. That left a sum of, say, £700,000, w T hich they took a reserve against—each account —and then took a blanket over the total reserve. They were to retain money not required for one account to make good any deficiency on all or any other account, and to this we agreed. Then, they threw out accounts that they would not take, amounting to £102,000. These were property and dead accounts, and these belonged to the Colonial Bank to liquidate as they think proper, and they paid £133,000 odd in cash. I consider that they made a good bargain. They got business that they could not have got without going outside and fighting for it against other banks, and that meant a reduction on all their discounts and their interest rates. They got the second exchange business in the colony. They got a business which for the last ten years has been able to pay £20,000 a year to cover depreciation and bad debts, and pay dividends of £28,000 per annum besides, and all for the sum of £75,000 good-will. I would like to say this: that the directors of the Bank of New Zealand, while shrewd men, are men without banking experience. When they got us under their thumb their officers made themselves extraordinarily safe, so that there could be no doubt about their getting their money whatever became of our shareholders. In my opinion, in giving evidence those directors have been rather severe, probably, first on the Bank of New Zealand colonial directors who immediately preceded them, and who were labouring under considerable difficulties, and who had very troublesome, affairs to deal with. They have, further, talked about the Colonial Bank directors, but at the same time they themselves have had two years' nearly working at the Bank of New Zealand, and I see that last night they had to send their Auditor here to say that on one account alone they had made a mistake of £40,000 or £50,000. One would think in criticizing other directors they would be a little less severe, at all events. At no time were the Colonial Bank affairs in such a condition that we could not have written down any doubtful accounts. We did not want money. We had too much. We had a lot in London for which we were only getting 1-J per cent., and we had lots here ; so that, in making any call to replace that we could have written down every doubtful thing by calling up a pound and giving a couple of years to pay it. I now go back to the year 1893, a period of financial panic and embarrassment to banks such as never before occurred in the w r orld. You all know the circumstances of the banks in Australia. The whole lot would have stopped but for the action of the New South Wales Government in making the notes a legal tender. One of the banks there was the Commercial Bank of Sydney, which had to close its doors. I look upon it yet as the strongest bank there; and, as far as the Colonial Bank was concerned, it was the safest bank.
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to do business with in this colony. It may have had accounts requiring nursing, as other banks must all have, but all its affairs were liquid, and it had an undoubted share-list, all shareholders being in the colony, who were able to pay up everything. This purchase took place at a time and under a forced liquidation when there was not a market for property, when things were unsaleable, and it is purely a matter of valuing accounts. The Bank of New Zealand only threw out £102,000 of accounts. The Colonial Bank, like other banks, suffered through the panic of 1893. They lost about £600,000 in deposits, and advance business had to be called in. It was called in, and managed very well in the calling of it in; but the effect, although imperceptible then, was bound to weaken a large number of accounts in time. We had taken in hand several accounts we meant to see the bottom of, and no doubt we would have had, when we came to that point, to write down some capital to meet it. But we would have had no trouble to do that. We had the experience of another bank, which wrote off capital and reserve fund £400,000. They then called up 305.; and up to lately the shares were not worth the last call. 7a. Was that the National Bank?— The National. We therefore preferred to get from the Bank of New Zealand the value of our shareholders' remaining capital to forcing a call on them, the par value of which call they might not get for their shares in the open market. A further reason for our selling was that the Bank of New Zealand was in a dicky position. The colony was coming to its aid, but it was not yet on its legs. The want of earning-power would have forced it to go into the open market and fight for new business, and the Government would have had again to give it more assistance. The embarrassment then going on might have created a run on us, and we had to run that risk. lam not at all sure, if we had closed our doors, but that these other banks would have had to do the same, and that we should have done very much better than we have now. We were under this additional disadvantage : The Bank of New Zealand knew all about our accounts—their officers knew all about them—and we were then in a very unfavourable position to fight the matter, and we put up with different terms in consequence of that than we should otherwise have done. People are blamed for making bad debts. Managers, in putting the matter before directors, give very good reasons for an extra advance, and say they think so much more will make the advance come all right. Now, the colony has started on the same principle. It has got its doubtful customer in the Bank of New Zealand. It put two millions into the account. It found, after it had done that, that that was not enough, and in order to save that two millions it had to advance a good deal more. I hope and trust that this will not turn out a bad account, but that it will turn out a good account; and I only compare the two when I say a bank-manager makes a bad debt in the same way that our wise legislators are doing now, and I hope their second venture will turn out right. What prevented us from breaking off the negotiations to a large extent was that I had a lot of shareholders running after me and declaring that they did not mind what they got out of their shares so long as they got out of their liability. There were heavy calls being made by Australian banks, and this frightened the life out of our shareholders. They were pressing their shares on the market and accepting what they could get for them, and that destroyed confidence. With the Bank of New Zealand propped up by Government money, it was not likely the Colonial Bank shareholders would refuse to sanction the sale and be content with what they could get. In the other Chamber, before the Committee, I gave a list of all the calls that were being made on the Australian bank shareholders, and the results of how they have turned out since. Members of this Committee can see what the results were there of these reconstructions in Australia, and I do not care what bank it is, if any bank here had to go through the same process we had, I would not like to say how much they would be deficient; even the Bank of New Zealand itself, put through this process, with all its washing up would yet leave a deficiency that would astonish you. I have served in a bank myself, from the sorting of notes to the top of the tree, and had varied experience, and I say banking is changing rapidly. The old form of fixed deposits is going out of favour, and. there is a tendency to lodge money on demand, which money is too unsafe altogether for banks to trade on; and, as I recommended to the Committee of the other House, there is only half as much coin in the colony as would pay demand deposits, and I should certainly advise the Government, before they allow the House to prorogue, to put the Note-issue Act on the statute-book again. It runs out, I think, this month, and I should certainly advise that, as a matter of precaution, this ought to be done, because we know how, when a panic sets in, people are apt to lose their senses. I am unacquainted with what is going on in the liquidation of the Colonial Bank further than that complaints have been made by the liquidators tome that the accounts in the "B" list are not being fairly dealt with. Some I know the Bank of New Zealand have had to take over without the reserve to prevent them going away to another bank. But there are some of those accounts in that "B" list that, with a portion of the reserve they have against them, another bank could be got to take them up if the Bank of New Zealand would not do it. But the difficulty is that the Court has to give its sanction. Even the Bank of New Zealand cannot give up a portion of the reserve against any one in order to let it go; a large business firm cannot go before the Court without having its business disclosed and ruined, and this is the difficulty I see in the matter. There is another dispute that the liquidators complain of. They complain that the Bank of New Zealand are charging interest on the total amount of the " B " accounts at 6 per cent, interest. By the clause in the agreement they say they are legally entitled to it, and I suppose, if they are legally entitled to it, they must get it. They say they are going to have a friendly action against the liquidators to settle it; but what might be law might not be justice. I would like to rsfer to clause 15, which says, " An equitable adjustment shall be made of the interest due and to be allowed to the selling bank on any amount standing in the said right-hand column of the said 'B , list which may ultimately be found to be in excess of the amount necessary for securing the debts mentioned in the said 'B' list, and the rate of such interest shall be based on the current rates of interest for fixed deposits for twelve months paid by the purchasing bank." I suppose there is a comma left out there which would alter the sense of it. But in fairness they should not
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charge on the whole amount of £500,000, £600,000, £700,000, or whatever it is, at the advance rate, and then pay at the fixed - deposit rate the shareholders of the Colonial Bank. If that goes on the Colonial Bank shareholders will not get very much out of that list. These difficulties with regard to the "B" list, in addition to the customers of the "B" list itself, are creating a feeling of dissatisfaction amongst the old customers that originally were customers of the Colonial Bank, and it may seriously affect the Bank of New Zealand by accounts leaving them. It is very desirable that power should be given to the liquidators and the Bank of New Zealand to settle their own affairs by coming to some agreement, and if they cannot agree they should have power to take in an arbitrator to say what is a fair agreement, and so put an end to a condition of things which I am satisfied is quite as hurtful to the Bank of New Zealand as to the shareholders of the Colonial Bank, and it has been hurtful enough to them. With regard to what people are saying in reference to accounts turning out badly, the outcome of an account depends upon how the liquidators, to a very large extent, deal with the sale. When an account is put into liquidation everybody interested thinks he ought to get off for nothing, or by a compromise. I heard of a case where one party valued an account of £1,200 at £600. Another appeared as a purchaser, and valued it at £300. The debtor paid the whole account of £1,200. In a matter of liquidating, I do not care what firm it is, if it goes into liquidation the whole property is bound to be sacrificed. I cannot think of anything else. If you wish to ask me questions, I shall be happy to answer anything I can. 8. Hon. Mr. Seddon.] You have, no doubt, had the balance-sheet of the Colonial Bank, say, from 1893 ?—Yes. 9. What is the last balance-sheet issued prior to the bank purchase ?—3lst August, 1895. 10. Does that balance-sheet fairly put the position of the Colonial Bank at that date ? —That was the balance-sheet made up and the account stated, and we struck out in the directors' report of that balance-sheet the words "after providing for bad and doubtful debts," because we had several accounts that the management and directors were dissatisfied with were being hauled up, and we did not know what the result would be ; and we said in the balance-sheet that we did not propose to deal with the bank balance until we knew the result of the negotiations. When we came to the meeting of the shareholders I told them then, inputting the statement before them, that we did not propose to deal with the figures until the result of the sale was known, and then, if the sale did not come off, we would go into the position of the bank and state what the directors proposed to do. 11. Now, the accounts of the Colonial Bank were gone into with your sanction and approval by the officers of the Bank of New Zealand ?—Y'es. 12. Can you give the dates when that first overhaul took place ?—Sometime in July. I asked the general manager to give the Government Auditor all our balance-books to enable him to go through all our accounts. He, being an independent man, would not be likely to take as sanguine a view probably that our officers would ; and I wanted then to get a certificate from him of the amount that it would be necessary, in his opinion, to write down, so as to thoroughly clear up our business. Of course, if our own officers did that the shareholders might not have the same confidence that we had gone to the bottom of matters. We, however, went into the question of the sale of the bank when this process was going on. 13. The result of all this during the negotiations was that £327,000 was asked for as a cover for the accounts in the Colonial Bank which were in the " B " and " C " lists? —Yes ; but in the meantime an unexpected development had taken place. 14. Were you surprised to find so much cover demanded ?—I was astonished to find so much, but I did not mind if our accounts were treated properly, because I felt certain we should get a large amount of that back again. 15. You are not likely to get much back from the present outlook, are you?—l am not sure. If the liquidators and the Bank of New Zealand disagree we are not likely to get much, but I certainly think we shall. 16. But the way things are going on the outlook is not very cheerful ?—No; but I may say this: that they have £20,000 or £25,000 against a certain account that has never given us any anxiety for years, and if two or three accounts like that are brought to grief I say it would be a very bad thing, and a very improper thing. 17. You say that from the first the result of the legislation has been disastrous to you?—To the Colonial Bank. 18. And, secondly, it has proved injurious to the clients of the Colonial Bank ? —Yes ; and I say that if you do not produce legislation it will cause trouble to the Bank of New Zealand. 19. In other words, the Bank of New Zealand will not get that business and profit which might reasonably be anticipated?— No. If I had known that they would have to go to the Court and expose every case I never would have agreed to the agreement in that way, because it is impossible to liquidate things reasonably if they have to go to the. Court and advertise matters as they have in Dunedin. There was a string of some eight accounts. One "D " account was compromised for £8,000. It has been said that the "D " list was valueless. Ido not know where that information was obtained, because I myself would have given a good many thousands for it, even on a liquidating basis. 20. Who is responsible for this unfortunate condition being placed in the Act that the liquidation was to be under the Companies Act ?—That is a thing I never thoroughly understood. I did not dream that it would be put in that position. I did not realise what liquidation under the Companies Act meant. We had power under our own deed of settlement to liquidate without any trouble, and to hand the money over to the shareholders as we got it. 21. But it requires something to be done by law, although if the shareholders had not sold you might have gone on ?—That is true; but after the shareholders had passed the resolution they were done for, and could not reopen the matter. *48—I. 6, , .
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22. You have instead a compulsory liquidation under the Companies Act. You think it should have been a compulsory liquidation under the deed of-settlement ? —Or to have given the liquidators power to compromise. You saw a string of eight different accounts the other day in Dunedin, with all the particulars advertised. One was compromised for £8,000 in the "D " list, another for £1,000, and so on; and the customers' friends now say that if they are to be advertised in that way they are not going to come to the rescue. It is well known that if liquidators have power to compromise, his friends will come and pay the value of the estate in order to save him going through the Court. But as it is now, there is no inducement for anybody to compromise, as they might just as well go right into the Court. 23. I suppose you are not blind to the fact that, from what you are saying to-day, if the Legislature were to legislate in the direction you recommend, it would be at once said there were some legislators who were to be befriended in order that their affairs could not be brought before the Court, and that this was another way of hiding or covering up things ? —That is all over. There is nobody now left in the lists to whom they could attach the same circumstances. That has all been done, and disastrously, in my opinion. There has been too much politics in the whole matter, and this element has been simply ruinous. 24. You think in the interests of the colony that is the course that ought to be taken ?—I am quite sure of it. If something is not done all the shareholders of the Colonial Bank can do is to put up with their loss. They cannot get any more, and then the Bank of New Zealand will not pay so well. I presume, under that agreement, they may be called upon to hold the accounts for years to come or show the outcome of them. 24a. You think it would promote a more speedy winding-up of the affairs of the Colonial Bank ? —I think, if the liquidators of the Colonial Bank had power, they could come to an agreement with the Bank of New Zealand as to the value of the accounts, and pay whatever it is the Bank of New Zealand could pay, and have the whole handling of the accounts. When I advocated the sale of the bank for a lump-sum the Bank of New Zealand would not have it. If they had done so, their men, knowing that the accounts were their own, would have handled them in a different way from what they .will do if they think they can give the Colonial Bank a dig. No doubt human nature is human nature, and they will say that so long as they get what they estimated it will not matter, because it will show how correct their estimate was. There is no encouragement to get more. 25. That is to say, if £5,000 was wanted for an account ?—They would take care to get that amount; they would not nurse the account to bring it out differently. Whenever they get that money they are done with it; they are all right. 26. On the other hand, if you paid that cover of £5,000, and they work the account and only make £3,000, there would be a difference of £2,000 to the Colonial Bank ?—That is what they can do. 27. Do bankers do this kind of thing?— You see there has been a terrible feud all through. They have been trying to kill the Colonial Bank, but it was too much for them until the colony came to their aid, and then the Colonial Bank could not fight the Bank of New Zealand and the colony too. The Colonial Bank shareholders are all in the colony, and have all their interests in the colony, and the bank deserved better legislation than to be ruined. The colony not only did this, "but it passed legislation that for three solid years the Colonial Bank had to pay 40 per cent, of the whole taxation that was levied on all banks of the colony. 28. Under whose administration was that done?—l think it was in Sir Harry Atkinson's or Mr. Ballance's time. I protested year after year. I knocked at the door so long that the Colonial Treasurer had at last to alter the taxation. 29. You saved the colony, and the colony wrecked the bank?— That is exactly what it is. Why, the colony was refused £20,000 of an overdraft in London about the time we came to its assistance. 30. It was not a case of virtue rewarded this time ?—Well, I hope now they have got us out of the way they will all prosper. That is my earnest wish. Any man who has had control of a financial institution has had many sleepless nights since 1893. At the time of the big crisis one never knew any hour when you might have to shut your doors. 31. The first banking legislation was in 1889. Do you remember that clause in the Bank Act by which directors were enabled to declare dividends although they made losses ?—Yes, and I protested against it; but I was chairman of an opposition bank, and in all these negotiations nothing would have been taken notice of in consequence of my being chairman of an opposition bank. 32. You have said that was an improper thing to do ?—Yes. 33. Were you present in 1893 when a conference was held of representatives of the various banks in reference to this colony passing the Note Issue Act ?—I was. 34. Was any demur made by any one representing the several banks at that conference ?— No, I do not think so. 35. If it has been stated, then, that one of the representatives at the conference protested against it, that statement would be incorrect? —I should think so. I have no recollection of any one protesting. 36. In fact, I suppose it was the reverse —all were anxious to get something done in case of accident ?—Yes. 37. You looked upon that statute— as you said it was necessary that it should be kept on the statute-book —as advisable in case there was financial trouble ?—I think the Government should have that Act in force, and if there should come trouble there will be some safety. 38. You say the Bank of New Zealand paid £75,000 for the good-will of the Colonial Bank ? —Yes. 39. And £125,000 for landed property and premises ?—Yes. 40. Was that book-value ?—Yes. 41. Will there be much loss in realising that landed property? —Not if it is done properly. For instance, take the outside offices let belonging to the bank, totally apart from the offices used by
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the bank. They were paying about 1-80 per cent. The premises in Dunedin were bringing in, so far as I recollect, a net £950 a year without calculating rent for the banking premises at all. Besides, in my opinion, the Government are bound to get that building, and cannot hang off very long, for either a Supreme Court or a post-office. 42. You say the Bank of New Zealand made a good bargain?— Yes. 43. And of the two parties got the best of it ? —Yes. 44. You had either to make a call under adverse circumstances or to sell your bank?-—Yes. With what was taking place in Australia, and with the Bank of New Zealand not rehabilitated, if we had started to write down any capital, which we would have had to do, and which, when we got to the bottom of a few accounts, we were going to do, it might have created a run, which would not have stopped with us. It would have gone to the Bank of New Zealand, and to other banks too. 45. You think that two banks making calls simultaneously would have brought about a disaster? —Yes, it would probably have brought about what the two millions avoided. 46. And in addition you were pressed by some of the shareholders of the Colonial Bank ?—Yes. Seeing these enormous calls made by banks in Australia, with disastrous results to the shareholders, they were naturally much alarmed. Now, some of those banks, in spite of what has been called up, are seeking to reconstruct again. The Colonial Bank business was different from that of the Bank of New Zealand. It had no big estates. It was a liquid business, and it was much easier to liquidate it with all these small accounts than these banks that have large accounts. 47. Do you remember my telling you the Government were not prepared to let any bank go to the wall ? —Yes; when I was protesting against the two millions being given you said the Government would not allow any bank to go to the wall. 48. And that what we were doing for the Bank of New Zealand, if the necessity arose, would be done for your bank ?—Yes ; you said so then. 49. There has been a good deal said and written in reference to the question I shall put to you now. I have put the same question to Mr. Watson, Mr. Booth, Mr. Vigers, Mr. Johnston, and to all the witnesses. It is this: They have all sworn that in respect of the J. G. Ward Farmers Association and of the Hon. Mr. J. G. Ward there have been no writings-off. Do you confirm that evidence or otherwise ?—-I do. 50. Touching the balance-sheets : You have had considerable experience as a banker, and have had a commercial training and experience extending over many years ?—Yes. 51. If it has been stated or asserted that a balance-sheet which does not show bills under discount under the head of " Liabilities " is a falsification of accounts and dishonest, would that statement, being a very strong one, be warranted? —No, Ido not think it would be. I might say there are many companies that do not show bills discounted in their balance-sheets ; some, again, show them as a contingent liability in a note at the bottom, but many firms do not. The bank does not care whether they are shown or not; having these bills in their books, they know all about them. 52. You are chairman of directors of the Colonial Bank?— Yes. 53. You know Mr. Watson, who is now President of the Bank of New Zealand ?—Yes. 54. Were you consulted as to his leaving your bank and going to the Bank of New Zealand? —I was consulted by him. 55". And you consented to his going ? —Yes. He first agreed to stay with us; then we agreed to release him and let him go. 56. The next question is under our order of reference, and that is as to the fitness and conduct of the President (Mr. Watson) when he was with your bank ?—Well, I should say from the experience that he gained with us that he is quite capable for the position he holds. 57. From the position of the Colonial Bank, as regards the cover that was asked, and the condition in which the bank was proved to be on the purchase, do you hold Mr. Watson in any way responsible for that position, or was there anything that you have to find fault with during the time he was inspector for your bank?—No doubt he has committed errors in judgment, like the rest of us. We have all done that. But there is no circumstance I could point to, which would render him unfit for the position, in my opinion. You must see what any bank has come through during the last ten years —the severe crisis we have been passing through—and in my opinion no mortal management could have avoided making losses. Some directors, when a man makes a bed debt, want to sack him. My own opinion, which is different, is that when you have paid for his experience it is a bad thing to get rid of a good man, because he will take care not to get into trouble again. 58. Then, the Bank of New Zealand got the advantage of your experience in that?— Yes, you can put it that way. 59. Did you put anything in the good-will for that?—lSio, we did not charge for that. 60. I take it that you say this : that your bank was taken over at the juncture of a financial crisis extending over ten years, and that there had been no chance to recuperate?— No. There was no chance to recuperate. The bank was weakened, and no doubt some of the accounts handled at that time would have required drastic treatment, and this might have brought down some firms. 61. And, unless this crisis was taken into consideration, both the officers and the directors of a banking institution might be improperly blamed —misjudged ? —Yes, that is so —misjudged and misrepresented. No one could possibly know the difficulties and inward working of an institution during that crisis—a crisis which has not been known in the world before. 62. You know Mr. Mackenzie, now General Manager of the Bank of New Zealand?—l do. 63. In the course of the negotiations for the first amalgamation it was contemplated that there were to be some officers of the Colonial Bank taken over with the bank by the Bank of New Zealand? —That is so. 64. Was Mr. Mackenzie one of the officers ?—Yes. It was discussed and arranged by agreement between Mr. Murray and myself. Mr. Murray, of course, was urging Mr. Butt, and I was
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urging Mr. Mackenzie, and we agreed to make them joint General Managers, which I looked upon as a good thing to do ; and a further agreement was this, as far as I can recollect: that there were to be a proportionate number of the officers of both banks employed ; this was to insure that the officers of both banks should be fairly dealt with. 65. Do you look upon Mr. Mackenzie as a capable man and fitted for the position he occupies as General Manager of the Bank of New Zealand?—l do. I say this for Mr. Mackenzie :He has had the financing of the Colonial Bank through all this crisis, and I must say that I compliment him greatly on the manner in which he has managed it; and his knowledge of exchange through his experience in the East is such that I am quite sure he will make a considerable amount more of profit out of his exchanges than a less experienced man would. So far as Mr. Mackenzie being responsible for making bad debts—well, I look upon it as almost impossible for any man in those times to have gone on without making bad debts. A general manager's difficulty is this :He will take every precaution that he can, but he must rely on his branch managers. Sometimes a branch manager will urge for an increase on an account, showing fair reasons for granting it. If granted, and the account later on becomes doubtful, he often is afraid to divulge circumstances in connection with it, but will hide them in the hope that the account will prove to be all right, with the result that he makes a bad debt, notwithstanding that the general manager has been urging him to keep that account down. Therefore a general manager may make bad debts despite his own care. 66. A general manager, like a chairman of directors, I suppose, wants backbone ? —Yes; and I consider that Mr. Mackenzie has plenty of backbone. 67. Then, if it has been stated, as between Mr. Mackenzie and Mr. Watson, that Mr. Watson has always dominated and will dominate Mr. Mackenzie, who will only be the mouthpiece of Mr. Watson, do you concur in that statement?—l do not know how that statement could be brought about. Ido not think it is so. Of course, Mr. Watson was our chief inspector, and, having charge of the branch advances, Mr. Mackenzie and he were brought into contact. Mr. Watson would have the opportunity of putting the accounts before Mr. Mackenzie and discussing them ; and, Mr. Watson having experience of them, Mr. Mackenzie would, no doubt, be considerably guided by him.- Mr. Watson, again, was in the Bank of New Zealand a year before Mr. Mackenzie went there, and Mr. Mackenzie would naturally avail himself of his knowledge of the accounts. There was this to be said about Mr. Mackenzie : that the directors of the Bank of New Zealand were through every hole and corner of our balance-sheet and every account, and they engaged Mr. Mackenzie after they knew everything about the balance-sheet and every account- there ; and I may say that there has not been an item found wrong in the balance-sheet of the Colonial Bank by the Bank of New Zealand that I have heard of. 68. Then you do not substantiate what Mr. Macarthy said, that in this matter it is a case of the tail wagging the dog, instead of the dog wagging that appendage ?—No, I would not say say so. They are good friends, and would consult where necessary to keep out of bad debts. I have had this experience of Mr. Mackenzie, that if you decide to do a certain thing he will carry it out. 69. But their positions are reversed, and it will be rather difficult, I suppose, under those circumstances?—l do know that there would be much difference in that. Mr. Mackenzie, of course, is the dominating power here still. He is the dominating power, and Mr. Watson's position is to review his actions. 70. At all events, from your experience, extending over a period of years, you say that, as regards their capability and integrity, they are both fitted for the positions they hold at the present time?— Yes, they are both honest, able men. 71. Do you think that eighteen months or twelve months would be sufficient time for anybody to judge of the abilities of men like Mr. Mackenzie and Mr. Watson—any one, say, who has had no previous banking experience? Take, for instance, the directors of the Bank of New Zealand, from the time and opportunity they have had, would you consider them to be in a position to fairly judge ? —From what you have heard me say about them judging other people's actions, they must be men of very superior knowledge, and, probably, may be better able to judge than we mortals who have been all our days in the business. 72. You have told us that you were opposed to the course of procedure in the colony coming to the rescue of the Bank of New Zealand : that you disagreed with the manner of doing it. Are you of opinion that, unless something had been done to rescue the Bank of New Zealand it would have been disastrous to the colony as a whole ?—Of course the colony would have suffered very largely, and your revenue would have suffered considerably; but the relief that would have been given afterwards would be very great. When I argued that with you I was under the firm belief that the creditors and shareholders of the bank should be made to stand the loss on the bank, not the colony. lam not prepared to say that your course is the wrong course. Time alone can show that. You had nearly the unanimous support of the Legislature in your action, and it was generally approved by the country. 72a. Could you say from the developments which have subsequently occurred, both to you and to all concerned, that the Bank of New Zealand was in a much worse condition than any of us were aware of ?—Yes; I think it was ; but I was quite clear that it was in a very bad condition. 73. In 1894?— Yes. 74. There was a Committee set up by the Legislative Council to inquire into the position of the Bank of New Zealand?— Yes. 75. You were a member of that Committee?— Yes. 76. You examined Mr. Ward, Mr. Murray, and myself in respect to the position of the Bank of New Zealand ?—Yes. 77. And the Committee proposed legislation?— Yes. 78. And after that examination they reported that they saw no reason to interfere, and let the Bill proceed ? —But you will remember that the whole course of my examination of Mr. Murray was with a view to reduce the amount to as little as possible. It was a million. 1 was trying to see it
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reduced too. When I saw I could not get that done I abandoned the thing. 1 was wanting to lessen our risk until we saw what the developments would come to. Of course I am aware that you could not have the knowledge that a man who had gone into the accounts would have, and I was quite aware that the borrowing by them of the two millions would not clean up their balance-sheet. 79. It has been proved that four millions with the bank itself was about the loss? —Yes. A good deal has been said about the losses of the Bank of New Zealand, and, no doubt, at an earlier period they were going on in a style that made it very difficult for any bank to exist alongside of them. If we found fault with a man's account he at once said, "I will go to the Bank of New Zealand." A committee of investigation was appointed by their shareholders, who then recommended writing off a large sum, and, no doubt, then thought they had touched bottom. Since then the depreciation of properties in New Zealand has had a great deal to do with increasing that loss. They had also gone on with big accounts, landing them in further loss. The accounts would probably have been better if they had taken my process of liquidating them, for they would have got to the bottom of them; and I looked on it then that if all these estates had been liquidated and sold they would have been scattered among the people at the cost of the shareholders and creditors of the bank. 80. You have had some experience of scattering these accounts by liquidation ? —Yes. 81. But your evidence tells us that heavy loss is entailed so far as the bank is concerned, and, so far as the clients are concerned, there is great injustice ? —lf you had mercy on them why not have mercy on us ? 82. You are putting them in the position of bad losses? —I say this, that the sooner the Government purchase these estates under the Advances to Settlers Act the better—l mean all that are fit for settlement. 83. But the fact remains that the colony gave the Bank of New Zealand two millions of money?— Yes. 84. Since then they have taken over the Estates Company's assets, £2,700,000? —Yes. 85. Judging by the developments since 1894, one million would have been of very little benefit to the Bank- of New Zealand?— Well, two millions have been of very little benefit. I would like to say that, having put in the two millions, you were not setting the thing on its legs again. Having put in the money it was necessary to work it out. When a banker puts his money in an account he puts it in to see it through, and the colony has had to do the same in this case. I think it was a fair thing for the colony to take those estates, because, with judicious management, I think they may realise very fairly, and if the bank is not knocked about politically it will earn the money to help to meet the loss. 86. From your knowledge of what is going on in the colony, do you think the outlook is promising ? —There has been a rise in wool, and there is a good market for grain, and these all help. 87. Are land values rising?— They are higher, but sales are still difficult to effect. 88. Taking it all round, you think the outlook is promising ?—I think the outlook is very good. 89. And I take it take it that you think something ought to be done to obviate the unfortunate position in which the clients are in in respect to the lists ? —Decidedly. 90. Now, with regard to these lists and the agreement to purchase. Who commenced the negotiations of 1895? —It is very difficult to say. I think it came from the Bank of New Zealand. I know that our people would not move until it came from that bank. 91. I suppose there were several meetings which took place between the directors of both banks ? —There were a few. 92. Do you remember any dispute with regard to the furniture?— Yes, I remember that, and it was nearly bursting up the whole arrangement. 93. Do you remember whether Mr. Seddon was consulted about that? — Yes, I do. I thought it was ridiculous, having bought so large a concern, and which we understood was bought with the furniture and premises as they stood in the books. I thought it was a miserable thing to haggle about £3,000 or £4,000 in a big transaction like that; and I felt inclined, myself, to break off negotiations and put up with whatever might come. 1 remember your good services being called in, and that you helped to smooth over our ruffled feathers. 94. Beyond that, was the Government, or any member of it, made acquainted with the accounts in the lists?—No ; not that I know of. I can only speak for myself. 95. The whole of the negotiations were completed, the amount stated, and cover taken, and, so far as you are aware, the Government were not acquainted with the lists ? —No; there were only difficulties in connection with the furniture and the London account. The balance in London is taken before the balance here, and there is always an apparent loss on the transactions. We had, however, a lot of securities in London which had risen to a considerable value, and we held that the profit on these should be taken as against any probable loss. 96. It was stated here that there was some difference of opinion with regard to guaranteeing transactions of £20,000, and £5,000, and that your bank gave that guarantee?— That was a stipulation they made in bargaining, and we agreed to it, because the main account was with ourselves. 97. There was not much risk in doing that?—Of course, it is all in a general account. The risk was not considered very great then. 98. It has been stated here that the first mention of this arose through Mr. Larnach making a threat in reference to it at a meeting among yourselves, while the negotiations were pending. Do you remember anything about that ?—I remember Mr. Larnach being angry at our negotiations. He did not believe in taking the amount offered for good-will. He said it was worth £150,000, and it was difficult to conciliate him into taking what we did. That is what I remember. 99. At all events, you think the Bank of New Zealand made a good bargain ?—I consider they made a good bargain, because they not only got business which must have been ruinous to them if they had tried to get it, but they got rid of their greatest competitor. Their business was a bit interwoven with ours, and we could annoy them a great deal more than they could us.
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100. Mr. Montgomery.] You told us you were opposed to the two million guarantee?— Yes. 101. You were one of the Committee of the Legislative Council who investigated the matter on that memorable night?— Yes. 102. Did you recommend that the Bill should proceed?—l did not see what else one could do, when the Government were determined to go on with their proposals. I could not get my way, but as they were responsible I would do my best to help them. What chance would I have had as chairman of a local bank to stand up in the House to fight that Bill? Everything would have been put down to my position, and I should not have had much chance of succeeding if I had tried. I first tried to see if I could get Mr. Murray to cut it down to a million. 103. How far were you aware of the position of the Bank of New Zealand previous to the meeting with Mr. Ward when you were going to tell him about the bank ? —I had a good deal of knowledge about it at the time of the investigating Committee, and afterwards I had a good deal of knowledge about it from the late Mr. George Buckley. 104. That would be in 1889 ?—Yes; and I knew his difficulties. 105. But in the year 1894? Did you anticipate that the Bank of New Zealand would be compelled to close its doors that year ?—I knew from the circumstances that there was always a chance of its going down. I may say this : I looked upon it that they should have been husbanding their resources when they were letting out. They came down to Invercargill, and in three accounts they plumped down something like £100,000, and in one account they must have lost about half of that one within a year. 106. Did the bankers, generally, in the colony anticipate this crash ? —They always knew that the bank was insecure. I was over in Australia and got the particulars of what they were doing in Sydney, and I told one of the Managers in confidence there that we were preparing for emergencies, and that the Bank of New Zealand could not go on very long. 107. Did any of the others do the same?—l could not say that. It is not a thing I would discuss. I know that we had a lot of coin at the time in Australia, and we were getting it over. 108. Were the other banks also accumulating coin ?—I could not say that. 109. .The.Union Bank in particular?— They had a good lot of coin on hand always. 110. Now, referring to the Colonial Bank balance-sheet of the 31st August, 1895. You put down the bills discounted, and all other debts due to the bank, at £1,731,549? —Yes ; that is what was due to the bank. There was also what was done on exchange operations. 111. And did you know yourself that some of the accounts due would not realise par, or nearit ?—We knew that we were dealing with some accounts that might end in loss. 112. In other words, you were putting that down as an asset ?—How could you put it down ? 113. lam not answering questions?—l do not know how else I should put it down unless like that. 114. It would lead one to suppose that all this was a sham, would it not?—No; the value of an account in a bank depends upon the view a man takes of it. 115. But these are put down as good assets? —We hope they are good. But would a director ever know in the whole course of banking that all his accounts would be good ? He goes over them carefully, and he writes off a certain amount for bad debts. 116; Did not the directors know that some of these were bad ?—I do not know that they could know that. None were actually bad. Every liquidation account, so far as we knew, when fully realised, was written off. 117. You know that the amount of £1,731,549 is the exact total of the " A," "B," " C," and "D" lists?— Yes. 118. That is, amongst the good assets you include the whole of the "C" list?—No; we did not say we included it. The lists were not then made up. We struck out of that statement as directors the usual words, " After providing for bad and doubtful debts." 119. I notice that the profit and loss account provides for a gross profit for the half year, after making provision for bad and doubtful debts ?—That is not the directors' report; you turn to the directors' report. Some clerk in the bank allowed that to go through, and it was not noticed. 120. The profit and loss account is an official document, is it not ?—Yes; but the directors are not responsible. 121. It was laid before the shareholders?— Yes; but you will see what I said to the shareholders : that we would discuss the position of the bank with them if this sale did not eventuate. 122. If you had written down the assets to what they were worth would you not have had to write off capital for the year and not have been able to pay a dividend?—We did not propose to pay a dividend. We had to produce the statement, and did not propose a dividend. 124. When was the last dividend paid ?—The time before—a reduced dividend. 125. The 26th February, 1895 ?—Yes. 126. You paid a dividend then ? —Yes; and we thought we were justified in doing it. 127. And, meanwhile, had you written off anything for debts due to the bank?— Yes; we wrote off every year about £20,000. 128. Would that represent the amount that was actually bad ?—That is as far as we thought we were making good provision for. This is the report: "Pending the result of negotiations opened by the Bank of New Zealand for the purchase of this bank, as and from the 31st August, 1895, it is not the intention of the directors at present to deal with the balance, but to adjourn the general meeting on the 25th September until a date in October, by which time the wishes of shareholders, as expressed at an emergency meeting (shortly to be called, and of which due notice shall be given), will be known." 129. I notice that you say you do not propose to deal with the balance, but I do not notice anything as to this large total of £1,731,549. Do you suggest that they are all good assets?—lt is a matter of valuation of accounts. Evidently the shareholders were not taken by surprise, because they were selling shares at 13s. 6d,
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130. But do you think the shareholders put absolute faith in the balance-sheet ?—Every shareholder would know that it was purely a matter of valuation. Suppose you have a good propertyworth £10,000; you may think it is good value for that, but you cannot be sure, and when it came to a case of dealing with it, it might only be worth half. The only way of determining that would be by putting it up to auction, and probably it would not then fetch £2,000, there being no buyers. 131. Would you not make an estimate of the property in the " D " list ?—No ; I would not. 132. Did you think it was worth the full book-value ? —The list was not then prepared. We had a reserve fund, and, besides that, accumulated profits. 133. But you put it down at book value in the balance-sheet?— How would you put it down? 134. lam not answering questions. I am saying that you did put it down at full value in the balance-sheet ?—T say that many estates could show 20s. in the pound, and very justly show it as having cost that. I may take the case of a company in Christchurch which is familiar and known to you, in which there was supposed to be nothing wrong. They lost £35 a share, but nobody thought anything was wrong in that case, because they had to submit to a sale of their assets, and they went at very low prices, resulting in a heavy loss, but were supposed to be worth 20s. in the pound. 135. Did any one know that there was anything wrong with the accounts in the "D " list? —I should say there is no bank in existence, if you let me value their assets, in which I would not value them differently from itself. 136. But I am asking if anybody knew there was anything wrong with the " D " list ?— That list was not then made up. Supposing the "D" list was all bad, we had accumulated profits and the reserve that would have wiped the lot off. 137. But if they are at par, should not that have appeared in the accounts in the balance-sheet ? —No. We would have had to revalue everything, and taken good care that we had taken enough, and more than was wanted. 138. In other words, do you not think it is desirable and necessary that in a balance-sheet the assets should appear as of actual value, and not be left to be revalued at some future date ? —No; we were going to deal with them, and we stated in the balance-sheet that we were. Whatever I stated to the shareholders I know particularly well that if we had not come to an agreement with the Bank of New Zealand the directors would have had to go then into the position of the bank with the shareholders. 139. I should like you to find that, if you can '?—You will find that in the report of the meeting of the 26th September. I said, " Whatever your directors may agree to in the meantime will therefore be of no validity unless approved of by you. At present your directors think that further consideration of the report and the position of the bank should be postponed to a convenient date, by which time we hope to be in a position to state definitely what course we shall recommend the shareholders to adopt." 140. As a matter of fact, if the bank had written down its losses to the full amount every year, could you have paid any dividends at all for the last six or seven years ?—Decidedly ; we had always provided sufficient or would not have done so. The directors are all gentlemen who do not owe the bank a penny, and had perfect faith in it, were large shareholders, and even some of them increased their holding latterly. The directors had nothing to gain in the world by paying dividends if not earned. 141. But the bank stood in such a position, as its affairs disclosed, that a very large sum of money had been lost—hundreds of thousands of pounds ?—No. If you make bad debts it is only when you come to realise the accounts that you come to know the extent of them. 142. If the bad debts had been discovered year by year you would not have been in a position to pay dividends ?—Yes, we would ; there were not enough bad debts to prevent us paying dividends. Besides, there was always the reserve fund of £65,000, and independent of that there is always about £30,000 at the end of the half-year of devisable profits to meet bad debts with. Besides, I would like to say that the Bank of New Zealand or the colony had no interest whatever in the balance-sheet; they selected the business individually, account by account.
Saturday, 26th September, 1896. Examination of Hon. George McLean, M.L.C., late Chairman of the Colonial Bank, continued. 1 Mr. Montgomery.] Referring to the £20,000 advance guaranteed to the Bank of New Zealand as a condition of the purchase : Did you consider that was a valuable consideration to the Bank of New Zealand ?—I presume they thought so or they would not have asked for it. 2. I asked you if you considered it a consideration ?—I presume it was a consideration to them. I did not consider it a great risk when given. 3. What would the guarantee be worth—l mean in the sense of the difference with and without the guarantee to the Bank of New Zealand ?—That would depend entirely on the out-turn. I am not prepared to say what the value would be. 4. Could you not make an estimate ?—No. lam very chary about estimates. I see so many estimates that have not been borne out right, and I am very chary about making any estimate. 5. The Chairman.] Your estimate might be just as valuable?— Well, I do not know. 6. Mr. Montgomery.] About the £5,000 : Did you consider yourselves liable for the £5,000 without the guarantee?—No, I do not think we did. 7. There was a question about it as to who was liable?—No, I do not know that there was a question about which of us were liable, but there was some question about it being drawn properly. 8. What, the bill of exchange ?—Yes. 9. Can you give us an explanation of how this £5,000 came to form part of the purchase agreement ?—I could not, because I did not know anything about the £5,000 until I knew of it from them.
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10. But you know it now?— Yes. 11. Well?— Well, Ido not know that I should go into private business. It is a matter of private business. 12. We have had an explanation from Mr. Watson, or Mr. Macarthy, or one of the directors? — I think now, now I come to think of it, that the explanation I gave is not correct, either. That shows you how little I know of it. Ido not think there was any necessity for the bill beingguaranteed. 13. How did the hitch occur ? —I could not say. The hitch was that the Bank of New Zealand wished it guaranteed. 14. Do you mean to say that you do not know ?—No. I did not see what difficulty there was, and Ido not think, from the explanation given to me, that they were under a liability. I think they should not have asked us for it. 15. How was the Bank of New Zealand connected with it at all ?—No doubt it was portion of an account of the Bank of New Zealand and a portion with the Colonial Bank. That is how it came in, and the Bank of New Zealand insisted that they should not run any risk. 16. Mr. Seddon contends that there was not much risk in doing that. What is your reply to that ?—I could not give a reply to that. I could not say what risk there would be, but the draft has since been paid. 17. We have had one director of the Bank of New Zealand saying that the £20,000 advance was practically unsecured —or words to that effect—from the beginning; and we have had the President, on the contrary, telling us that it was always worth 20s. in the pound. Can you tell us which is right ?—No, I do not think I could ; but I am quite sure the director would not be right if he said it was worth nothing. 18. Would a person be right in saying it was 10s. in the pound?— That is an estimate again, and I am not prepared to go into estimates. 19. Do you think there was a considerable amount of risk?— That depends upon proof yet. 20. Do you not think there was a considerable amount of risk on the advance ?—lf they had not thought there was some risk they would not have asked us to guarantee it. We did not think there'was any great risk when the guarantee was given 21. But I am asking what you thought; you knew the position of the account? —No man could know the position of the accounts in the way they were being knocked about, in my opinion. 22. Do you think there was much risk or not ?—I consider there was a risk, or they would not have asked us to do it. For a portion of it there was a risk to them. 23. A portion of the £20,000, or £5,000 ?—The £20,000. 24. With regard to the £20,000, do you not think that was a very risky advance ?—There is no doubt there would be a risk about it, but it will entirely depend upon the out-turn of the account, and lam not prepared to go into the turning-out of any account. If I had the handling of the accounts, then I would speak with some confidence. I know nothing about the accounts after we gave them up. The liquidators have not consulted any of the directors, but have gone on on their own account. 25.. Do you think the advance was a prudent one to make ?—I did not make the advance. I cannot tell what other people thought. 26. I am asking you, not what other people thought ?—That is a question I am not prepared to answer, because circumstances change so quickly, and what one may think was a prudent advance at one time he would not think it at another. 27. But, knowing what you do, do you think it was prudent?—l am not prepared to say it was not at the time. lam satisfied they believed it was a prudent advance to make at the time. 28. The directors? —Yes ; the Bank of New Zealand, I believe, thought it was a good advance. 29. Do you know what time the advance was made ?—No ; I do not know the Bank of New Zealand's business. It was entirely the business of the Bank of New Zealand. It had nothing to do with us. 30. But you told us it was part of an account that you had ?—lt formed a portion of the account we had, and they said, "You must guarantee this as part of the bargain," and we said "Yes." 31. You can give no further explanation?—No, I am not going to give an explanation of other directors' proceedings. It is not for me to tell what is in the mind of any man. I know when I am making an advance myself what is in my mind, but I am not going to interpret what is in the minds of other directors. 32. You can give no reason why the Colonial Bank gave the guarantee ?—-Because the Bank of New Zealand insisted upon it as part of the bargain, and we did not at the time think there was a great risk in giving it. 33. But suppose they had insisted on other guarantees?— Well, we might have broken off the negotiations. We were very nearly breaking off on account of the £3,000 on the furniture, and the negotiations nearly came to an end. 34. At any rate, the guarantee of the advances formed an essential part of the good-will?—I do not know ; I would not say that. 35. Would you say it did not ?- —No; I could not say what was in their minds. One of our directors insisted on £150,000 for the good-will. Some of our directors said they would be satisfied with £100,000, and finally it came to £75,000. In our own minds this had nothing directly to do with the good-will, because the £75,000 would have been insisted on. . 36. This had nothing to do with the good-will ?—No doubt it would be very difficult to put it in any other way. The whole was a bargain transaction, and Ido not think it formed a particular part of it, because, as I say, we did not think we ran any extraordinary risk in giving the guarantee.
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37. It was not mentioned in the written agreement laid before Parliament? —No; I did not say that. 38. Nothing was said about that ?—I could not tell you where that is. 39. Why did you not mention it in the written agreement ? —I could not tell you that it is not mentioned in the agreement in some place or other. 40. Can you point it out in the agreement [agreement referred to]. — Paragraph 28 says : " It is agreed that the selling bank shall guarantee the due payment of all amounts payable under, or in respect of, any securities mentioned in the memorandum at the foot of the said ' C ' list as being held by the purchasing bank, and given or executed by any person or company whose name appears as a debtor in the said 'C ' list; but the said selling bank shall be entitled at any time to pay off and take a transfer of all or any of the said securities."?—l think it would be under that. 41. Were these two accounts mentioned in the memorandum at the foot of the " C " list?—l could not say. 42. It could not be referred to in clause 28 if it was not ? —lt says so. 43. It does not say anything about the £20,000 there ?—No; in the agreement it says, "shall guarantee " the amount of everything. 44. In the " C " list ?—Yes; the " C " list they did not take over. 45. Then, this was part of the " C " list account ?—That, no doubt, was so. 46. Is the £20,000 included in the amount of the " C " list 47. Hon. Mr. Seddon.] There have been no writings-off in this account, Mr. Chairman, and I do not think we should waste our time in considering whether this particular account or any other account is in the " C " list. (Discussion.) The Chairman.] As we have so little time left to finish the inquiry, I hope members will restrict themselves to asking questions which are within the order of reference. ■ 48. Mr. Hutchison.] How long were you chairman of directors of the Colonial Bank? —For a very long time, with the exception of the times I was away in England. 49. From the inception ?—Not quite. 50. How many years would you say ?—More than ten years. 51. And you were chairman at the time of the issue of the last balance-sheet?— Yes. 52. Have you a copy of it with you ?—No. 53. Did you sign it as chairman of directors ?—Yes. 54. How long after closing the books for the half-yearly period would the materials be complete for the compiling of the balance-sheet ?—I do not understand that question, quite. 55. You closed the books on the 31st August?— Yes. 56. Then you would have to get all returns from the branches at the head office ? —Yes. 57. And you would have to get the reports from the different managers. How soon would these come in ? —Variously estimated ; probably three weeks or so. 58. And then it would be the duty of the accountant to make up the balance-sheet ? —He makes up the balances to the 31st August. 59. But how soon after is the material laid before the directors?— These profits are laid before the directors immediately after the balance is struck. We do not get the balance-books until some time after. 60. How long after ?—I should say, from three weeks to a month. 61. What would be the action, next, by the directors, after seeing the balances ?—The directors do not see the balances then. They would see the aggregate balance-sheet. The balance-books would be available for the management as they arrive. 62. The management would go over them first at the head office?— Yes. 63. What would the management do besides going over them—what would be the result of their going over them ? —The result would be, that if there were any amount they wished the directors to decide upon they would submit it to the directors. 64. That is the way the balance-sheet is drawn up as a rule ? —We know the profits the day after the balance is struck. The next morning the head office has got all the profits at the different branches telegraphed, and we know the reported profits the day after the balance. 65. You said that some took three weeks to ascertain ?—They are the balances and reports of the managers. 66. Do the inspectors go over them? —Yes. 67. Does the chief inspector then supervise them ?—Generally. 68. Would the general manager then go over them ?—Yes. 69. Are they laid on the table for the directors ?—The process is that the chief inspector and his staff see them, and then the general manager. That would probably take a lot of time, and would probably not be finished for a couple of months. 70. Would two months after the close of the half-year elapse before the balance-sheet was in a position to be signed?—No; you have to take the accounts submitted. The directors put out the report when they know the profits reported. 71. When is that?— They know the profits the day after the balance is struck. 72. Do you mean to say that the balance-sheet of the 31st August was in all its essential particulars known on the Ist September?— The profits were known on the Ist September, and what you had to deal with. The balance could be made up whenever the returns come from the branches. The telegraphic report comes the day after the profits are struck. Then the different managers send an abstract of their accounts, and that is written up, and the aggregate balances taken out; but the reports do not come until some time after. 73. It will shorten the inquiry if you will tell us when you signed the balance-sheet for the last half-year ?• —It would probably be a fortnight after. * 49—1. 6.
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74. Do you know that the balance-sheet indicates a profit for the half-year of close on £20,000 ?—Yes. 75. How did you ascertain that ? —ln the ordinary way—that is, from the different profits from the various branches which were before us. 76. Did you investigate the different balances ?—No ; we had not the material to do so, further than the statements from the different branches that these were the profits. 77. But you surely waited before issuing the balance-sheets to get the reports from the officers?— No. 78. You did so, then, without inquiring as to the correctness or otherwise of the officers' estimates?—lt is our officers who make up these, and this is done from the abstracts received. 79. Did you accept the officers' estimates of the balances at the end of the half-year without going into them yourselves ?—We are bound to do so. The directors are only there two hours a day in the week. Igo there as chairman very often, but we never take any control over the detail business of the bank. None of us could do that. Ido not pretend to do it, 80. Did you not make yourselves responsible for the amount you declared as profits ?—We rely on the reports of our responsible officers. We could not possibly do more. 81. You say that is your position?— Yes. 82. How do you interpret that article in the deed of settlement which requires you to make allowances for bad and doubtful debts before declaring profits ? —A sum is put aside, enough for bad debts, on our officers' reports. 83. What amount did you write off for the half-year ending 31st August, 1895? —We simply put that balance-sheet forward as a statement, and we told our shareholders that we did not propose to give a further statement then, that there were negotiations going on, and we postponed the meeting until a certain time, when I told them we would be prepared to go into the position of the bank, and make proposals as to what we should do. 84. That is what you stated at the meeting of shareholders in September ?• —Yes. 85. I come back to the question I put a few minutes ago : What amount did you allow for the half-year ending the 31st August, 1895, for bad and doubtful debts ?—We had not decided that. 86. Did you make any provision, or none? —We put aside £5,000; but that was put aside in this way : that it was to guard against profits which might not have been earned, or towards bad debts. 87. Where is that shown in the balance-sheet ?—lt is not shown at all in the balancesheet. 88. You put aside £5,000 ?—Yes. 89. Did you make any other provision for bad and doubtful debts during the half-year ending 31st August, 1895? —We put this aside. It might be either for bad debts or profits on accounts that might not have been earned. I have here the statement of what we took away from our profits for bad debts—£2BB,623 2s. lid. We wrote that off out of profits, and the public did not know anything about it. For the last ten years we have put aside about £20,000 a year from our profits. 90. What were the gross profits for the half-year ?—They are shown in the balance-sheet. The gross profits were £35,773 ss. 6d. 91. Did you deduct anything from that for bad and doubtful debts ?—This £5,000 was deducted, but we were not dealing with bad and doubtful debts at that time. 92. Where is it shown to be deducted ? —lt is usually put to the bad and doubtful account until we decide what debts there are, when the general manager tells us what he recommends us to write off. 93. lam asking you about the balance-sheet you issued to the public. I have asked you to state the gross profits for the half-year ending 31st August, 1895 ?—£35,773 ss. 6d. 94. Is that after making provision for bad and doubtful debts ?—The £5,000 would be deducted before that. 95. Then the gross profit would have been £40,773 odd ?—Yes. 96. And you then deducted £5,000 ?—Yes. 97. Making it £35,773?—Ye5. 98. Had you any materials before you for arriving at the deduction of £5,000 ?—No ; it was recommended by our manager. We always took away a considerable amount out of profits. For the last ten years we took about £20,000 a year. 99. That half-year you only took £5,000 off?— Yes, the profits were not so good. We did not deal with bad debts fully until the balances should come up from the officers. 100. But you signed the balance-sheet as chairman ? —I say, how could I know about the individual accounts of the bank ? lam not there to manage the hank. I simply took the profits as they were stated by our officers, and had to be content with that. I could not go to every branch and ascertain that for myself. 101. How did you ascertain about the sum of £5,000? —We did not ascertain about that £5,000 except on the report of our manager. 102. Was it guessed ?—We took that simply from the profits. 103. But why was it £5,000 instead of £10,000, or any other sum ?—You might ask why it was not £40,000, or any other sum, in previous years. 104. I ask you whether you had a basis for that £5,000 ?—We had no basis, because the circumstances altered, and it might have required a good deal more than £5,000. The report issued with the balance-sheet was a special one, and all reference to bad and doubtful debts being provided for was omitted. 105. You are aware of the article in the deed of settlement with regard to the making-up of the balance-sheet? —That provision in the deed of settlement was not present in my mind. It was only pointed out to me after liquidation.
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106. You were chairman of directors over ten years, and you never knew the provision in the deed of settlement requiring you to make certain provision for bad and doubtful debts before making up your balance-sheet ?—I did not remember it. It is a matter we would provide for—bad debts— without any mention in deed of settlement. 107. I am going to ask you whether the 103 rd paragraph of the deed of settlement does not impose a duty on the directors, in making up the balance-sheet, to deduct from the gross profits of the half-year, or charge to the reserve fund, not only debts due to the bank which shall appear to the directors to be bad debts, but also such as appear to them to be of a seriously doubtful character ? —Those serious or doubtful debts are simply a matter of valuation and opinion. 108. Do I understand that you had not these particular debts before you in making up your balance-sheet?— What debts? 109. Had you them at any time?—We had them when bad debts came to be reported and considered. 110. How soon after?— Some of them developed in a few days after. 111. I understand you fixed the date of signing of the balance-sheet about a fortnight after the closing of the half-year?— Yes, but I signed the balance-sheet as at the 31st August, and not at any other time. You must state your balance-sheet on the date your accounts close. You cannot alter your balance-sheet after that. 112. When did you ascertain as to the bad and doubtful debts exceeding £5,000? —I could not tell you when we ascertained it. 113. Within a month after the 31st August—in September?— Yes. 114. And you had a meeting, which was adjourned, in that month ? —Yes. 115. When did you meet again ? —The Bth November. 116. At that time had you more information as to the bad and doubtful debts ?—We knew of the lists then. 117. What did they amount to then?—l could not tell you. That would simply be an estimate of what they were then. 118. Just so; but they were debts existing on the 31st August ?—The meeting of the Bth November was only a meeting to confirm the sale. It had nothing to do with anything but the sale. 119. I ask you whether at the meeting in September you had information that the bad and doubtful debts greatly exceeded the £5,000 ?—Well, I had information that they might. 120. Had you in September a report from your officer at Invercargill as to an account Hon. Mr. Seddon: I object to this question, as it will lead to questions which have already been ruled upon. The Chairman : I must simply rule in the same way that I have done before. 121. Mr. Hutchison.] Who is Mr. George Cowie?—He is the London managing director. 122. Of your bank?— Yes. 123. You have been asked some questions as to the sale of the Colonial Bank to the Bank of New Zealand. We have heard elsewhere, and you can tell us whether it is correct or not, that a hitch occurred on Saturday, the 12th October, with reference to the terms of purchase ?—I cannot name a date. 124. With reference to the J. G. Ward Farmers' Association Account?—l do not know of any. 125. You do not know of any hitch?—l do not know of any hitch about any particular account; but I cannot go in any special accounts or private business. 126. You decline to say anything about it ? Hon. Mr Seddon : I object to this question being put. Witness : There is a mistake about this. It must have been a hitch with the directors of the Bank of New Zealand, if there was a hitch. There was no meeting of the directors of the Colonial Bank and the Bank of New Zealand that I know of where there was a hitch of that sort put before us on the 12th September. 127. Mr. Hutchison.] But a difficulty arose before the completion of the agreement as to the terms of the agreement ?—There were many difficulties about the terms. 128. lam asking whether there was one in particular, where ? —I cannot recollect. 129. Do you recollect if it was a hitch over the Ward Farmers' Association's account?— No, Ido not recollect; and Ido not think there was any meeting of directors of the two banks over any hitch with regard to that account specially. 130. Will you refer to the agreement which was laid on the table of the House and look at clause 18 : " With respect to the accounts appearing in the ' C ' list, the selling bank shall indemnify and protect the purchasing bank against any loss or deficiency on the realisation of such accounts respectively, provided that the purchasing bank shall, immediately on this contract taking effect, write off the amounts standing in the right-hand column of the 'C ' list, and credit the respective accounts in such list with the amounts so written off." I ask you whether that was done ?—There was no forgiving of any debt whatever. 131. That is not the point ?—I do not recall any writing-off. 132. The question is, whether this provision was complied with?— There was no writing-off. 133. I ask whether effect was given to this part of the contract ?—I decline to answer it in any other way than that we forgave no one. A debt written off in a bank is the forgiving of a debt, and there was no forgiveness in this case. 134. I ask again if this part of the contract was given effect to ? —lt is to be presumed it would be so if it is in the agreement. 135. So, as a matter of fact, a certain sum would be credited to the accounts in the " C " list ? —I could not tell you. 136. Do you not know that a sum of £55,150 was credited to the " C" list?
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Hon. Mr. Seddon : I object to this, as it is simply getting round the order of reference. The Chairman: We are prohibited from inquiring into accounts unless there have been writings-off in those accounts. 137. Mr. Hutchison.] Now refer to clause 28 of the agreement. Was that given effect to? — That does not rest with me at all, and I know nothing of what they have been doing. 138. You are "the selling bank " ?—Yes, but the liquidators are in possession of the selling bank. 139. This would be from a certain date, some time after? —It was some time after. 140. [Clause 28 again read.] I ask you whether the Colonial Bank did guarantee payment of the accounts referred to in the memorandum at the foot of the " C " list ? Mr. Cooper: This is a legal clause, and is equivalent to an absolute guarantee on the face of it. 141. Mr. Hutchison.] Was it so treated?—l presume so. It is there in the agreement. 142. Did you give any other form of guarantee ?—No. 143. What was the amount of the total amounts mentioned in the memorandum. —I am not prepared to give any particulars of any account. 144. We know them already. Were they £20,000 or £5,000 ? —Yes, but there were more than that in the "C " list. 145. lam speaking of the memorandum at the foot of the "0" list?— Yes, but there were other accounts in the " C " list, and I decline to go into private accounts. 146. My question was not as to the accounts in the " C " list, but as to the amounts mentioned in the memorandum at the foot of the list? —Well, I cannot give you them. 147. I wish to ask you whether one amount was £20,000 ?—I cannot say that. 148. Do you mean that you do not know? The Chairman : The witness has already stated that he cannot give information with respect to private accounts. 149. Mr. McGoivan.] How much was paid up on the share-capital of the Colonial Bank ? —£2 a share. 150. What was the dividend declared for the half-year previous to the sale ? —There was no dividend-oii the half-year that the sale was made. 151. The half-year previous to the sale?— The dividend for the half-year was reduced to ■ —if I remember rightly—6 per cent. 1.52. It was not 7 per cent. ?—No, I am sure it was 6 per cent. 153. What was the total share-capital of the Colonial Bank? —Two hundred thousand shares —£400,000, £2 paid up. 154. What were the annual profits, roughly, say, for the five years previous ?—I could not tell you that, but they would be shown from what was in the balance-sheet, to which you have to add what was taken away to cover depreciation and bad debts. If you ask me about any one year or half-year I will tell you the exact profits. The profits would be shown in the balance-sheet, plus £20,000 a year taken out of profits, not shown to the public, and put aside to provide for bad debts. 155. You say there has been an average of £20,000 per annum devoted to the cover for bad debts ?—Yes, or nearly that. 156. Can you say what it was the year previous to the sale?—ln 1894 we put £20,000 aside out of the profits made for bad and doubtful debts. 157. Did that meet the bad and doubtful debts for that year?—We considered it would. 158. What would it be the previous year—lß93?—£2s,OOO. 159. At the time of the sale, you say the amount for the half-year was £5,000? —Yes. 160. Will you give the Committee some reason for setting aside £5,000 —without going into the accounts —when for previous years you had put aside no less than £20,000? —That is only for the half-year. 161. That would make it £10,000 for the whole year?— Well, yes, but the amount was larger the previous half-year. 162. Did you do that in the previous half-year?— Provision was made in dealing with the bad debts then. 163. If that was so, would not that show the position of the Colonial Bank to that extent to be so much more to the good ? —No, the Bank of New Zealand bought the bank account by account— they did not buy by the balance-sheet at all. They value each account separately. They took over, first, a large amount as undoubted —nearly a million; then the "B" and "C" lists; and, in order to guard themselves against loss, they put an amount against each item referred to, and then put a blanket on the whole lot, so that, if one was over and another was short, they could provide for the deficiency on one out of the surplus on the other. 164. You put nothing aside for the last half-year ?—I said that we did not deal specially with the bad and doubtful debts because we were in the midst of the sale, and the report was a special one. 165. You have given us the average you required set aside annually covering bad and doubtful debts. Could you give us the average of the profits ?—That is easy to get from the balance-sheet. If you take any one balance-sheet, and add this amount to it that I gave you, you will find the total profits for the year. For instance, if we had shown in the balance-sheet net profits £30,000 as profits that year, put £20,000 aside for bad debts, £50,000 would be the profits of that year. 166. Was there any year for the previous five years during which no dividend was paid ?—No. 167. And it was the smallest dividend paid during the last five years?— Yes, 6 per cent.; but in the last half-year we were paying nothing. 168. Taking the called-up capital of the shareholders, and the amount of dividends you have been able to pay out of the profits of the business, do you now consider you have done a good thing for the shareholders of the Colonial Bank in selling their business to the Bank of New
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Zealand for the sum of £75,000 ?—No, Ido not. But we had this to take into consideration : I considered it was worth far more than that, but we had to consider that we had to go into the question of bad debts—which the Colonial Bank could easily have done —but we had this to face afterwards : that the Bank of New Zealand was not rehabilitated, and there was £2,350,000 to write off there. The state of affairs was very uncertain. There might have a run taken place on us, and then that might have brought down the Bank of New Zealand, and probably other banks. Then our shareholders would not have been worse off than the others, but we had to choose between two evils. 169. You do not mean to say that you sold the Colonial Bank in order to rehabilitate the Bank of New Zealand? —We did not do that, but it was a necessity for the Bank of New Zealand to get the Colonial Bank, and if they had not got it, seeing that the colony had taken the Bank of New Zealand in hand and become responsible for it, there might have been a war of rates, and probably they would have gone for us specially and driven us to the wall; but, if we had not come to terms at the time, we were prepared to risk all that. 170. Do you think the directors of any bank are justified in paying dividends out of profits if upon their Capital Account they had to show a loss ?—You do not mean to say that we did that ? 171. lam asking your opinion? —I sa.y, No. 172. What will the £75,000 amount to —10s. a share?—No ; I think it will amount to 7s. 6d. 173. Do you still think the Colonial Bank, in selling a business which enabled them to pay the shareholders a dividend of never less than 6 per cent, for about half or two-thirds of the paid-up value of the shares?—lt was put fairly to our shareholders. We issued a special proxy form —" I vote for the sale," or " I vote against the sale." They were told, if they did not agree to the sale, the directors were ready with proposals to strengthen up the institution, and they elected to sell ; and then they had the contingency that a large amount that the Bank of New Zealand kept as a reserve, and which we calculated was unreasonably large, would come to them—at all events, a portion of it. 174. Hon. Mr. McKenzie.] There has been some talk with regard to the Colonial Bank, to the effect that if you had not been able to sell to the Bank of New Zealand your bank would not have been able to keep open. Do you think that would have been so ?—That would not have been so. We could have gone into the matter of anything doubtful when we ascertained the depreciation; we could have called up so much money, and written down our capital. We had too much funds, and could have given our shareholders one, two, and three years to pay their money in. And, of course, our shareholders knew that they had to run the risk then of the banking institutions not being stable, and they had to take the probability of a run on the bank, which might bring it down, along with other banks. 175. You said that during the last ten years, during which you had been chairman of the Colonial Bank, there had been a general fall in the prices during that time ?—Yes; very much. 176. And you estimate that your loss is due to the gradual falling down of the prices and of your securities? —Greatly to that, and our accounts reckoned on a liquidation basis. 177. The actions of your directors have been pretty severely criticized as to the state the bank was in when it took the £75,000, and gave such a large guarantee for the accounts taken over. Was your position worse then in that way than that of other banks ?—I do not think so. I think if you' put any bank through the same process, it would not come out so well. 178. Do you think the Bank of New Zealand would come out so well if it went through the same process ?—I am satisfied that the Bank of New Zealand, or any other bank, could not put their affairs on a liquidation basis and show them to come out better than we did. 179. I was not here at the time you gave your evidence, but I see by the report of it that you made a statement to the effect that, even with regard to the present directors, you think they should be a little more merciful in their criticism, seeing that they had to acknowledge that they made a mistake to the extent of £40,000, or £50,000, in one of their securities ?—What I said was this : That they had been very severe on the directors of the Golonial Bank, but that they were new to banking themselves, and appeared to think that everybody else was wrong, and they were the only " Simon Pure," and that I felt that, perhaps, when they had been a couple of years longer in office the difficulties they would meet with would make them have a little more mercy in criticizing those that went before them. Their evidence was not quite dry on the paper when they had to send their auditor down to say they had made a mistake of £40,000 or £50,000 on one account. Well, that ought to teach them that they may have difficulties to encounter by-and-by. 180. You have given evidence with regard to your balance-sheets from time to time in the colony, and, in answer to one question, you gave an instance of a company in Christchurch which discovered a big loss to the shareholders after liquidation. What company did you refer to there ? —I simply instanced that company because I knew that Mr. Montgomery knew about it, and that it was a case where everything was fair and straightforward. That was not a Court liquidation, but their own, and I showed what was the result of it. 181. What company was that? —I cannot answer that question. Ido not think it is wise to refer to names. That was an affair that went into voluntary liquidation, and I wanted to draw Mr. Montgomery's mind to it when he was questioning about the liquidation of the Colonial Bank. I would like to say this: that of course Mr. Montgomery and Mr. Hutchison have been asking me lawyers' questions —not with a view always of eliciting the true state of things, but, lawyer-like, to put one in a corner. I would like to refer to the last balance-sheet. When we issued the balancesheet that was a statement of account up to the 31st August, we omitted the usual reference in the report that bad and doubtful debts were provided for. We then had in our mind that there were certain accounts that the management and directors were dissatisfied with. They were being dealt with, and the securities were turning out differently from what we expected. We had several in our minds that might land us in bad debts; and another one we thought would come largely to the good during the year, increasing the bank security, but instead of that the man has been
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swindling the bank. When we put out that statement we told the shareholders that we would not deal with the accounts until a meeting to be adjourned. We also told the shareholders at that meeting that if the sale did not come off we would go into the position of the bank and make proposals. Had this sale not come off we would have gone into every account, written down our capital, called up money, and probably have been in a position to fight the reconstructed Bank of New Zealand. Of course, having these things in view we could not pay a dividend—we dared not pay a dividend. The directors, while prepared to carry on business, were not prepared to carry on at a risk, and unless we were advised it was earned we would not pay a dividend, and therefore we would have had to deal with the affairs of the bank. And, still further, we called a meeting of the shareholders, when we put the agreement before them. W T e put in special proxies, asking them to vote as they wished, and told them that if the sale was not effected we were prepared to strengthen up the institution and go on. I put this before the Committee as Ido not want it to be thought that I shirk any questions. I want to put my statement fair and straightforward. These lawyers in putting their questions to me were trying to put me in a corner, and perhaps my answers looked as if I were fencing the questions, which I did not wish to do. William Graham Rhind, Inspector of the Bank of New South Wales, sworn and examined. 182. Hon. Mr. Seddon.] You have had considerable banking experience ?—Yes, I have been engaged in banking thirty-five years. 183. And in the course of that experience you have had a great deal to do with the balancesheets of banks, private companies, and private persons ? —Yes. 184. I desire to have your evidence as an expert on a question that has been raised in respect to bills under discount in the balance-sheets of companies and private persons. If it has been asserted that a balance-sheet of a company, where there have been bills under discount by the company, and the bills under discount are not shown as a liability, that that is a falsification of accounts, would that be correct? —I will explain in this way: I think it is absolutely essential to proper book-keeping that those bills should be shown as a contingent liability; but I should not say it was false and misleading not to show them. I have had many hundreds of balance-sheets put through my hands, and I do not think there are 50 per cent, of ordinary tradesmen who put them down as contingent liabilities, and there could not be the slightest suspicion for believing they were guilty of falsification or fraud. It is only a matter of book-keeping. It is only in leading firms where they can afford to keep a first-class book-keeper, where balance-sheets are drawn out with such care, and it never suggests itself to ordinary traders that such a thing is required. Only last night I got a balance-sheet from a country storekeeper. This man had made out his balancesheet, and was coming to town. It was highly satisfactory, and he was crowing over it, and I, knowing I was coming here to give evidence on this matter, looked to see if he had shown his bills under discount, and they were not shown; and I may say that 50 or 60 per cent, of the balancesheets do not show the bills down as liabilities. At the same time, I think it is proper to put them down. 185. As contingent liabilities ?—As contingent liabilities, not as actual liabilities. As a matter of fact, they ought to be put down in this way. With good bankers at Home, two good names have to be put down on the bill, but in the colonies that would be impossible. There are large wealthy firms who bring in hundreds of thousands of pounds' worth of bills, which are simply traders' acceptances. They rest largely on the indorsers. Many of them go back to the indorsers, and that resolves itself into a liability on the part of the indorser. Therefore I think it is right that these bills under discount should be put in the balance-sheet as a contingent liability. It would not affect the capital. In the one case it would be liabilities to the bank, so much, and on the other side, bills receivable as per contra; but it would show the entire position.-----186. If it has been stated that where bills under discount are not shown as liabilities, that it is a falsification of accounts, and dishonest, a reflection has been passed upon a very large circle of commercial people ?—lf the statement were made per se ; but I think it would be a sweeping remark to say that there was an intention to mislead, or that there was fraud. 187. Hon. Mr. McKenzie.] Do you mean by " contingent liabilities " this : Supposing a firm or company brought you ten thousand pounds' worth of bills to discount. Of course, it would not be possible to say that all these bills would be paid; but you would allow 25 per cent, contingent liability on them ?—lt all depends upon the indorsers. Thus, a large hardware firm might have five hundred bills in one pocket, some against men who you knew were not able to pay in ss. 188. Would you take them from customers dealing with you ?—Yes, those that are undoubted, because it is manifestly impossible to go through accounts running up from £10 to £50 to see what they are ; but, still, I think the indorser ought to show these bills as a contingent liability. It is generally shown so by people who are able to keep a first-class accountant, but in country districts people keep their accounts in a more simple form. 189. Hon. Mr. Seddon.] There are a very large number, though, who do not in their balancesheets show their bills under discount as a contingent liability ? —I should say, 50 per cent, do not do it. James Crawford Hanna sworn and examined. 190. The Chairman.] What is your business ?—I am inspector for the New Zealand Fire and Marine Insurance Company. 191. You were formerly manager of the Estates Company?— That is so. 192. You are required to give evidence before this Committee regarding that company. Will you make a statement, as concisely as you can, showing your connection with the company and matters concerning it as far as they come within our order of reference? Have you a statement prepared ?—Yes, I have a written statement. I would like to say verbally, as regards the adjustments between bank and Estates Company in August, 1890, on the sale of the globo assets to the Estates
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Company on the basis of Mr. Hean's valuation, that the adjustment-sheets were prepared by me, approved by Mr, Butt on behalf of the bank, and subsequently passed by the Chartered Accountants in London without a quibble. Presumably, the present adjustments with the bank, the Estates Company, and the Realisation Board are being made on the same lines. I much regret the necessity for having to make this explanation, which, in justice to the late attorneys and myself, has been forced on me by Messrs. Booth and Foster's allegations. Statement by Mr. Hanna. Wellington, 23rd September, 1896. There are certain statements made to the Committee by Messrs. Booth and Foster to which I desire to specially refer. 1. Mr. Booth says that I was retired because I had no practical knowledge of station management. Mr. Booth came to this conclusion almost immediately he was appointed, and before he had any personal knowledge of me or my capacity. Apparently the recorded testimony of the London and colonial boards, composed of such men as R. Rome, R. J. Jeffray, John Murray, and H. J. Le Crerr, gentlemen who had perhaps larger experience of station management in the colonies than any four others in Australasia, did not weigh with him. The Estates Company was administered on the same lines as Goldsborough, Mort, and Company, the Australian Land and Finance Company, the Union Mortgage Company, the New Zealand Loan and Mercantile Company, the National Mortgage and Agency Company, and, in fact, all large corporations of the kind in the colonies and in London. The chief executive officer, or general manager, is the mouthpiece of the board. He organizes and looks after administration and finance. The practical inspectors and managers are under him. I am not aware that my qualifications differed from those of the chief executive officers of any of the concerns I have mentioned. Mr. Booth and the other attorneys of the Estates Company held that a practical man, having knowledge of station management, could discharge the duties of the executive in addition to the duties performed by three station inspectors. The station properties represented one-third of the entire assets. The other two-thirds came under the headings of mortgages, liquid assets, trading concerns, town, suburban, and country lands. If Mr. Foster can efficiently discharge the executive duties of the Realisation Board and the Estates Company in addition to the duties till lately discharged by the three station inspectors, he can claim to have accomplished more than any other man living in Australasia. Mr. Booth states that Mr. Foster is saving the company thousands. No man with practical knowledge will take this statement seriously. Moreover, the certified returns prepared by Mr. Foster flatly contradict it. Mr. Foster, in his evidence before the Committee on Thursday and Friday last, stated : — 1. That the net surplus of revenue over expenditure for the year ending March, 1896, was £58,000. 2. That, in fixing standard values, sheep had been written up £94,063 in excess of actual values. 3. The system of book-keeping he found on taking office was not, in his opinion, satisfactory. 4. That a few days ago the whole of the fat sheep in the South Island, numbering from six to seven thousand, had been sold at 18s. 4d. in railway-trucks. 5. That the increase in the Estates Company's profits in 1896 was £51,000 more than it was in 1895. 6. That he had effected a saving of £19,000 per annum in the cost of management. 7. That the largest economies in the management were owing to the amalgamation of a set of station properties in the Waikato. 8. None of the economies introduced by him had been prompted by the late management. 9. That the frozen meat stored in Auckland would be sold at a profit. 10. That the revenue from the stations from 1891 to 1896 was as follows :— 1891. —£16,265, which was due largely to the increased value of sheep. 1892. —£72,991, about £14,000 of which was due to the increased value of sheep. 1893. —£39,391, stock this year standing at the same figures. 1894. —£35,885, there being a reduction in the value this year. 1895. —£12,356, the stock this year being kept at its standard value. 11. Realisations, year ending March, 1896, £185,725. I will deal with Mr. Foster's statements in their order. As to Nos. 1 and s—Profits5 —Profits :— The net revenue, without deducting bead-office charges, produced by the Estates Company (which dealt with the whole of the globo assets), averaged for the three years and seven months ending the 31st March, 1894—a period of unexampled depression—£loo,ooo per annum. During the first clear year of Mr. Foster's management (that is, the year ending 31st March, 1896) prices improved all round, as follows: — Increase in the value of wool-clip, say, l|d. per pound ... ... 19,860 Saving in administration under new management, as per Mr. Foster's estimate ... ... ... ... ... ' ... ... 19,000 Improved returns from trading concerns—mainly, Morrin and Co., Auckland, Globe Timber-mills, Adelaide (owing to the mining booms in Western Australia and Auckland), and the Northern Roller-mills, where lucky purchases of wheat resulted in a profit of several thousands .. ... ... ... ... ... ... 16,000 £54,860
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In other words, if allowance is made for the increase in the prices ruling for wool, &c, and the increase in the revenue from trading concerns (neither of which is due to Mr. Foster's intervention) the revenue from all sources during the first year of Mr. Foster's management— plus " estimated economies, £19,000 " —should have reached £154,860. The actual revenue (without deducting head-office charges) from the properties held by the Estates Company and Assets Realisation Board amounted to, according to the certified balancesheets placed before the Legislative Assembly, — £ s. d. Estates Company ... ... ... ... ... 54,667 10 0 Assets Realisation Board ... ... ... .. ... 64,788 15 7 £119,456 5 7 or about £19,000 more than the properties produced—good seasons and bad seasons—for the period ending March, 1894, but £35,404 less than the net results forecasted above. (An amount of £16,842 3s. lid., which appears as a writing-up in the assets of the Auckland Agricultural Company, requires explanation.) Out of the amount available the Realisation Board has to pay— The Bank of New Zealand Estates Company, £ s . d. £ s. d, in terms of the Banking Act ... ... 96,446 5 10 Land-and income-tax and license-fee ... 8,346 7 0 General charges ... ... .. ... 3,855 15 11 108,648 8 9 And the Estates Company has to pay— Charges account ... ... ... ... 8,532 15 4 Amount suspended on account of the Auckland Agricultural Company ... ... ... 16,842 311 25,374 19 3 Total... ... ... ... ... £134,023 8 0 or about £15,367 in excess of the income. But the bank has, under the Act, to pay the Realisation Board £50,000 out of its profits. No provision has been made out of the Realisation Board's profits for the cost of debenture conversion, amounting to £45,000, which stands as an asset in the balance-sheet. As to Nos. 2 and 4—Standard values, of sheep : — The standard values were fixed on this basis: Under the authority of the attorneys, I took the current local market-values, as certified to by the managers at the various centres, from the formation of the Consolidated Properties Department in 1889, and then continued on the valuations as fixed year by year by the Estates Company to the 31st March, 1893—say, four years. Taking the certified valuations then at the close of each year, we struck an average, which, in the case of Albury in Canterbury, brought out the following figures : —Rams : First class, £4 45.; second class, £3 3s. Prime three-quarter-bred wethers, 13s. 2d. to 16s. Bd.; half-bred wethers, 13s. 2d. to 16s. sd. Half-bred ewes, 10s. Bd. ; merino ewes, 6s. Bd. ; merino lambs, 9s. 2d. The prices quoted in the New Zealand Times of the 6th August, 1896, are in line with those quoted above, and the prices quoted on page 24 of the New Zealand Loan and Mercantile Agency Company's annual report of August 1896, are considerably higher. Up to 1894 the stock was written up and down at the close of each year to bring the bookvalues into line with the current market rates at the various points as advised by the station-man-agers. This system was found to be wrong and misleading, as, owing to the certain fluctuations always going on in stock-values, it did not disclose the true results accruing from the management in any given year. Hence the attorneys adopted the practice that obtained with the New Zealand Loan and Mercantile Agency Company, the Australian and New Zealand Land Company, and indeed all pastoral companies—namely, an average was taken based on prices realised for all classes of live-stock for four or five years previously, and that average was fixed as our book-value, to be revised only, say, every five years. In dealing with this question of sheep valuations I have confined myself to actual facts. The views held by Mr. Foster on this subject are certainly original. If the Committee requires any further information in the connection, I suggest that the testimony of any man having knowledge of station accounts be obtained. As to No. 3—Bookkeeping : — The chartered accountants employed by the bank in London have certified that the system of accounts, and the organization generally, as initiated by me was second to none, —and that they had had twenty-seven years' experience of accounts of all companies in all countries. I prefer their testimony to that of Mr. Foster, who, according to Mr. Booth, knows nothing about accounts. As to Nos. 6, 7, and B—Economies8 —Economies in management, £19,000 per annum : — When Mr. Watson stated that most of the economies introduced by Mr. Foster were first prompted by me, he stated the simple truth, anything Mr. Foster may say to the contrary notwithstanding : vide Estates Company's minutes; my Board memoranda — No. 3/435, of the 21st September, 1893; Nos. 4/327, 4/331, of the 4th and 7th July, 1894; 5/67, of the 11th December, 1894 ; and 5/167, of the sth February, 1895. My last recommendation was put before Messrs. Booth and Johnston in February, 1895. They deferred consideration of the matter. Mr. Foster came in a week or so later, recommended and received permission to reduce wages, and got credit for what I wanted to introduce in 1893, 1894, and 1895.
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In the Waikato, where Mr. Foster claims to have introduced the major portion of his economies, I donot hesitate to say that, if the existing condition of things is permitted to go on, a point will ultimately be reached where the carrying capacity will show an enormous reduction, and a corresponding diminution in profits. Comparing the stock carried in 1895 with 1896, there is already a considerable falling-off in numbers. The so-called economies in the management, so far as the Waikato is concerned, have resulted in a heavy drop in the revenue from stock-sales. The records of the office will prove that, during the recent sheep fairs in the Waikato, 10,000 sheep had to be sold at 2s. 6d. per head because there was no feed, for them. As regards management: Every practical man to whom I have spoken condemns the present system of management as introduced by Mr. Foster. Formerly the manager m charge of each station was responsible for the management. Now, head shepherds and overseers have been placed in charge of tens of thousands of pounds' worth of property, and their operations are controlled from a distance. They are not allowed to make a commitment of any kind without reference. Experience proves that there is only one way of managing properties successfully, and that is by placing a man in charge in whom the owners have confidence, and giving him credit for having a head on his shoulders. A man who is to be told that he is to do this, that, or the other is not fit to hold a responsible post; and any man who is "worth his salt" would only retain a management on such terms till he could better himself elsewhere. If the Committee requires confirmation of any of the foregoing statements, they can get it by reference to any practical man of standing in the Waikato. As to No. 9 —Frozen meat stored in Auckland :— The manager of a large estate in the Waikato informed me on the 10th instant in Auckland . that he could not get frozen space for 2,000 sheep, because the chambers of the freezing company in Auckland were choked since April last with 14,000 carcases belonging to the Estates Company. It was also common talk amongst the stock-owners in Auckland that a large firm of butchers there had the offer of these same sheep in the chambers, on their own terms, to retail them out to their customers, but they declined to purchase. The sheep will never realise April prices, plus cost of storage, loss of interest, and depreciation. As regards last year's shipments from Wellington, which were apparently treated on similar lines to the Auckland sheep above referred to : Perhaps I cannot do better than quote my own letter to Mr. Foster on this subject, dated the 18th March, 1896: — Motoa Frozen-meat Shipments per " Ruahine." "I beg to quote below advices received from our London manager on the condition and probable out-turn of the meat shipments per ' Ruahine' hence to London. '"" The first cover in respect of the shipment was issued on the 26th April, and the last on the 28th June, 1895. The meat was finally despatched by the ' Ruahine 'on the sth September last. " In reference to the extensive damage ex ' Ruahine ' mentioned to you at the time of sale, and also this morning, I think it is of such moment that I feel it my duty to write to you on the subject. " The parcel is a large one, consisting of 3,728 carcases mutton, marked ' Motoa ' in diamond, policy No. 12167 ; and about 3,300 carcases are damaged to the extent of from Id. to lOd. per stone, and the claim will be over £500. " As the consignment is reported and has the appearance of being a long time in store before shipment, having a tallow flavour and very pale colour, I think this practice should, if possible, be stopped, as rt is a greater risk than fresh-killed and frozen meat. " The possibility of the meat being, say, sixty days in store in the colonies before shipment, sixty days oh board ship, and sixty days in store this side, would, in my opinion, be very detrimental to it, besides the handling that it would have to go through in that time, &c." " Yours faithfully, "J. C. Hanna, " Manager New Zealand Insurance Company." Here, then, is the independent testimony of a London expert, who is in no way biassed, and who, in effect, tells us that it is disastrous to keep meat an indefinite time in the chambers. It may, and and no doubt will be, said that the shipment of mutton above referred to was sold f.o.b. in the colony. So much the worse for the company ultimately, because London buyers do not buy a " dicky " brand twice. Probably this accounts for Mr. Foster's inability to dispose of the enormous quantity of mutton at present stored in the Auckland freezing-chambers. I refer specially to the meat-freezing branch of the business, but it is claimed that Mr. Foster is making profits under this head that the late management never dreamt of. As to No. 10—Revenue from stations, 1890 to 1896: — The figures quoted by Mr. Foster are wrong and misleading. First of all, the Estates Company's operations for 1891 only covered a period of seven months and a half, from the formation of the Estates Company on the 15th August, 1890, to the 31st March, 1891, and not a whole year, as Mr. Foster would have us believe. Then, as the writing up and down of stock-values: The live-stock were taken into the balancesheet at current values as fixed by the station managers throughout the colony. Vide their certificates as recorded in the Estates Company's offices. By what process of reasoning Mr. Foster, sitting in Wellington, is justified in making the bald statement, after such a lapse of time, that the live-stock (at Matamata, in the Waikato, for instance) were overvalued in 1890-91 is more than I can understand. * 50—1. 6.
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As to No. 11—Realisations :— Mr. Foster puts the realisations for the first year of his management at £185,275, the greater portion of which is represented by the sale of a large trading dependency in South Australia, and of Carnarvon Estate in the Manawatu. According to the annual report there is a deficiency in the Realisation Board's sales of £6,284. The Carnarvon Estate was always kept as a stand-by in the event of flood at the Motoa Estate, some eight miles distant. The late attorneys, although they had offers at prices in excess of the reserves, declined to part with Carnarvon until they had sold Motoa, on the ground that if they did so grazing for the Motoa stock would, in the event of a flood, have to be provided at a heavy cost; and this is exactly what happened, and will happen every time there is a flood at Motoa. Finally, Mr. Foster, in drawing comparisons between the results of his own management and that of his predecessors, has gone out of his way to unfairly damn the latter and praise the former. For instance, he selects the results of working for the year ending March, 1895, and compares them with the year ending March, 1896. I practically retired from the active management in December, 1894, when the new attorneys assumed control of the company's affairs. The balancesheet and accounts for the year ending March, 1895, were made up by Mr. Foster. I know nothing about them, except that they covered the operations of one of the most disastrous years the Estates Company, or any other similar company, every experienced. There is no mention made of the prices ruling in 1895, as compared with those ruling in 1896; nor does Mr. Foster say one word about the unexampled depression experienced prior to his assuming the management. But, taking the actual results of working during my management, as disclosed by the balance-sheets which I prepared, i.e., from the 15th August, 1890, to the 31st March, 1894 (a period during which the Estates Company was greatly handicapped by considerations for the bank, and outside interference in the management, on the top of which we had to contend with the lowest range of prices for our products on record), the gross revenue per annum averaged, as already stated ■ • ... ... ... ... ... ... ... ... £100,000 Add: In 1896, the increase in profits from trading concerns and the increase in the price of wool, due solely to the improvements in trade, and in the markets, amounted to ... ... ... ... 35,860 Total ... ... ... ... ... £135,860 The gross revenue during the first year of Mr. Foster's management, as per certified balance-sheets of the Assets Realisation Board and the Estates Company, amounts to ... ... ... ... ... 119,456 Let us now see what the net results were for the three years ending the 31st March, 1894. (I will not take in the broken period from the 15th August, 1890, to the 31st March, 1891, because I cannot, owing to the adjustment with the bank on the transfer of the assets to the Estates Company, quote the net results with exactness.) The certified net expenditure for salaries and charges at head office, and the outgoings at other points in connection with the head office executive management, were —in 1892, £5,459; 1893, £4,485; 1894, £5,489. (I do not quote the figures for 1895, because, for reasons explained above, I know nothing about them.) Comparing, then, the above figures with those which appear on the certified balance-sheets, covering the operations for the first clear year of Mr. Foster's management of the Estates Company and Assets Realisation Board, we have the following figures:— Estates Company : General charges, year ending the 31st March, £ s. d. 1896 ... '... ... ... ... ... ... 8,532 15 4 Realisation Board : General charges, year ending the 31st March, 1896 ... ... ... ..." ... ... ... 3,855 15 11 Total ... ... ... ... ... £12,388 11 3 According to these figures, which I have set out as they appear in the balance-sheets, the cost of administration at head office appears to have been more than doubled in 1896. As to net profits available for payment of interest on debentures, &c, for the three years ending March, 1894, the average annual profit (after providing for cost of manuring, grassing, alterations and additions to buildings, depreciation in implements, &c, which came to £77,555, but taking credit for bank exchange improperly charged—say, £3,000 per annum) amounted to, net, £75,400 os. Bd. The net profit available for the year ending March, 1896, from £ s. d. the Estates Company was ... ... ... ... 29,292 10 9 From the Realisation Board, without deducting interest due to the Estates Company on debentures, £96,446 ss. 10d., amounted to ... ... ... ... v . 52,586 12 8 Total ... ... ... ... £81,879 3 5 That is, in spite of all the economies introduced by Mr. Foster, and the improved markets during his year of management (which alone meant an addition to profits in 1896 of £35,860), the net results are only £6,479 2s. 9d. better than they averaged for the three years ending March, 1894. In view of the foregoing, I respectfully submit that the much-talkod-of economies are mythical.
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Monday, 28th September, 1896. Examination of James Crawford Hanna continued. 1. The Chairman.] When the Committee adjourned on Saturday you had completed your written statement with regard to the Estates Company. Do you wish to add anything further this morning before you are asked questions on the subject by members of the Committee ?—No, Sir. 2. Do you wish to say anything in regard to the statement sent in by Mr. Foster?—l do not know whether Mr. Foster wishes me to take his statement seriously, but it looks to me as if it were written with the intention of misleading. It would save the time of the Committee if Mr. Foster were asked to come up here and bring with him the annual reports and balance-sheets prepared in London and the colony for 1893 and 1894. 3. You mean that you would like to have these here for your guidance and information ? —Mr. Foster makes a deliberate statement that certain items —one item in particular of £44,858 —was taken by me to the credit of profit and loss. I deny having done anything of the kind in the way suggested by Mr. Foster. The portion of the return I refer to is where Mr. Foster says, " From the statements it will be seen that over the periods of the Estates Company's existence within the above dates a total of £77,069 was included as profit, but never earned " 4. Mr. Montgomery.] What is the date ? —From the commencement of the Estates Company,, in 1890, until 31st March, 1895. The statement goes on—" namely, £32,069, the result of the valuation of stock on rising market, and showing same as profit; £44,000, an account called ' Cost of turniping,' which, instead of standing in capital account, should have been deducted from revenue, as being purely working account." Such an amount was never taken to profit in the way suggested. 5. You do not know anything about it ?—I know all about it, but Mr. Foster has apparently got hold of improper data. That is only one paragraph. There are many others which I am prepared to deal with presently; but I think my evidence would be much more effective if Mr. Foster would produce the balance-sheet in which he says this amount was taken to credit. The balance-sheets were properly audited in the colony and in London, and Mr. Foster's statement, without explanation, is a very serious reflection upon the directors in London and in the colony, as well as upon me. 6. Are you prepared to make a statement now with respect to the alleged taking of £70,000, because we may or may not get Mr. Foster here ? —Yes ; the paragraphs are here, and I can either read the paragraphs from Mr. Foster's letter and reply to them, or you can read them. 7. Have you anything to say with regard to paragraph 1—" The increased profit on account of Awatere at March, 1896, was £6,871 ?—Yes. 8. What comments do you make on that?— Well, Mr. Foster, according to that statement, shows a loss of £170 in 1895 against a profit of £6,871 in 1896. 9. Is that correct? —It is not correct to make such a statement without explanation. Mr. Foster, apparently in his first statement, omitted to explain that the writing-down of stock in 1895 and the reclamations on the previous year's wool-shipments accounted for £5,433 of the year's adverse outturn, which showed a loss of £5,603, the figures you have just quoted. He takes the loss of £5,603 into the operations of March, 1894, and after allowing for that he shows his net earnings of the station as £6,000 odd. He has also omitted to explain, first, the increased profit on stock, £2,000 odd. Ido not know what that means—the increased profit on stock. 10. £2,870? —Yes. I would like to know if it is the difference between last year's valuations of the stock on hand and the value at which the stock have been taken into the books at 31st March, 1896, or is it profits made on actual sales. 11. Do you not think it possible that this means the increased amount of stock on the station? —You could not take that in entirely as profit, as some of the increased stock has to be paid for. It must be one of two things. It must either be profits made on actual sales —and if it is, then it is an increase in the valuations of 1895 as compared with 1896. It must be one or the other. Then, there is the increased profit on wool of £2,000. Probably some of this is due to surpluses on last year's shipments. 12. How much ?—I would like to know. These are all questions that should have been explained in the balance-sheets of the stations. They are questions which I always explained myself, in detail. 13. Have you seen the balance-sheets of the stations—the profit and loss? You said you always showed the profit and loss? —I have not seen them. [Exhibit 35 handed to witness.] 14. Well, there is this reclamation on wool. There is an amount of £716 mentioned as reclamation on wool: Is that what you refer to ? That would only refer to the 1895 Profit and Loss Account, would it not ? —No, he does not show it quite in the same way that I did. He does not explain it. I always took- the capital figures at the previous year and the closing of the year being dealt with and under review, and explained the difference between the two. The difference is not shown here in a way to enable me to explain it, and therefore I cannot tell you from this balance-sheet whether the increased profit on stock sales is due to actual sales, or is due generally to increased valuations. 15. Which do you think is the most probable ?—1 should say, increased valuation. 16. Is it a merino station? —Yes. 17. Then, the valuation would have gone up on the merino sheep ?—Yes, probably. 18. Probably a couple of shillings a head? —Yes, probably. 19. Now for the wool? —On wool there is £2,000. What I would iike to know is this due to surpluses on last year's shipments. I cannot get that from the balance-sheets here; it is merely an estimate of what the wool would realise in London. 20. The wool that has been shipped to London at May would realise less or more, but that is an estimate of what the wool would realise based on current market-values in the colony.
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21. There is nothing wrong about that, is there ? —I do not know how it is made up ; probably it is right. It is a most remarkable thing that this station account should show a loss of £5,000 in one year and profit of £6,000 odd in another. If Mr. Foster's figures are correct, neither I nor any other man living at a distance could possibly be held accountable if it was due to bad seasons. If the manager there when the loss was made in 1895 is still there, and it is due to mismanagement, there is a screw loose somewhere. The manager is there still, 1 understand, and I say that the loss for 1895 as compared with the profit of 1896 must be clearly explainable ; and, if not, why keep the manager on the station still? That is part of the explanation; but other part of the explanation, I think, is this : About 1892 or 1893 it became a question whether the rabbits were going to exterminate the Estates Company or the Estates Company were going to exterminate the rabbits; and, after the matter had been thoroughly reported on, the attorneys authorised an expenditure of £5,000 or £6,000 on rabbit-proof netting, which covered an area of forty-eight miles. The netting was completed in 1895, and, of course, a large increase of revenue followed. 22. Hon. Mr. J. McKenzie.] Was that charged to capital account? —Yes, all charged to capital account; but the benefit of the expenditure came to account in 1896. 23. Mr. Montgomery.] You see no reason why these profits should not have been made £6,871? —To a very large extent they should have been made ; but the two sets of figures, without explanation, are startling. lam quite certain it is explainable in this way : that previously there had. been an immense loss of sheep owing to some unexplained cause ; but, as the statement appears there in Mr. Foster's letter, it looks as if it was due to mismanagement. Well, clearly, if it was due to mismanagement, Mr. Young, the present manager—a most capable man —ought not to be manager now; and therefore I think Mr. Foster ought to have given the details as to how the loss was brought about. 24. We asked him to give the details, and these are what he gives us ?—But he does not tell you how the loss occurred. 25. Paragraph 2. —" Have you any objection to give us Mr. Hanna's reports ? Will you look through them ? " —-I have looked through these reports. In the last annual report on the business for the year ending the 31st March, 1894, Mr. Hanna says, ' The operations of our estates are closely supervised by Messrs. Clark, Lyons, and McCaw—all men of experience—and at the moment I am at a loss to suggest any special reforms that would be likely to result in increased profits from the estates under their supervision.' However, later on, the 3rd April, 1895, Mr. Hanna recommends the board to reduce the rate of wages to station-hands, which subsequently was done. This is the only instance that I am aware of where Mr. Hanna's suggestions have been in the lines of economies brought to bear during the past year. This recommendation, not being in his report before alluded to, is my reason for not having seen or been aware of it." Have you any remarks to make on that?—l never made any such recommendations in April. I was not connected, with the Estates Company in April. That is evidently put in to bring Mr. Foster's statement in in proper sequence. What I say is this: It would suit Mr. Foster's explanation if I had made the recommendation in April, 1895. I recommended a reduction in wages in 1893, which the attorneys did not pass. Was it at all likely that, in my annual report to the attorneys, I would record the fact that they declined to adopt my recommendations ? But I renewed my recommendations in July and December, 1894, and again in February, 1895. I personally pointed this out to Mr. Foster when handing over to him. 26. What were the recommendations you made? —That a general all-round reduction should be made in the wages of station-hands, in order to bring the expenditure into line with the diminishing revenue. 27. Did you suggest the reduction in the managers or hands?—On every one, of from 10 to 15 per cent. 28. Did you suggest that certain station-managers should be dispensed with ?—Not exactly. Mr. Clark, of Temuka, who, up to a point by those capable of judging —when I say " those capable of judging " I allude to Mr. Brydon and Mr. Hean —was looked upon as an excellent man. He got into very bad health in 1892 and 1893, and, as I have already stated before the other Committee, the management was lax. He was physically unfit to be in charge of the properties. There is no doubt about that, and I reported the fact to the attorneys on my return to Auckland in 1893. 29. What was bis salarv?—He had £800 a year. 30. And his clerk ?—£l7s. 31. Has he been subsequently retrenched? —He is dead; but he was retired before his death. It was one of the first things the new attorneys did, partly on my motion. I think I told Mr. Watson in the first instance. 32. At any rate, if Mr. Foster said the economies were not suggested by you, you wish to point out that that is an error?— Mr. Cooper has a transcript of the minute-book here supporting the statements I have quoted, and minute-books do not make misstatements. 33. Passing on to paragraph 3 —" Realisations to date, £192,586 ;to Land Board, £99,028 ; sundry purchasers, £93,558." Is there any remark to make as to that?— Nothing beyond what I stated on Saturday. 34. Have you any remark to make on paragraph 4—"Cost of management"?—No; 1 have nothing to say with regard to that. The London office expenses have been done away with altogether. I did not take them into my calculations, nor did I compare them with Mr. Foster's. 35. Are these correct ?—I do not know anything about the figures of 1895 and 1896, but lam quite prepared to take the figures Mr. Foster quotes for the purpose of my comparison. 36. There appears to have been a steady increase in the cost of management from 1891 onward in New Zealand ?—Yes; but you must remember that 1891 covered a period of seven months and a half only. The expenses are fairly steady from the time I took up the management. . 37. Have you any remarks to make on question s—"5 —" What are the items T.V. W. ? " —I could not answer that, because I do not know what they mean myself. _ ,
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38. Question 5.—" What is the liability on shares, exclusive of Thames Valley Land Company's, which are transferred to the Assets Realisation Board ? '' Have you any remarks to make on that ? —None. 39. I think you explained about the writing-down of the sheep before?—l did ; but there are two items dealt with in the writing-down of the sheep. The writing-down represents a third of the value of the sheep. It is not within the range of possibility, on the basis of Mr. Hean's valuations, that it could be so. The average taken up to 1895 was an average of so many years, and that brought out certain figures. 40. About 10s. ?—A little under that ; but it is almost impossible that the sheep could have dropped £90,000 in one year. 41. What is their value now? —6s. lOd. 42. 7s. Id. ?—lt is not warranted now. 43. Do you mean to say that sheep are not worth more than 7s. Id. now, taking in merinos?— Taking the valuations given by Dalgety and Co. and the Loan and Mercantile Company at the 31st August, 6s. lOd. is very low. 44. With the wool on their backs ?—I was allowing 2s. for the wool on their backs. That is in the South Island. 45. That would be about 2s. a head higher than in the North Island?— The values of stock quoted in Canterbury on the 20th August are : " Prime crossbred wethers, 18s. 6d. to 215.; light do. do.. 16s. 6d. to 18s. ; prime crossbred maiden ewes, 15s. to 17s. 6d.; heavy crossbred ewes (old), 12s. 6d. to 15s. Stores : Forward crossbreds, 14s. to 16s. ; crossbred lambs, 10s. to 125.; crossbred ewes (six- and eight-tooth, and in lamb), 13s. 6d. to 15s. 6d.; crossbred ewes (two-tooth, in lamb), 14s. to 15s. 3d." 46. You have not got merino ewes at all there?— No. 47. Hon. Mr. J. McKenzie.] Those prices are given for this year?— Yes. 48. They are too high ? —Even then, there is a big margin in the figures. 49. Mr. Montgomery.] There is a difference of about 2s. in wool since the 31st March, and a rise of about 2s. in price. Owing to various causes, the sheep have risen beyond the wool increase ? —Even if you take 4s. per head off, there is a margin in the figures. 49a. In the North Island you have to take about Is. or Is. 6d. more, because these are South Island prices? —Yes. 50. You take 4s. or ss. off, and the Awatere and Clarence merino sheep would not average more that ss. How many merinos have you got?— About 100,000 out of 440,000 at the Clarence, Awatere, and Glentui. 50a. Then a quarter of the sheep would only be worth ss. ?—Yes. 51. Do you not think that if you took the sheep all round at 7s. Id., that would be a very fair value before the 31st March ?—No, I do not, if published market reports are to be taken as a guide. 52. Take question Bof Mr. Foster's note —" Gross revenue from station and other assets, 1891-95, showing £68,873 in 1891, £120,854 in 1892, £126,106 in 1893, £80,139 in 1894, and £35,185 in 1895." Have you any remarks to make about that ?—Mr. Foster gives me credit for making profits which I never made. The profits in 1893 were £81,248, and in 1894 £75,352, and not as"quoted by Mr. Foster—viz., £126,106 in 1893, and £80,139 in 1894. He also states that a sum of £44,858, cost of manuring, turniping, &c, was taken to credit of profit and loss in 1893. I think Mr. Foster is in error here. A suggestion was made to the London board in that connection, but I cannot say, without reference to the records of the office, if it was adopted. 53. Then, you say that £44,858 was not taken for expenditure in manuring and turniping?—lt certainly was not taken to profit in my calculations in the statement that I made on Saturday. I think, if I take my certificates to Mr. Murray in 1894, they will explain the matter: " The average profit for the three years ending March, 1894, after taking credit for bank exchange, amounted to £75,400 os. Bd.; but if the amount proposed to be charged for manure, addition to buildings, grass, &c, referred to in the letter to Mr. Murray of even date, and subsequently recredited, is now included, the average for the three years amounted to £90,352 14s. 54. You say it is recredited?—lt was debited to profit and loss, and recredited. I explained to the board, on the 31st March, 1893, as follows : " For the years ending March, 1891-92 and 1893, we have charged against profits the cost of manuring, depreciation in implements, repairs and alterations to buildings, and grassing, sums amounting in round figures, to £78,000. As this outlay went to improve the properties, in many instances permanently, it is a question whether or not a portion of it should not have been capitalised. In view of the exceptional reverses met with during the year just ended, I consider we are, under the circumstances, justified in debiting the following sums to a suspense account, and carrying the amount so debited to profit and loss, the suspense account to be gradually wiped out out of future profits before the improvements effected become exhausted: Manures, £22,000; grassing, &c, £9,000; additions to buildings, £9,000: total, £40,000. Balance profit and loss, per balance-sheet, debtor, £17,340 ; leaving £22,660." 55. How much did you want to charge to permanent improvements ?—About £40,000. 56. Was that done? —I cannot recollect positively. I will read the attorney's reply, in a resolution of the board dated 10th June, 1893 : " The board of attorneys having read Mr. Hanna's memorandum of the 9th June, with its postscript, relating to the proposed recredit to profit and loss of a sum of £40,000, being part of a larger sum of £77,000 expended in manuring, grassing, alteration to buildings, and other items in the last three years, and charged against profit, to some extent unnecessarily in his opinion, and contrary to the practice of another similar concern, and so charged because of the ample profits coming in these years to bear it; and which sum of £40,000 he considers may justifiably be recredited to profit and loss in view of the very exceptional circumstances of last year, and debited to an improvement suspense account for gradual extinction as value of improvements becomes exhausted ; the board thereupon record that, while it is not possible in the time available to pronounce an opinion upon Mr. Hanna's recommendation, they hold the
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opinion that, under the circumstances, it is one upon which the board of directors may justifiably act as far as the company's own accounts are concerned, but whether the surplus so accruing shall be held in reserve or paid as dividend they think should be left to the discretion of the Bank of New Zealand, the sole shareholder. As to leaving the estimated profit of Globe Timber-mills in Estates Company's balance-sheet unaltered, the sudden alteration of a profit of £15,000 per annum to an actual loss is so inexplicable, after the assurance given to Messrs. Glyn and Holmes, in Adelaide, that the attorneys believe that the last year has been unduly loaded, and think that, pending examination, the amount may stand as estimated, and be dealt with as suggested in case of estates. —John Murray, Chairman. (Signed) W. T. Holmes. I concur. (Signed) J. C. Hanna." Then, I stated that other large corporate bodies in the colony were in the habit of charging to capital suspense the cost of manuring, and wiping it out gradually year by year. This suggestion came before the attorneys, but they declined to adopt it, and passed the matter on to the London directors to deal with. 57. It states here that it was taken —" No appropriation was made in 1894, but full amount was written back to profit and loss in 1895 " ? —I do not know what that means. It was a mere suggestion, after the accounts had been closed for the year, as being justifiable for making up some portion of the immense debit on the year's operations. 58. I understand that you explained the debit of £40,000. Do you suggest that Mr. Foster has taken in your manuring account and added it to your profit ?—Yes, to the profit shown in my comparative statement. You see an amount of £44,000 mentioned there. He has quoted profits as earned by me that I never did earn. My profits are less than those he states. 59. Have you any other remark to make about that gross revenue account. It seems to be going down steadily, year after year?—l think the gross revenue is all fully explained. 60. You have explained it before ? —I have explained it fully before. The figures Mr. Foster takes out as a reduction are more remarkable, without explanation, than they are in the Awatere. I am speaking entirely from memory, but I am quite sure that the figures he quotes for 1895 cannot fairly represent the profits. 61.-Are-they too much?— Too little. I cannot conceive how the loss could have been made. There may have been old debit balances brought into account that year; but I say that the year's actual operations would show better results if fairly taken out than are shown there. 62. Have you any remarks to make on question 9—" Revenue from stations for years ending 31st March, 1891, to 31st March, 1896, and amount contributed to profit by increased valuation of sheep " ?—Yes. Regarding the increase in stock-values, in 1891 the stock were taken to account on the basis of the valuations made for Mr. Hean by Messrs. Brydon, Reynolds, Carter, and Whyte, and lam satisfied the Committee will prefer their valuations to Mr. Foster's. The valuations made in 1892-93 were made by the managers on every station in New Zealand, and checked by the station inspectors as being in line with the current market-values at the various points throughout New Zealand, and I am prepared to vouch for their accuracy. 63. I see there is an increase for 1893. Did not the stock fall in 1892 and 1893 ?—The big fall was, I think, in 1893. 64. If there was a fall, how is it you have got an increased value ?—That might be explained in many ways, but it was mainly due to adjustments in Canterbury to insure uniformity in our system of accounts. 65. This is for 31st March, 1893. 1892 was about the highest period for sheep for the previous ten years ?—Yes, I think that is so. I think that was the highest point we reached. However, I do not want to make a statement I am not prepared to support by the records of the office, and if I had the books by me now I could answer every question with accuracy, because the detailed statements give every item, and how it was arrived at, for each year. 66. You put a fixed value on the sheep when they were on the downward grade?—l have already stated that up to the close of 1893 we took the current market-values. After that, I struck an average for the four or five years previous, and adopted that. 67. If you had not struck that average, and had gone on doing as you had done, you would have had to make a tremendous loss in 1894 ?—Probably. 68. Something like £30,000 ?—Yes, but that £30,000 would have been replaced in the following year by recoveries in the market-values. 69. To some extent ? —I want to show that there is one way of dealing with live-stock, and that is to have an average. These fictitious figures in the market-values, as quoted by Mr. Foster, have nothing to do with the management. Mr. Foster disagrees with the taking of an average; you will see by his evidence he prefers valuing every year; and yet, because I took yearly values up to 1893, he now objects ; but I do not think you could have a better proof of the inconsistency of Mr. Foster's statements than the one you have before you now. The whole reductions in valuation for 1893 have since been replaced by the increases resulting from improved markets. Mr. Foster says stock should be taken into the balance-sheet every year at the current values, fixed by the managers, from one end of the colony to the other. That, I contend, is wrong; they should be taken in on values based on an average of years. 70. Did the managers not have a circular sent round to them asking them to give the full values ?—No. When it was decided to take in the value of the stock all round on an average of years, managers had a circular sent to them to that effect. In making up our annual account to 1893, I could not take the stock in at any other values than the values fixed by the managers ; I had no power to do it. 71. The average of four years worked out something like 9s. 6d., and you took them in at something like 6d. above the average ?—No. It is rather a large order to ask me that question. I took the whole of the certificates sent in by the managers. These were worked out by the accountant, and afterwards submitted to me. I went through the certificates, and checked the calculations. I then sent the papers on to the inspectors, who sent them back to me with their remarks,
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and they were then put before the board. These certificates worked out the average prices ruling in the colony, taken as a whole, for the four years ending March, 1893. 72. Have you any remarks to make about sheep, mentioned in question 10 ?—The average value in 1891 was 10s. 9d., and the lowest value in 1896, 6s. 10-80 d. I think the cardinal point in the memorandum is about the profits. 73. The statement says that for the period stated " a total of £77,069 was included as profit, but was never earned ; £33,069, the result of the valuation of stock on rising market, and showing same as profit; £44,000, an account called ' Cost of Turniping,' " which you have explained, and say it is not so ?—ln the statement put before the Upper House I have never included that. 74. The statement goes on, " Which, instead of standing in Capital Account, should have been deducted from revenue, as being purely ' working account' " ?—Exactly. It was referred to the London directors. However, with regard to the stock, if Mr. Foster is prepared to take his own values in preference to those of Mr. Brydone and others, then I have nothing to say. 75. You average them at 10s. ?—Yes. He quotes these figures to support the valuations given on the other side—the accretions of profit. 76. I quoted the Auckland Agricultural Company's instead of the Estates Company's figures, and I see the Estates Company's figures are very much less than for the Agricultural Company ? — How do you account for that ? 77. That is what I would like to know?—l should say that the Estates Company's sheep are not better than those of the Agricultural Company ; but I do not agree that the Agricultura Company's sheep should be higher than the average throughout the colony. The sheep in Canterbury are of a higher value than those of the Waikato. 78. Is this Turniping Account the same that is alluded to in Messrs. Smith and Kember's report ?—I do not know. 79. Question 11: " Figures quoted by the Hon. J. McKenzie, in relation to the total revenue from estates 1891-94, lam unable to account for or assimilate to our books." Can you say anything about this ? Do you say Mr. McKenzie's statement is right?—l saw that Mr. McKenzie asked the question with regard to the profits which Mr. Foster said he could not agree with the books. I think Mr. McKenzie would probably quote the figures correctly and as I gave them before the Legislative Council Committee. 80. Are they in the report of the Legislative Council Committee ?—Yes. 81. Have you got the paragraph there referring to it?— Yes ; I give the details of the profits here. 82. You think that Mr. Foster might have discovered it ?—lf he had taken the figures from the balance-sheet he could not have helped discovering the history of the £44,000. 83. In answer to question 12, do you know anything about the " job lot £153,000 " ?—No. 84. The volcano, racecourse, and so on ?—No. 85. Have you any further statement to make with regard to Mr. Foster's notes here ?—None. 86. When you gave your evidence before the Committee of the Legislative Council you put in a written statement of the history of the Estates Company, stating that very fully and completely? —Yes. 87. Could you put that in for us? —Certamly. 88. Have you got it here ?—Yes. [Type-written statement put in.] 89. Then, you put in a report of yours to the Board to the Legislative Council. Is that included in your papers put in now? —I have the report here, but Mr. Cooper points out to me—and probably with some reason —that I ought not to use a document which does not belong to me. It has already been before the Upper House Committee, but the fact is that I took nearly all the papers I had to the Upper House Committee. I did not look at the matter in the same light as Mr. Cooper does. 90. Well, I ask you if you will produce the report ?—ln consequence of what Mr. Cooper has told me I think I would prefer to keep it. 91. Then, if you decline to produce this, I will ask you if you made a report to Mr. Murray on the position of the Estates Company, making suggestions as to what should be done. 92. Was the report as follows ? Hon. Mr. Seddon: A member cannot quote from a report of the Legislative Council, and that cannot be brought before us in any shape or form. Discussion. The Chairman : I rule that it can be put in as an exhibit ? [Memorandum of the 9th June by Mr. Hanna to Mr. Murray put in by Mr. Montgomery.] 93. Mr. Montgomery.] Will you look at this exhibit and see if it is a true copy of the report you submitted to the Legislative Council ?—As I explained in the Upper House, that was prepared for my own information. I was to confer with Mr. Murray, and hefore doing so I put my own views on paper, and it was on the basis of that memorandum that I discussed the matter with Mr. Murray. 94. What was the date of this?—9th June, 1894. 95. Have you got a letter written to Mr. Murray on the Bth August, 1894, or a press copy of that letter?— Yes. 96. Will you produce it ?—These are the Estates Company's letters, of which I have press copies. Mr. Cooper: I must advise Mr. Hanna not to produce it. It refers to private accounts, and to individual persons. Mr. Montgomery : I shall ask to have this put in as an exhibit. Hon. Mr. Seddon : You cannot do that if it relates to accounts on which no writings-off have been proved. Discussion.
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The Chairman : I rule that the request is out of order, as the letter deals with the private accounts of individuals. 97. Mr. Montgomery.] Did you write a letter on the 15th August, 1895, and have you got it?— It is headed " Station Profits" ; it is a certificate of profits of the Bank of New Zealand Estates Company, dated 15th August, 1895. Mr. Cooper: I raise the objection that Mr. Hanna should not produce copies of letters which he has got from the Estates Company during his period of service without the consent of the Estates Company, and I say that as a man of honour he should not produce these letters or copies of them. Discussion. 97a. The Chairman : Mr. Montgomery has asked Mr. Hanna to produce certain letters. I understand that Mr. Cooper has declined to allow Mr. Hanna to hand them in, on the ground that they refer to private accounts, and I simply say that any letters to be handed in must be handed in by Mr. Hanna, and not by members of the Committee through a report in another place. Mr. Hanna: I cannot hand them in. Mr. Cooper says it is not proper for me to hand them in. 98. Mr. Montgomery.] Do you decline to hand in any of the letters on pages 294, 295, 296, and 297 of the Legislative Council reports ?—Well, Mr. Cooper is acting here for the Estates Company and the bank, and he has told me that these documents are the property of the Estates Company and the bank. I have nothing to do with either one or the other at the present time ; but if I had had time for reflection I, perhaps, should not have given them in to the Legislative Council. I went there with a packet of papers. I may say that on leaving the Estates Company I took with me a copy of the most important documents affecting my management, also copies of the principal letters forwarded to Mr. Murray at Wellington in 1894. The chairman of the attorneys is aware that I took copies of these documents away. 99. Did you take them with his knowledge ?—Yes. 100. Did he object?—l do not know that he did; I simply left a press copy of the main documents I took, with the chairman. I took what I think every executive officer was entitled to take. 101. These are press copies of correspondence written by you as manager of the Estates Company to other people ?—Yes. 102. Those addressed to Mr. Murray would be in his possession?—l think in all likelihood Mr. Murray would have destroyed all these documents. He may or may not; I am not sure. The originals are not in my possession, at any rate. 103. And you decline to produce any document written during that period?—ln the light of what Mr Cooper has told me just now. Yes. 104. I will ask you generally about these properties?— Before you go on with that you will recognise that this letter, dated the 15th August, 1894, not only corroborated all the statements I have made with regard to the profit and loss and net profit accrued, but also gives in detail a reply to the question that Mr. McKenzie asked a few days ago, which Mr. Foster says the books do not supply. 105. Hon. Mr. McKenzie.] I did not ask about the management, I simply asked whether that was the revenue? —Yes, the revenue. 106. Mr. Montgomery.] Can you form an estimate of the value of the Estates Company's properties ? Separate those taken over by the Assets Realisation Board and those still remaining in the hands of the Estates Company ? —The properties taken over by the Assets Realisation Board were returned as of the value of £1,800,000. 107. What is your opinion as to that value? —I think it is very reasonable value. 108. It is about right ?—Yes. 109. That is based on the land-tax valuation and 10 per cent, added ? —Yes, and in the light of the returns that the property has produced during my own management, and previous to that. 110. Do you think they can pay interest on that amount?— Certainl y—unless the bottom falls out of the markets. 111. Supposing things keep as they are, do you think they will realise that amount in the hands of the Assets Realisation Board? —That all depends upon the purchasers. I have no doubt that if you had purchasers who wanted the properties which would produce reasonable returns the properties would sell, but in the absence of purchasers I would not like to express an opinion about the ultimate outturn. 112. Are there properties which are almost unsaleable, although they pay fair interest?— That is a difficult question. A certain proportion of the properties in the Waikato are suitable for cutting up into small areas, and a certain proportion are not suitable ; but, as to what is best to be done with the unsuitable proportion I am not prepared to express an opinion. 113. How do the Waikato properties pay?— Well, in good seasons they produce a moderate return, and in bad seasons some pay working-expenses and some do not. 114. Working-expenses were somewhat heavy in the way of manuring and in other ways?— Yes. 115. Mr. Foster spoke of a possibility of a syndicate taking over all these properties. Have you heard anything of the sort? —I have not. 116. Do you think there is any likelihood, if it was thought a fair return could be made, that syndicates could be got to take the properties over ?—I should think, if there is any syndicate which would adventure its own or other people's money in landed property, they would get as good property here as anywhere in the colonies —that is, if the Board is prepared to sell at the present bookvalue. The present book-values are the written-down values. 117. But the Assets Realisation Board has not written down the values ?—No ; they took the properties into their books at the values put before the House last session.
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118. Did they not take the properties into their books at £2,731,000? —Yes, they took them in at £2,731,000; but the actual value, as I understand it, is about £1,800,000, 119. The debentures are issued to the book-value of £2,731,000? —Yes. 120. You will therefore correct your statement that that was the latest ascertained value. You said that perhaps a syndicate might take them over at the present book-value, and I call to your mind that the properties were taken over by the Assets Realisation Board at £2,731,000? —I thought the Board would sell at the written-down value. The latest ascertained value is £1,800,000. 121. That is property-tax value? —Yes. 122. You do not suggest that they would bring more ?—I think they ought to produce more when property values revive. 123. How long should it take to realise these properties, the Board using all possible speed ? — I do not think I could answer that question in a manner that would be of service to you. 124. Would the balance of term (eight years) do it ? —lt depends entirely on the markets, and I could not venture an opinion as to what the markets would bring forth, or what likelihood there is of having purchasers in the next few years. 125. Have you heard of any offer to take over the Auckland Agricultural Company's properties?—l have not. 126. They are the most unsaleahle, I believe ?—No ; I think they are the most saleable in the Waikato. 127. You do not include the Waikato properties?—-They are all in the Waikato, except a small place at Tamaki. 128. Mr. Hutchison.] You were in charge of the Estates Company in 1894 when the Paramata Block was brought before the Validation Court ?—Yes. 129. What was the interest of the company in connection with that block ?—Well, the title to the block was in dispute, and we had a mortgage over the incompleted title for whatever it was worth. 130. What was the claim of the company under it ?—The total claim was for about £60,000 altogether, over that and other properties. 131. What was the result of the proceedings?— The result of the proceedings was that we got a complete title, or that our claim on the block to the extent of our indebtedness against it was held to be good. 132. The title was secured, was it?— Yes. 133. Was anything more secured than your claim —the expenses incurred by the company also secured? —Yes. 134. Will you look at this, page 28 of the Journals of the House of Representatives, 1894, Paramata No. 1. Does that relate to the proceedings?— Yes. 135. Is that the judgment in the case ?—Yes. 136. Did you say that the expenses—costs and charges—were to be approved by the Court ? —Yes. 137. Were they approved by the Court?—As far as my memory serves me they were, but it easily ascertained by application to the Estates Company. 138. But that occurred during your time ?—Yes; but it is some time ago. As far as my memory serves, the costs were passed by the Validation Court. 139. And the title of the Natives as well as the company made secure ?—Yes. 140. With reference to the transactions in June, 1894. Do I understand that you gave Mr. Murray full and explicit information with regard to the Estates Company?—l did. 141. He asked for it, and you gave it?— Yes. He wrote and asked me to supply the return he required with strict accuracy and explicitness. 142. And your memorandum of the 9th contains, as far as you could give it, full and explicit information with regard to the company ?—Yes. 143. Hon. Mr. McKenzie.] Have you any practical knowledge of station-management ?—No, not exactly practical knowledge. 144. Your knowledge was acquired as a banker and financial man? —Probably; but I have driven bullocks and followed the plough. That is what I did when I first came to New Zealand. Since then I have had a turn at nearly everything. 145. With regard to the 10,000 sheep we have been told were sold at 2s. 6d. in the Waikato. How did you get that knowledge after you left ?—I got it when going over from Auckland to Takapuna Lake, from a large land-proprietor in the Waikato. 146. Is it not possible that these sheep may have been sold as surplus sheep?—lt may be possible, because they were sold at very low prices. It is the lowest on record. 147. It is evident they must have been very low in condition ?—Yes. 148. Would it not be good management, then, to clear them off the stations?—lt would be good management; but I think it is very bad management when people have to sell sheep at ruinous prices because they have not got feed for them, through overestimating the carryingcapacity. 149. But do you not think it possible an explanation might be given, even to satisfy you ?— Quite possible. 150. You gave us the values of sheep for the present year published by the Loan and Mercan- ■ tile Company? —Yes. 151. Do you not think those values are far too high?—l compared the reports with a good many similar reports, and find there is a great similarity as regards values between those and every other pastoral company's reports, and I think the telegraphed reports published in the .New Zealand Times on the date I quoted are in line with those. * 51—1. 6.
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152. I would not doubt that sheep in Canterbury might be of that value, but do you think that those values would apply to sheep on all the stations?—l think it would be a very generous valuation, and probably a high valuation. 153. Now, with regard to the valuing of sheep on the stations, you said that you took an average of four years as the value, and that you thought that better than taking the annual valuation ?— Yes. 154. Now, take a man who bought sheep in 1892, when they were very dear. Say he bought a couple of thousand ewes at 145., and at the end of the year they were not worth 10s. Would that not show an average loss on capital? And you still think it would be a fairer way to average the price over a number or years ?—Yes. 155. If you are keeping your stations going over a number of years it might be all right; but if you had a leasehold, and the term was nearly up, it would be entirely different?—lt would not do to value sheep on that basis on a leasehold at all. 156. The sheep were up in 1892, and down in 1894, and this accounts, I suppose, for the large reduction?— Yes. If you take the value of produce all round in Australasia you will find that there was a heavy fall. 157. You say that they were going down gradually, except in 1892, when there was a little rise, and then they dropped down again ?—Yes. 158. In reference to a question put to you by Mr. Hutchison, with regard to the Paramata dispute, Mr. Hutchison was employed in that case ?—He was, Sir. 159. What was the scale of fees arranged upon ?—I think the fees were to be paid on the customary scale. lam not sure whether any specific fee was arranged. 160. Did you agree to give him a pretty large retainer? —The retainer, as far as I remember, was not a large one, perhaps £100. 161. And you made the Natives pay the whole of the costs?— Well, we were managing the property in the interests of the Natives, and, on getting the title to Paramata, we charged the costs to their property. 162. It did not come out of the company ?—lt did not. 163■ It came out of the poor Natives ? —Yes. 164. Hon. Mr. Seddon.] Were you in the habit of getting your lawyers' costs taxed ? — Usually. 165. Why did you not in this case?—l am not prepared to say positively that the bill was taxed, but I am prepared to say that I never charged the costs up without full authority, but that it was ultimately passed by the Court I am almost certain. 166. It was not paid in your time at all. It was paid in 1895 ?—lt was paid in my time. 167. Who was in charge on the 3rd August, 1895? —I was not in charge then ; I left at the end of March. 168. And on the 13th February, 1895?— I was in charge then. 169. We have had evidence that the bill was not taxed ?—I will not say from memory; it was taxed before I j)aid it, but I think it was taxed and approved afterwards. 170. What was the good of taxing the bill after it was paid ? Did you ever know a lawyer to make a refund ? —I would repeat what I stated in the first instance, that I never paid a bill of costs without the authority of the people who had power to give such authority. 171. You said just now that there was only a small fee on brief given. Mr. Gully got £78 15s. Do you call that a small fee ?—I was speaking of the retainer. 172. And the fee on brief to Mr. Hutchison was £105. Do you think that a small fee?— Well, I do not know. 173. The retainers are £12 12s. to Mr. Gully and £15 15s. to Mr. Hutchison. Do you call that a trifle to be paid by a company that was bankrupt ?—Well, we thought they did very well for the Natives in Gisborne, and we turned an unproductive property into a productive property that was for a long time eating its head off in interest. 174. Mr. Hutchison.] Refer to the decree in the proceedings, and see if the costs and charges are not required to be approved by the Court: Page 31, G.-2, paragraph 10? —Yes; I have no doubt that was done. 175. Hon. Mr. Seddon.] I see the retainers amount to £38 17s. a day for forty-four days. Do you think that was reasonable, and that it did not require taxing ? Did you agree beforehand on these prices, or did you trust to the tenderness and soft-heartedness of the lawyers?— This was a very old case, and in whatever was done Mr. Hutchison was joined usually with Mr. Gully and Mr. Bell. 176. But who would fix the fees on brief and the retainers ? —Certainly I did not fix them. 177. When they came into you, did you overhaul them with a view to having them taxed ?—I overhauled the bill, and submitted it to our lawyers in Auckland, and I am quite certain they were passed for payment in accordance with, this decree of the Court. It was a very stiff sum, but at the same time we got a distinct title to a property worth £25,000. 178. Have you had many cases of this kind where you have had to pay travelling and hotel expenses of counsel ?—That is the only case in my experience where we had to employ lawyers and to send them away. 179. Do you think there was an allusion to this when Mr. Johnston said, in answer to a question of mine, that he and Mr. Booth went to examine the stations and found them mismanaged. He gave that evidence very definitely, and it was what he said which led them to make a change?— If there was mismanagement Mr. Murray, who had the supervision of the stations, did not mention it. I was the chief executive officer,- and there were three inspectors. How Mr. Booth and Mr. Johnston in five weeks could go round the-whole of the station properties and say they found that they were mismanaged is beyond my comprehension altogether. It would take them all that time to go over one large property to scrutinise the accounts and examine the whole of the workings from
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beginning to end. Besides, I should require some better evidence than theirs before accepting such a statement as that, which is opposed to the recorded testimony of some of the most practical men in New Zealand. 180. You think they were not in a position to judge ? —Well, what they said is flatly contradicted by the inspectors' reports, which Mr. Murray never seriously questioned, and I would accept their testimony in preference, 181. Have you any suggestions to make, Mr. Hanna, as to realising the properties or dealing with them, so as to help the Committee in their report ?—I am certain of one thing, and that is this : that if the Board is prepared to sell the trading concerns on a profit-producing basis to purchasers they can sell them within six months.
Tuesday, 29th September, 1896. Thomas Meek sworn and examined. 1. The Chairman.] I understand that you are desirous of giving some evidence before this Committee ?—Yes. 2. Hon. Mr. Seddon.] Your name is Thomas Meek?— Yes. 3. What are you?—A miller. 4. Carrying on business where ?—Oarnaru. 5. You are aware, Mr. Meek, that the Estates Company are also carrying on the business of flour-millers?— Yes. 6. Where are they carrying them on ?—ln Auckland and Ashburton. 7. Have you any knowledge of their business, or the way in which they are carrying their business on ? —Yes, I have some little knowledge of it. 8. You have read the newspaper reports of the evidence given by the manager of the Estates Company in respect to the trading business they are carrying on ?—Yes. 9. Do you concur in the statements made and the evidence tendered ?—No, distinctly not. 10. Will you state to the Committee why? —Because they are at variance with the facts. 11. In what way are they contrary to facts?— One part of Mr. Foster's evidence states that no definite offer had been made for one of the milling properties. In reply to that, I would like to read this document:— " Dear Sir, — " Oarnaru, 23rd December, 1895. " Referring to our conversation re the purchase of the Auckland and Ashburton mills, &c, after careful consideration we are of opinion that the most equitable and satisfactory way for all parties arriving at a fair commercial value as a going concern will be by arbitration in the usual way—viz., each party to appoint a valuer, and they to appoint an umpire, the selling-value to be arrived at to be calculated on the basis of the net returns for the last three years. Should your board agree to this proposal, we are of opinion we could arrange to form the proposed company, and thus put the milling business of the colony on a sound and satisfactory basis. We would be glad if you would bring this matter before your board as soon as possible, as, if any changes are to be made, it should be done at once, so that we could commence operations at the beginning of the ensuing season, which is now close at hand. " Yours faithfully, " Thomas Meek, "John Riley, "W. Evans. " W. G. Foster, General Manager, Bank of New Zealand Estates Company, Wellington." That was on behalf of the Millers' Association. 12. Didjjyou receive any reply to that? —Yes. 13. Will you give it to the Committee ?—We received a reply, dated 10th January, 1896, from the Assets Realisation Board : — " Dear Sirs, — " In reference to your letter of the 23rd ultimo, which I brought before my board to-day, I am desired to say that, whilst desirous of selling the properties referred to at the earliest date practicable, and on fair terms, the board cannot agree to sell on the lines proposed, as they apprehend the result would not be so equitable and satisfactory as is contemplated by the writers of the letter. The board would view favourably a proposal for amalgamation of the whole milling interests in the colony, on the basis which would give us a fair price for an undoubted good business. " Yours faithfully, " Walter G. Foster, Colonial Manager. " Messrs. Meek, J. Ryley, and W. Evans, care of Messrs. J. and T. Meek, Oarnaru." 14. You made the offer, and I do not suppose gentlemen make offers of that kind without knowing what the profits for the three years were, as that was to be the basis for the purchasingand selling-price ?—Yes. 15. Have you any basis to lead you to come to that conclusion ? —Yes ; I have here a copy of the results of the Ashburton mills from 1891 to 1895 inclusive, also for the Auckland mills, and also a combined statement of the two. 16. Will you give those to the Committee?—-Taking the Ashburton balance-sheet for 1891, they show a profit of 2-93 on capital or book-value. 16a. Mr. Cooper.] This document was marked " Confidential " when it was sent to Mr. Meek? —No such instructions were given to me, and it is not marked " Confidential." 17. The Chairman.] You have the original document ? —Yes. 18. It is not marked " Confidential "?—No. In 1891 they showed a profit of 2-93 on £20,000 ; in 1892 they showed a profit of 15-75 ; in 1893 they show a loss of 17-33; in 1894 they show a loss
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of 9TI; and in 1895 they show a profit of 6-15. Taking the losses from the profits, it shows a loss in the five years of 1-61 on the £20,000, so that there is no interest on the £20,000, and there is no depreciation shown. Then, taking the Northern mills, in 1891 they show a profit of 13-26 on a book-cost of £61,000. That, I may say, was caused by wheat speculation. There was a very large line bought by them. In 1892 they show a profit of 10-18; in 1893 they show a profit of 8-94 :in 1894 they show a profit of 6-28 ; and in 1895 they show a profit of 6-26, or an average for the five years of 8-96. Taking the combined statement of the two mills with the total book-value of £81,000, in 1891 they show a profit of 10-71 percent. ; in 1892, 11-56; in 1893, 2-46; in 1894, 2-48; and in 1895, 6-23, or an average for the five years of 6-50 per cent. During the whole of that time, I made particular inquiries of Mr. Foster at the time, and he told me that no depreciation had been written off at all. Now, it is a well-known fact that milling machinery has not got a life of more than twenty years. 19. Hon. Mr. Seddon.] What do you say should be written off for depreciation ? —Well, 5 per cent, is reckoned the usual thing, and that, in my opinion, with the new machinery coming out every year, is under the mark rather than over it, because you find that you have to replace your machinery by new machinery continually. 20. What would have been the effect if 5 per cent, had been written off for depreciation ?—The effect would have been 1J per cent, on £81,000. 21. On that basis you would have got the mills for nothing?— Not at all. 22. How much would you have had to pay for them? —Certainly a good deal over nothing. 23. Do you think the last three years have been profitable to any of the millers of the colony— have not many had their own troubles ? —lt has not been possible for it to be profitable, seeing that the prices have been cut down on one hand and the other by these mills —that is to say, as far as the Auckland business is concerned. 24. In any other way are you prejudiced ?—Just a few days ago I had a telegram sent me from Auckland—on the 23rd September —by my agent, in which he says, "On arrival ' Pukaki' McCorquodale reduced bran 10s., pollard 155., stating will not permit merchants import these from- South-and make profit." Well, that very seriously interferes with our trade, and I do not think it is legitimate trade when people are deterred from importing stuff in the usual way. I may say that a document is being signed in Auckland, and will be down by next mail, protesting against that as preventing people from importing. I shall ask for liberty to hand that into the Committee when it arrives. 25. Generally, you complained that there is undue competition ?—I complain of this : that no private individual could trade on those lines and live. 26. You have given us a memorandum in respect of the price of bran being reduced ; do they maintain the price of flour ? —No ; the price of flour in Auckland has been lower than anywhere else, if you add freight to the cost. I have remonstrated times without number with a view to them keeping up the price to that ruling in other places, but as a rule it has been 10s. lower. 27. Is much wheat grown in the Auckland District? —It is principally from the South. There is a little grown up there, but not very much. 28. What is the price at which they are selling to the bakers in the South Island ?—The general price is £9. 29. Are you selling at £9 ?—Yes. 30. And you are all keeping up the same price ?—Generally. 31. You cannot complain of that ?—No, it is right enough there ; but it is £9 in Auckland, and freight has to be paid on it. 32. Are they giving the same terms ? —I think they give longer credits ; but lam not positive about that. 33. Is it usual to give a minimum and a maximum price ? —There is a little variation between bakers and merchants, the same as in every other trade. 34. Do you fix a maximum for a given period, or enter into contracts?— No. 35. Does the Estates Company?—As far as I am advised, I cannot say of my own knowledge. I have been advised by my agent that they had very large contracts last year in Auckland. 36. Do you know the terms of those contracts ?—No. 37. Or any of the terms and conditions ? —No; they were made before the advance in flour. There was an advance from £7 10s. to £9 or £10 last year. 38. You do not know anything about these contracts?— Only what my agent advises me. 39. Did you not tell me that the Estates Company fixed a maximum price to the bakers, and gave them the advantage of any reduction, but were not to make any increase on the price ? —No, I did not tell you. I heard that that was being done. 40. You were present when I was told that?— Yes; I heard the conversation, but it was not me who said that. 41. You do not know anything about it ?—Only from hearsay. 42. Mr. Montgomery.] Are you prepared to sell the mills you are interested in on the basis of the profits that have been earned for the last three or four years ?—Yes. 43. Hon. Mr. McKenzie.] What do you object to in this matter? It appears from your evidence that your objection is that no trading concerns should be carried on by the Bank of New Zealand? —Yes; and competing unfairly by carrying on the business in a way which a private individual could not do and live. 44. You are under the impression that they can, from their position, always have plenty of finance at their disposal through the Bank of New Zealand, and can compete unfairly with you in the market ? —lf you take the returns you will find that no private individual could live at the average returns. 45. The Chairman.] This is a question which has been handed in by the Estates Company. What you complain of, then, is that you cannot sell your flour in Auckland at £9, plus freight. In
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other words, you want the Auckland people to pay 10s. more than the southern people. Is that so? —No. Everybody round New Zealand pays the same price, but the freight is added, and it is 15s. in some places, as on the West Coast. All I complain of is that the price in Auckland is 10s. too low compared with that in other places. We get £9 a ton free on board, whereas we have to make it c.i.f. at Auckland at £9. 46. Hon. Mr. Seddon.] If the Auckland mills had to export the flour, they would have to pay the freight south?— Yes. 47. Is there any advantage in having a flourmill there ? —The thing is unworkable now, because to get the wheat to Auckland you have to pay the freight on it. 48. Suppose it is contended that by buying the wheat in the South and milling it in Auckland they have an advantage of 10s. a ton?— They cannot have that, because they have to pay the freight of 10s. 49. Is there nothing to compensate on that ?—No. 50. There is the bran and pollard and so on ?—That would make a slight difference. 51. You can get flour at £9 a ton in Oarnaru ?—That is so. 52. Then, why should not the Auckland mills get the flour at £9 a ton where their mills are ? —Because it has to pay the freight to take it to Auckland. You cannot possibly have it at the same price in Auckland as in Oarnaru, where it is grown. 53. Hon. Mr. McKenzie.] Your contention is that in Oarnaru they have large quantities of wheat grown, and in Auckland they have to buy it ?—Yes ; and the price has been 10s. less than at other places. 54. The Chairman.] You mean that, although you can sell flour in Oarnaru at £9 a ton, you cannot deliver it at Auckland at that price, while from the Auckland mills of the Assets Realisation Board it can be delivered at Oarnaru at about the same price as you can produce it on the spot ?— That is so. 55. Hon. Mr. Seddon.] The average profits for the five years shows 8-96 per cent, for the Auckland mills?— Yes. There might have been more than one speculation in wheat. 56. If 5 per cent, had been written off for depreciation, it would give the profit at 3-49, and without the writing-off it is 8-96?— Yes. 57. The Chairman.] Your contention is that the action of the Estates Company does harm to the other millers in the colony without doing themselves any good ?—That is so, William Evans sworn and examined. 58. The Chairman.] You are a flourmiller, carrying on business at Timaru ?—Yes. 59. I understand that you wish to make a statement ?—Yes, to make a statement and answer any questions that may be put to me. The Chairman: Very well; you will please make your statement first. Mr. Evans : Re the evidence of Mr. Foster, given before your Committee on the 18th instant: When referring to the milling concerns of the Bank of New Zealand he says, " The properties of the Estates Company would sell readily at the latest ascertained values." I now beg to state in reply that I do not believe the milling properties of the bank would realise anything like half the amount of the book-value—which, I am informed, stands at £81,000 —if placed in the open market for absolute sale at the present time, for the following reasons—namely, in the case of the northern mills, a rental of £536 per annum ground-rent is payable over a long term of years, independent of rates and taxes, which are heavy, amounting to £165. I may here state that the bulk of the wheat used in these mills has to be brought from the South Island. This involves extra freighthandling, commission, &c, and when reshipped to other ports, local and foreign, such as Australia, Fiji, &c, means another freight and commission against one handling, as in case of most southern mills that are located in the midst of a good agricultural district connected by a shipping port. lam informed that the Northern mills run only half-time, which is considered by all millers a much more expensive mode of manufacturing flour than if running full time. I hold, at the present relative prices of wheat and flour, there is not a legitimate profit being made, any profit made for some years past has only been through wheat speculation. As regards the Ashburton mill, it is an old wooden, rickety concern, and very much behind the requirements of a modern roller mill. This mill is situated about fifty miles from a seaport, and, in my opinion, would not in the open market realise anything near one-third of book-value. It is run by a deputy general manager of the Assets Company, who resides in Christchurch, and who also runs a leather-factory as agoing concern for the company. His mode of competing with other opposition millers is a very unfair one, as advance sales of flour are made by him on the basis of present values, flour not to be paid for until after delivery is taken, perhaps months ahead, so that, if the prices go down, a corresponding concession is made to customers, whilst, on other hand, if an advance takes place no further rise is demanded, and neither storage, or interest is charged, whilst wheat from farmers is sold at net cash terms. This is not legitimate trading, and other mill-owners who have to get accommodation from banks —many of them from the Bank of New Zealand—or who work entirely upon their own capital, cannot compete except at a loss, the milling business being a very fluctuating one. When a rise takes place, as a matter of course, the miller should get the benefit of said rise, seeing that he has in case of a fall to bear the loss. Other millers have to follow suit or shut down altogether, resulting in a cut-throat competition. The style of business alluded to demoralises not only the milling, but the baking trade also, and I feel sure that it was not the intention of the Government, when they came to the rescue of the Bank of New Zealand, to sanction the running of these mills for an indefinite time in direct opposition to legitimate millers, more than half of whom are the bank's own clients, and also against the interests of the taxpayers of the colony. In conclusion, I may say that the southern millers made the Assets Company an offer for their mrlls some months ago, which offer was not entertained, notwithstanding the assertion of Mr. Foster to the contrary, copy of which offer I believe has been handed in to you by Mr. Meek this day.
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60. Do you desire to supplement your written statement ?—I am prepared to answer questions. 61. Hon. Mr. Seddon.] You have heard Mr. Meek's statement? —Yes. 62. Do you corroborate that? —I do so to a certain extent. 63. You are the general manager and managing director of the Atlas Company's mills ?—Just so, Sir. 64. On what point do you differ from Mr. Meek ?—I have not gone through his statement, and we may not entirely agree on every point. 65. In respect to the mills at Auckland, has the Northern Boiler Mills of the Estates Company an advantage in milling wheat in Auckland as against it being milled in the South and shipping it away ? Have they in Auckland something to compensate them in that ?—Quite the reverse, because they have to buy the wheat in our district and pay a commission for buying it, while the southern millers buy it at their own doors and pay no commission. In Auckland they • have to pay a freight of 7s. 6d., and, I think, 3s. for putting it on board. Of course, there are other shipping charges if they want to ship to foreign ports, such as Fiji or to any part of Australia— and I know they have shipped to Queensland —if they have to compete with us. They cannot compete against us fairly with all these extra expenses. 66. You saw the statement submitted to the Committee by Mr. Meek showing the percentage of profits? —Yes. 67. They show an average profit over five years of 8-96 ?—Yes. 68. On the two mills it comes to 6-J- per cent. Do you consider that a legitimate profit?—No; because they have not written anything off the machinery, and all careful millers will write off at least 5 per cent. I write off 10 per cent, if I can possibly do it, because machinery is always fluctuating in prices. 69. And, if they annually wrote off 10 per cent, for depreciation, what effect would that have on the whole ?—lt would depend upon the balance-sheets. 70. What is the value of the machinery on which they would have to write off 5 per cent. ? —Our mill is set down at £30,000, and if it were in the market to-morrow we would not get £10,000 for it. There is a mill in Dunedin, supposed to be owned by Mr. Eyley, which is known as Anderson''s Mill. I heard that it cost £26,000 altogether. Some little time since I made inquiries of the manager of the Bank of New Zealand in Dunedin about it, and I think he said he wanted either £12,500 or £13,500 for it then. But it was put up to auction, and I have heard that the only legitimate offer made for it was £5,500. That shows you the depreciation on milling properties. If mills were paying, a mill like that ought not to lie dormant. 71. What dividends have you declared for your company?—l have declared very good dividends, but not out of milling. Profits were very good last year, but if we had not turned a wheel we would have made much more. We bought large quantities of wheat when it was only 2s. 3d. a bushel, and it went up to 4s. a bushel a few months after. 72. Has not the Estates Company bought wheat to sell again, and not for the mill ? —Not to my knowledge. I have sold to outside people, independent of our own mill. 73. That is your line, of course; but if the Estates Company have only bought what they wanted for milling purposes, and made a profit out of their purchases, that is legitimate profit, is it not ? —lt may be, but Ido not think it is right for them to buy so heavily in the market. They are not speculators, or ought not to be. 74. They " struck it " then?— Yes ; but if they had not " struck it " they would have shown a big loss. 75. I suppose having a large capital is a great advantage ? —Undoubtedly. No other milling firm in the colony has a bank to back it to any extent except these mills, and I also object to them being supported by the ratepayers of the colony. 76. Do you think they have an undue advantage in doing what other customers of the bank are doing ?—I know that the Loan and Mercantile Company used to work on those lines, but whether the Estates Company does so I cannot say. Some agents of the Bank of New Zealand at one time were paid so much per annum for consulting with the agents of the Loan and Mercantile Company. I know this as a fact. That is some years ago. 77. You have based your purchase-price in the offer made on three years' working—" The value to be arrived at to be calculated on the basis of the net returns for the last three years." The last three years have not been the most profitable for milling?—We have not had any profit earned for many years. Very few mills have made anything during the last three years except those people who have speculated in wheat; and Ido not consider it is legitimate for the Estates Company to do that, because the ordinary miller is not able to buy beyond his own requirements on account of the bank refusing until lately to advance money to its customers to buy beyond a certain extent except on very good securities. 78. The fact is that these mills were taken over from people who had been working them at a l oss ? —They retired in favour of the Bank of New Zealand, and since our offer was made one of the customers of the Bank of New Zealand has also retired and put his estate into liquidation. The cost of that mill was £26,000, and to-day the highest offer for it is £5,500. 79. Then you think if the Estates Company goes on in the same way some of the other millers will be retiring in favour of the Bank of New Zealand ? —I think they will have to wash up very likely ; but at the present time it is just like a man going through the Insolvent Court and having a fresh start given to him. Any man who pays 20s. in the pound cannot do that. 80. In the meantime the public get the advantage of cheap bread?— The public do not want cheap bread on these lines. They want to see everybody pay 20s. in the pound. 81. I think you are right, but the bakers increase the price of bread when flour goes up, and generally charge the same price when it goes down?—ln some cases bakers do not raise their price when there is an advance in flour, and other bakers have to compete with those men who have made contracts with the Estates Company and are able to give the people the advantage of their well-bought flour.
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82. You have known flour to be £3 or £4 a ton less in New Zealand and the price of the loaf has be'"".i the same ?—I do not know that I have. Of course, they have to take their chance of profit and loss. The baker's business is not a very profitable one, because so much credit is given, and they do not seem to be able to accumulate riches. 83. Do you think this basis of sale includes the wheat-buying, or was it to be on a basis of milling alone ?—I understand it was to be taken on a commercial basis, including everything, and that we were to allow valuators to go into that. 84. You have seen the returns for the last five years. Taking last year's return, are you prepared to make a reasonable offer to purchase on that basis ? —On a commercial basis. I would be willing to purchase these mills, not for the sake of buying the mills, but for the sake of doing away with this competition. At the present time there are two nulls at least for every one that is required. 85. Would that have the effect of granting a monopoly which might be used to the disadvantage of the people generally ? —I do not think so. I think it would be the means of regulating the trade and giving a fair profit for the capital invested. 86. As a body, if you cannot arrange to purchase, is there any objection to entering into a commercial treaty with the Estates Company ?—Well, they are not exactly on the same lines as we are, for the reasons I have already stated. They could not easily be put on equitable terms with us. We ought to have an advantage through being on the spot in an agricultural district against them, as they are at a distance; but I would be willing to go into any reasonable arrangement that would stop this cut-throat business. 87. Have you thought of a proposal of this kind : You to give them the Auckland trade and they to let you have the Ashburton mill ?—No; this is a free country, and I do not think any ordinary business-man would enter into an arrangement on those lines. 88. You would have to agree on an output in any arrangement you entered into ?—Yes ; but what we distinctly object to is that the Bank of New Zealand should run these trading concerns at all. If they are going to run us to death, of course, we shall have to grin and bear it; but we think the colony should know how they are running these concerns. 89. The milling properties stand now at £81,000 in the books of the Estates Company ?—Yes. 90.- According to your calculations, you are proposing that they should make a loss of £50,000? —I do not know what the loss would be. I would leave that to practical business-men. 91. But who is to bear that loss ?—They would have to do what they ought to have done many years ago—wash up and make a fresh start again. 92. You would put that loss on the whole of the colony ? —lt will be put on the colony, and perhaps a great deal more. In the meantime, they are running their own customers to death. 93. If they get money at 3|- per cent., and they are making 8-| per cent, on the book-value— not on capital-value —even with 5 per cent, depreciation they would not lose ?—When they get one bad year where will the book-value go to then ? And if the mills have to be put in the market they will not get one-third of the book-value, as the case in point I gave you of Ryley's position shows. 94. Your reason for coming before the Committee is to state what is the policy followed with regard to the trading concerns, and to urge that the bank should get back to legitimate business as soon as possible ; and you are prepared to make a reasonable offer as far as the mills are concerned ? —Yes." 95. You have not replied to that letter in answer to your offer ?—No ; we are only feeling our way, and do not know what to do. 96. I suppose you recognise this fact, as a business-man : that in coming before the Committee and stating what you have done will not increase the value of your properties or those of the Estates Company ?—I have already said that I have a mill costing £30,000, and it would not bring, lam sure, £10,000 to-morrow if I were to put it into the market. 97. Mr. Montgomery.] What would you estimate the percentage at between writing down the machinery of the rolling mills 5 per cent, and not writing it down ?—I have not gone into that, but it would make a considerable amount. 98. Have you any idea? —No; I left that to Mr. Meek this morning. We did not know the value of the machinery. 99. How would you apportion the depreciation? —I should take it off the buildings and machinery. 100. Not off the whole of the capital?—-No ; off the whole of the buildings and machinery. 101. That would be off the profits representing interest? —No; that would be 5 per cent, off the profits. That is not on the machinery and buildings. 102. You say you would take it off hoth?—l am only speaking of the mill and the machinery. That has nothing to do with the working capital. 103. Could you give us an idea as to the effect that would have on the balance-sheets ? We should then be in a better position to judge? —If they value their mills at £81,000 for machinery and all, I should think it would be very easy to get at. It would be 5 per cent, on £81,000. 104. What is the total profit in cash made on their mills?— Mr. Meek gave that. 105. £3,718. The book-cost is £61,000, not £81,000?— That £81,000 is for Ashburton as well, where they have not done so well. 106. In 1895, for the Canterbury mills it was £1,231; for the Northern mills, £3,817; that makes it just about £5,000 profit, and the capital altogether was £81,000. If you take £4,000 for writing down there would be something like £1,000 ?—I have not gone into calculations. I should; and always do when I have made it, take 5 per cent, off machinery and buildings. In fact, some manufacturers allow 10 per cent. off. 107. I would like to know what you estimate the effect would be on the profits of the Bank of New Zealand on the Northern and Canterbury flour-mills if they had written down their machinery and buildings as much as you think they should do ?—I think they would have very little profit indeed.
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108. But will you find out and hand it in ?—Yes. 109. Mr, Tanner.] Are you quite certain, in the statement you made as to the business carried on at Ashburton, that it is a correct one ? —I have it on other's evidence, and on the gentleman who made the statement this morning ; he is now in the room. 110. You have made your statement on oath ? —Yes, and I will ask that gentleman to substantiate it. 111. Hon. Major Steward.] Have you seen the buildings recently ?—Yes. I said they were rickety. 112. Hon. Mr. Seddon.] Your name has been brought up here prominently in this respect : A rumour was in circulation that the J. G. Ward Company had drawn upon you, and intimated it by letter, or it was stated in a schedule that a draft had come forward to you. On this ground it was alleged that there had been an improper transaction for the purpose of financing. We have had secondary evidence that this was not the case, but, as you are now here in person, I would like to have direct evidence as to that. The question is this : Has the J. G. Ward Company drawn upon you for £5,000 or for any other sum ?—No. I have heard rumours of it, but I have had no transaction with the J. G. Ward Company, and it is a false rumour. David Hastings Brown sworn and examined. 113. The Chairman.] You are a flour-miller carrying on business where ?—At Christchurch. In reply to Mr. Montgomery's question to Mr. Evans that, as to the effect of writing off 5 and 2-§- per cent, on £81,000, that would show a profit of I'4B on the Auckland mills, and a loss on the Canterbury mills of 9-97, or an average loss on both mills combined of 8-49, if you take the value of the Canterbury mill, seeing that it is an old mill, consisting of wooden buildings twenty years of age, that would not be too much. But I want to testify more to the way the Estates Company are doing business than anything else. The mode of doing business in the Canterbury mill is selling flour on forward delivery. The year before last, at the beginning of 1894, they sold a large quantity of flour for forward delivery at the lowest point that flour has touched for years—namely, £7 per ton. Within a few months the prices rose to £8, £9, and £10 ; but they continued selling the whole year through to certain bakers at £7 per ton. Therefore a legitimate miller wanting to sell his flour could not sell it at any price which would show a profit. This year they have sold flour at the price of the day, and I have no fault to find with the price it was sold at; but they have sold it with the stipulation that if it goes up in price no increase shall take place, but if it comes down the reduction will be allowed. Therefore no legitimate miller could sell on those terms and live. This means that the bank is speculating for forward delivery to supply the bakers with flour, and the baker is running no risk whatever for the whole year, which demoralises the baking trade as well as the milling trade, and the man holding the flour at the low price can continue to sell his bread at a price which is ruinous to other bakers and the millers who supply them. Mr. Ryley's case is a case in point through them having done the same thing. As regards the value of the mills, I will speak for the Canterbury mill, as I know something about it, having put all the machinery into it thirteen years ago. The building thirteen years ago was an old one, comparatively in the life of a wooden building. The machinery put in was the best then known, but it is obsolete now in the rapid transition machinery has been in for the past ten years, and it is entirely out of date. The profit for three years on the mill was slightly under £5,000, and the loss in two years was over £5,000, or showing a net loss of £322 for the five years' work. This is in addition to the lack of writing off for depreciation, and, as I understand, nothing was paid by way of rent for the capital invested. If any otherindividual was running the mill, or took it from the bank, he would have had to pay rent for it, which would have to be taken off the profit. The bank shows it here as interest on the £20,000, but any private individual running the mill would have had to pay rent out of the profit first. As regards the Northern Roller Mills I do not know anything. As an expert miller of more than thirty years' standing, I do not know how they make the value £61,000, neither do I know how they arrive at the £20,000 as the value of the Canterbury mill. All the old portion of the mill was taken out and made firewood of by the owners years ago, and they added improvements to it which never amounted to anything like £10,000. That is all the direct statement I have to make, but I can answer any questions. 114. Hon. Mr. Seddon.] How do you arrive at the value of the machinery in the North mills ? —I take the whole thing. 115. Is that a fair way ?—Not being able to arrive at the value of the machinery, we have to take some basis. 116. But you would not like to write down your capital, together with the machinery and buildings?— But this £81,000 is the capital invested in the machinery and buildings. 117. How do you know that ?—We are told by the Estates Company that that is the value of the buildings and machinery. 118. Are you sure about that ? It might have been that the customer who owed the bank the money put it down at that. That is what is meant by book-value ?—They may have taken it over from Mr. Firth and Mr. Lamb, and put that amount on. 119. You put the depreciation of 5 per cent, on that value ?—We take their own figures. 120. What is the proportion of the value of buildings to your mill ?■—About half. 121. Is that always the proportion of buildings to a mill?— Not always; it depends upon the storage accommodation. .122. You can give us an idea as to the Northern mills. What did the machinery cost there, do you think? —I should say about £15,000 to £20,000, many years ago. 123. You reckon the machinery in the Ashburton mills at £15,000 ?—No, the Northern mills. The machinery in the Canterbury mill is not worth £2,000. I know nothing about the Northern mills.
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124. But you do know about the Ashburton mills. What is the value there ?—The invoicevalue of the machinery was originally £1,800 odd. 125. What was the original value of the buildings ?—About £2,000 or £3,000. 126. Well, that is £4,000? —The cost of the Canterbury mill was largely due to the bringingin of water to the mill, and there was a lot of expenses in connection with the water-race and building bridges in connection with the County Council, which is of no value whatever to the mill. 127. There is no depreciation on them?—No, but they are of no value to the mill. 128. I suppose, if a water-race is once made, there is not much depreciation on that. It will not get obsolete like machinery ?—lt has always cost as much to the Canterbury mill as coal would have cost, or nearly so. 129. That would be working-expenses. If you have to send a man to repair a water-race you have also to send a man to repair machinery. There is no depreciation so far as the water-race is concerned ?—No, 130. And as regards the machinery—£2,ooo ?—The invoice-cost in America or England would be about £2,000. Since then there has been a considerable amount more added. I was speaking of the original cost. 131. What would be the cost of the additional machinery?— There has been about £1,800 to £2,000 in buildings and machinery since. 132. That would be £6,000 altogether ?—Yes. 133. It is on that you would have to write down 5 per cent. ?—lf the bank takes it at a certain amount you must write it down on that. 134. You have said here, and Mr. Evans has said, that the proper thing to do is to write down the machinery and buildings at 5 per cent. ? —Yes. 135. It is 5 per cent, on £6,000, according to what you have said, and not 5 per cent, on £20,000, and your calculation was made on £20,000 ? —My calculation was on their own figures. I would not value the mill as they do. 136. Your basis of working is 7J per cent, on the book-value of £20,000? —Yes. . 13.7. And the machinery and buildings have cost about £6,000? —I said it was valued at about £6,000 at that time. If the building had been put up during the last few years it would not have cost one-third of what it originally cost. Mr. Alfred Saunders had to cart the timber from this side of the Selwyn. 138. You have no knowledge of the value of the machinery and buildings at Auckland?— No. 139. How do you know about- the mode of selling in anticipation, which you stated ?—Unfortunately, I know it too well. 140. How do you know ?—By going round to the customers. Mr. Wood would testify to the same thing. I can say, further, that they have begun to put their flour into 71b. bags as if they were going into the grocery business. 141. You were present when the manager of the Estates Company admitted that they were selling at a profit ?—I was present, and lam aware that they are giving four months' credit and 2J per cent, in addition in some cases. 142. What terms do you give ?—Five per cent, and thirty days in Christchurch only. 143. I do not understand you ? —That arrangement was entered into lately to encourage the bakers to give prompt cash, and the Estates Company only give 2f per cent, for cash?— This was before this arrangement was entered into. I may say that the trade is disorganized altogether, and no one knows what the terms are. 144. If they allow 2-J- per cent, it is payable within four months ? —Yes, in some cases. 145. Hon. Major Steward.] In giving an estimate of the value of the Ashburton mills, you stated what you thought was the value of the buildings and also the machinery ? —Yes. 146. Is not the building supplied with electric light ?—Yes. 147. Did you allow for the value of that ?—ln the £6,000 I did. It only cost £120. 148. Mr. Montgomery.] How do you know that the bank does not charge depreciation on machinery ?—We are told so. 149. By whom ?—Mr. Foster stated to a deputation sent to him that nothing had been written off for depreciation on the buildings. 150. Were you present ?—No; that statement is made by Mr. Meek. [At this stage Mr. Meek was recalled for examination as to Mr. Foster's statement.] 151. Mr. Montgomery, to Mr. Meek.] How do you know the bank does not write off anything for machinery or buildings ? —I asked Mr. Foster particularly on that point, and he told me that they did not. 152. When did you ask him?— When I received the documents from him. 153. When was that?— Some time in December, 1895. I could not say the exact date. 154. You were not aware that depreciation was charged in 1896 ?—I know nothing about 1896. We did not reckon on that. 155. You are quite sure he made that statement ? —Yes, quite sure. Mr. Brown's examination continued. 156. The profits on the mills came to 8-49 per cent, for an average of five years, and you propose to take over these mills at a valuation as business-men although there would be a loss if depreciation were allowed for. Do you think the mills would be worth anything ? —Yes. We do not value the mills at £61,000 and £20,000. We think that an absurd valuation. We took their figures, not ours. 157. If you took your valuation, how would it work out in the Profit and Loss Account?—lt would work out probably very much better than theirs. * 52—1. 6. "
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158. Can you give us any idea?—My anticipation of the Canterbury mill is that it would notwork out anything at all. They have made a loss on it of £5,000. You would have to take that mill at the valuation of an expert machinist. 159. Is the mill worth anything as a going concern? —Yes. 160. If it makes a loss of £322 in two years, is it worth anything?—l may say that for five years before there was a profit of £22,000 made. 161. A fair profit ? —Yes, after counting expenses of every sort, and rent in addition. 162. It seems that, if you took the previous period, it would come out to a very much higher valuation ?—Considerably higher. 163. So that unless you took into account the previous period it would not be fair?— But there are a great many more mills in the colony since then. There is increased competition. 164. If you take the last five years there is a loss, and you cannot say what is the value, and yet you say the mill is worth something as a going concern ?—Yes, if properly managed. 165. Do you think it is not properly managed?—l certainly would, compared with the other Canterbury mills. It shows a loss on five years' working of £322, in addition to depreciation, and I do not think there is any question about that. 166. Who do you attribute that to ? —I would sooner not answer the question, but, if I am bound to, I consider it is due to the management of the gentleman Mr. Evans referred to, who has also a leather-factory and several other things—Mr. Virtue, who is known as Mr. Embling's pet. 167. What is your valuation of these mills? —We have not touched that question either as. individuals or an association. 168. You are willing to accept a business valuation? —Quite willing. As one of the Milling Association I am quite willing. 169. And are you prepared to sell your own on the same valuation?—l am. 170. Mr. Guinness.] You said that the management of the business in Canterbury was very bad ? —I think the result shows that. 171. In what respect can you point out bad or incompetent management ? —Well, the insane forward-delivery sales. When flour is at the lowest point touched for years it is insane to sell it in advance. 172. But you do not suggest that the manager does not attend to his duties?— Not in the slightest; but, as a mill-manager, he knows as much about it as Ido of astronomy. 173. Was he the manager of a bank at one time ? —No. 174. He has not been brought up to the milling business ?—No. 175. Hon. Mr. Seddon.] What is his name?—-Mr. Peter Virtue. 176. I cannot quite reconcile your statement that, with the loss of 8.49 per cent, based on the returns of the Estates Company themselves, you say you would be prepared to pay something for these mills ? —Yes; that is based on the £61,000 and £20,000, which is absurd—perfectly absurd. 177. But last year, notwithstanding this average for five years, there is £300 of actual loss ?— Yes, which, if the mills had been properly managed, would have shown a profit. 178. Do you think it would be in accordance with good business if you asked the bank to give you a bonus to take these mills over ?—I do not think the bank would do so, and we are not prepared to waste their time by asking. 179. You are not prepared to state the amount of bonus you would require ?—Personally I would not take them over at a bonus, as I could not work them myself. Walter George Foster re-examined. 180. The Chairman.] You are recalled in order that you may have an opportunity of replying, if you desire to do so, to what has been stated by witnesses this morning with regard to the management of the flour-mills carried on by the Estates Company ?—I expected it was to answer a. statement in regard to unfair competition, and I rather fancied that perhaps we should be found fault with for putting full weight into our bags, which we always do. 181. Mr. Guinness.] You do not suggest that that is not done by other millers?—l suggest nothing. With regard to the so-called offer, I scarcely see that anything more than an offer toarbitrate was made—there was no cash offer. With regard to the low prices in Auckland, that is a very small matter. We do not get all our wheat from the South. But, as to competition, we have made a profit, and if we can sell to advantage I do not see why we should not do so. With regard to the agreement as to terms, as far as I know, any agreements made by the Estates Company are faithfully carried out; but, on the contrary, a case has come under my notice on the west coast of the South Island, where the Estates Company's mills having effected certain contracts for supplies, a southern miller followed us, and —I suppose in order to create discontent—offered to supply at 10s. per ton less. I think the southern miller referred to is in the room. As to the depreciation of property, Mr. Meek's statement that I said no depreciation had been provided for is only to an extent correct. The conversation had special relation to the Northern Roller Mills, which only came into the possession of the Estates Company in March, 1895, the Loan and Mercantile Company having previously controlled them. I had no records prior to that, and I said so. Since then depreciation has been provided for. As regards the purchases of wheat, I do not think we need say anything about them. We think we are on fairly level terms with the southern men. If we purchase in the South and employ an agent the farmer will frequently sell at a price equivalent to what he would get if selling through an agent. As to the desirability of the bank working the mills, I can only say that a miller, to be consistent, should not take any assistance from banks, because if misfortune overtook the miller they might get another mill on their hands. We have to work the mill to the best advantage. The southern mills have certainly approached us, and I think from the letter Mr. Meek has put in it will be seen that the attorneys desire to sell at the earliest possible moment; but to face the arbitration suggested would mean, in the present
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condition of the industry, facing an enormous loss. Ido not think it is equitable to arbitrate on figures in the present state of trade. There really was no money ready to be planked down by the millers ; but, supposing they had the money, in the unsatisfactory state of milling properties I do not know how they would arrive at a fair figure. As to the value of the machinery, the Auckland Roller Mills are only, I think, some seven or eight years old. The machinery was all new then, and it has in every sense been kept up to date. I think we have about the best practical miller in the colony, and if he, on whom I rely very much indeed, can see his way to carry out the business in the way he does, making good profits, I think I should be very much to blame if I listen to any outside twaddle in respect of competition. With regard to forward sales, I do not know whether the.statements are correct or not, but I will find out from Mr. Virtue ; but even if it is the case it is probably only a Roland for their Oliver. Mr. Brown said there were too many mills in the colony, but notwithstanding this he has just put up another. Mr. Virtue is not a practical miller, nor does he carry on the practical milling, but he is the business manager of the concern. With regard to the policy I have instructed our managers to carry out, I put in an extract from letter of instructions, following some suggestions as to working the business in a friendly way : " Providing terms are such as to insure the proportion of trade to which we are reasonably entitled under an arrangement of this nature, it would meet with my full approval and support ; but we cannot permit any undue encroachment upon the profit-earning of the concern, and unless our rivals are perfectly fair and moderate in their demands we must perforce carry on our business under competition with them even if we thereby incur some extra risk. Of course, our policy is, and should be, one of ' Live and let live,' but the value of this asset as a going concern must be maintained. You will understand that I wish to endeavour to work in with our rivals as far as possible consistent with profitable working, and deprecate anything like a running policy. We must be extremely careful to preserve the safe course adopted during past few years, and come out on the right side. Milling : In this a pacific policy may prove advantageous. It is, I think, gradually being forced on our competitors that, whilst we are ready and prefer to work smoothly with them for mutual benefit, we are quite able to go alone, and I fancy difficulties are lrkely to be overcome by present moderate .attitude." The letter is dated 11th July last. I can only say, in connection with this statement, that if there is any of this absurd cutting policy it is contrary to my wish and instructions, and I rather question the statement which has been made. I think it is a misconception, and is open to explanation. 182. Hon. Mr. Seddon.] Would you think it good business if, according to the statement made, you had fixed a maximum price of £7, the lowest for years, for a time ?—I should doubt if it has been done. I will make inquiries; but I see no reason why, having bought our wheat right, we should not fill any contract which showed good profit. We have purchased our wheat well, and know what it has cost, and I fail to see that it is not good business to take a contract for forward supplies. Owing to extra foresight, perhaps, we may have got our stocks of wheat at a lower price than our competitors. 183. What capital are you using for wheat-buying ? —Probably altogether £40,000 or £50,000 for both mills. That is the maximum. It depends upon the prospects of the markets whether we use more or less. 184. What do you think would be a fair basis, supposing there was to be an approachment between you and the millers ? You know what the policy has been, and that the direction of Parliament is that the bank shall get back to legitimate banking business as soon as possible ?— That is a question I would rather not answer, because we have to sell the properties. The attorneys would fix the price. 185. You recognise the policy which Parliament has directed, which is to sell the properties as soon as possible, and to the best advantage ?—Not only do I recognise that it is the wish of Parliament, but the attorneys are making strenuous efforts here and at Home to unload these properties. But supposing these properties were unloaded from the bank at Home, and they were sold to English capitalists, the millers here would not get rid of the competition they now complain of; they would probably get it a bit hotter. 186. Mr. Montgomery.] As a matter of fact, have you written off the depreciation for machinery ? —Since I have taken control, certainly. lam not able to say very much about the Ashburton mill prior to taking control, because I have not investigated it; but my impression is that there has been depreciation provided there too. I shall be glad to look it up, and supply the information presently. 187. Did you state to Mr. Meek at any time that there was no depreciation charged on the mills?—l was referring to the Auckland milis, which only came to us in 1895. I had no books of account to refer to prior to that time. 188. That was in regard to the Northern mills?— Yes. 189. And in regard to the southern?—l am not sure of that, but my impression is that I was replying to questions with reference to the Auckland mills. 190. You say there has been a profit of 6or 7 per cent, on the whole ?—-Yes, for a series of years. 191. Can you say what the profit would have been had the depreciation been written off?—l am not sure that it has not been written off. 192. Will you ascertain and show the figures of profit and loss with the depreciation ? —I do not know that I shall be at liberty to supply particulars of that nature, but if I am I will. 193. I presume the book-value of the mills is not the actual value ? —We are prepared to entertain an offer, and to take as much as we can get. Very large appropriations have been made for deficiencies, not specially on this, but on all the assets of the Estates Company that are likely to pan out at less than book-cost, and these have been provided for with the others. 194. Still, they are paying interest on the book-cost?— Yes. 195. In 1896, what was the interest paid?—l am not at liberty to say. We have to sell the properties. I can sa.y, however, we had a remarkably good year.
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196. Equal to the others ?—Better. 197. Was the income equal ?—Better. 198. Are you prepared to sell on the basis of capitalised interest ?—At what rate ? 199. Say 5 per cent. ?—I am not able to say, because Ido not decide these matters, but if any one would offer on a 5-per-cent. basis for the whole of the trading concerns I should be quite willing to take it. 200. For the flour-mills as a whole ?—I should say we should take it. 201. And you would allow an investigation as to the way in which the profit and loss were made up ? —Yes ; whatever information is reasonable to give any intending purchaser who might be a competitor would be given. 202. It would be, in an ordinary case, a fair basis to say that after the profit was agreed upon —what the actual profit was —to capitalise that over a series of years and sell at that ? —That would be a fair basis. It is difficult to answer questions of this sort. Profits are not always similarly looked upon. We might have an idea as to a profit which the purchaser might not coincide in. 202 a. I merely suggest it to you as a proper basis?— Generally, I should think such lines would be proper to go on. 203. Hon. Mr. Seddon.] It has been stated that you have 14,000 sheep in the freezing-works at Auckland, and that they have been there some months?— Yes, there are some, but they have not been any great length of time in store. 204. Does not meat depreciate by being kept so long as that ?—-I do not think so. 205. How is it that they have been kept there so long?— Had we shipped them when first frozen we should have had their skins only —the value of the offal in the colony. We shipped some at that time which barely covered charges. What we have in store is now a valuable asset. 206. Do you mean that with the cost of storage you have done better?— Yes; storage is only -fg&. per month. 207. It has been stated that 10,000 sheep were sold in the Waikato for 2s. 6d. ?—I think that is so.- I-do not know the number, but it was a very good-times price for old crocks. They were culls. 208. It was stated here that other culls brought 3s. 6d. ? —They might have been a better class of sheep. The reason for such low prices was peculiar to last year. They were sold during one of the most serious droughts we have had for many years. On the east coast of the North Island they could scarcely be given away. Our sheep had to be sold to make provision for the remainder of our stock. 209. Mr. Montgomery.] Mr. Hanna made a number of statements about the profit and loss of £71,000 which were entirely at variance with yours. He put in a number of lists. Have you seen those ?—I have seen the newspaper reports only. 209 a. Can you account for such a discrepancy ?—Mr. Hanna's analyses will not hold water. 209b. Can you show where he is incorrect ?—I should be very sorry to attempt the task from memory, and I have nothing before me. The correctness of the balance-sheets and returns I will stand shot for for all I am worth. 210. You have no remarks to make?— Except to deny in toto the correctness of any of Mr. Hanna's figures or statements that run counter to mine. 211. Hon. Mr. J. McKenzie.] About these 10,000 sheep: I suppose they were sold during extremely dry weather? —Yes. 212. It was good management you should clear off draft stock ?—You must sell off the draft sheep at the proper time for clearing them. 213. In your opinion it was better to sell them at a sacrifice than to let them starve on the stations ? —Yes. 214. That is your explanation ?—Yes; if it needs explanation, I may add that Mr. Todd and Mr. Fraser were in the Waikato at the time, and, in fact, at the sale.
Wednesday, 30th September, 1896. George Edmeades Tolhurst, Resident Inspector of the Union Bank of Australia, sworn and examined. 1. Hon. Mr. Seddon.] You have watched the proceedings of this Committee of Inquiry intothe banking business of the colony?—I have observed them. 2. You have read the newspapers, no doubt. It has been stated that you were manager for some time of the Bank of New Zealand ?—Yes ; acting general manager. 3. When did you first join the Bank of New Zealand? —In 1874. 4. In what capacity?— Manager at Wellington. 5. You continued as manager at Wellington until when ?—Until the end of 1888. 6. And at the end of 1888 ? —I proceeded to Auckland, on the summons of the president, Mr. George Buckley, to take charge temporarily during the absence of Mr. Murray on sick-leave ; and I think I read it in the evidence—l have forgotten the date—that on the 25th January, 1889, I was appointed by the board acting general manager. 7. You were, then, acting general manager from that time until the time you left the bank?— Until early in March, 1890, when I resigned. 8. You have seen the balance-sheet prepared during the time you were acting general manager ? —Yes. 9. You would be the officer responsible for the compilation of that balance-sheet ?—Yes. 10. When that balance-sheet was put before the directors, did it truly show the position of the Bank of New Zealand ? —Yes.
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11. Had an investigation taken place prior to the issue of the balance-sheet on the 31st March, 1888, as to the financial position of the Bank of New Zealand ?—I had nothing to do with anything until I was there in 1889, except in connection with my own branch in Wellington. 12. The first balance-sheet for which you were responsible was the balance-sheet of the 31st March, 1889?— Yes. 13. Had there been an investigation prior to the 31st March as to the position of the bank? — Yes. 14. You give the liabilities here [balance-sheet of the 31st March, 1889, referred to] at £13,820,000, in round numbers ?--Thirteen millions and three-quarters, roughly. 15. You notice that a dividend was declared of 7 per cent. ?—Yes. 16. Had due provision been made for bad and doubtful debts?—On the current business, Yes. I have no doubt whatever, speaking at this distant date, that it had. 17. But why should a dividend be declared on current business and not upon the profits made by the bank ?—lt was on the profits made, and was paid, in terms of the law. 18. After provision had been made for bad and doubtful debts ?—After provision had been made for bad and doubtful debts, except the globo assets, which by resolution of 1888 were set aside to be treated in globo. The Act was passed in 1889, and was made retrospective. The shareholders passed a resolution in October, 1888. I think they had two meetings—first to pass this resolution as to the capital and treating the assets in globo, and then to confirm that in due course ; and under one of the resolutions the directors were requested and required to apply for legislation to confirm what the shareholders had instructed the directors to carry out, both as to capital and as to the treatment of the " assets in globo." 18a. Clause 6 of the Act of 1889 says, " The powers and provisions contained in section sof this Act shall have a retrospective operation, and shall be deemed to have been in force as from the 11th day of October, 1888, so as to validate anything which may have been done by the bank or the board between that date and the commginto operation of this Act " ? —I think in that section yor> will find a direction as to the treatment of " assets in globo " —that they were to be put aside as from the 19th October, 1890, and a dividend might be paid by the bank out of current business. 19. It is quite true that the Legislature has passed this, and that you had retrospective power to validate anything?— Hardly, sir. It was to provide powers to pay dividends. 20. So as to validate anything that might have been done by the bank from the date of the coming into operation of this Act ?—I do not understand the precise meaning of that. Ido not think the directors —five of whom were entirely new, with a new acting general manager, as I was— had any intention of asking for powers which enabled them to do anything. Ido not recollect that as being the intention. 21. But it is in the Act? —I assume that as a private measure it was advertised in 1889 in the ordinary way, and as a private measure, presumably, it went before the Private Bills Committee, and was fully considered in Parliament. 22. Who was in charge of this Bill on behalf of the bank ?—I think, Mr. Stafford ; and lam not sure whether he did not employ at that time with him Mr. H. D. Bell. 23. Do you think, Mr. Tolhurst, that the bank to be put into a position to declare dividends and to discard the liquidation account was a proper thing to do ?—Provided the liquidation account did not show a very serious hiatus; and it could not be said to show that in March, 1889, as provision was made. That was obvious. 24. There were ascertained losses? —They were not ascertained; it was impossible to ascertain them. Mr. Buckley had been twelve months in Auckland, daily at the bank, and was unable to ascertain what they were. 25. At all events, we have had the bank officers and directors here, who have said that there was at least £800,000? —I think not. I remember that I and other officers wrote to the president in March, 1889, stating " That the provision made last year to meet losses is inadequate," but there was no estimate. We wrote to say that the provision made by the shareholders' committee was inadequate. The president asked me what I considered was the further deficiency. I pointed out that I had only been a few weeks in Auckland, and that, with my varied duties, it was impossible to have formed any estimate of what that deficiency would be. It was not anything like that which you state. 26. We have had evidence that £500,000 of reserve fund and £300,000 ?—Oh, you are referring to the estimated losses before the writing-off—that is to say, the writing-off in 1888. If you embrace that period, certainly it was more than £800,000. The probable hiatus in 1889 to which I have referred is that for which the provision made in 1888 was not enough. 27. My question was whether at 31st March, 1888, there were not losses ascertained of £800,000? —Probably. I think that was the amount. In my memory £800,000 was the estimated loss. But I cannot precisely remember what it was. I always thought that the estimated loss in 1888 was £825,000, with an estimated surplus of £25,000 at one of the branches, which was deducted from the estimated losses. 28. On the 31st March, 1888, there was a reserve fund of £500,000? —I do not remember what the reserve was, but there had been previous writings-off, if I remember rightly. 29. That £500,000 disappeared, and we have had evidence that that was written off?— Yes, and the capital written down. 30. In other words, as it was put by one of the witnesses, it was transferred to the bad and doubtful debts account ?—Yes. 31. Then, in 1889, you say, taking this, that would leave £300,000. If £800,000 had been the ascertained losses, and £500,000 was transferred to the bad and doubtful debts account, that would still leave a deficiency of £300,000? —Yes, to write off capital. 32. Now, after that writing-off of £500,000 there was still a loss of £300,000, and yet a dividend of 7 per cent, was paid ?—The capital had been written down and a dividend declared—£soo,ooo of reserve fund and £300,000 of capital. Those are approximately the figures.
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33. There was a further dividend declared on the 30th September, 1889, of £35,000 ? —Yes, in September, 1889, the board paid another dividend. 34. Now, this Act was passed in August, 1889?— Yes. 35. This was the dividend authorised by the Act setting aside the liquidation account, and giving the directors power to declare a dividend upon the bank business proper ?—Yes, confirming what the shareholders had done. 36. Then, the dividend declared on 31st March was without legal warrant ?—Certainly, except by the direction of the shareholders. 37. And what is your opinion of that transaction in declaring a dividend?—l think they were justified in declaring a dividend. 38. On what ground? —That they had earned it. 39. Was the dividend declared on the whole capital or upon the written-down capital?—l assume that it was on the written-down capital. 40. The Chairman.] In 1889 a dividend was declared for the half-year of £35,000: that is a dividend of 7 per cent, on the capital ?—lf there was a dividend in 1889 on a million it must have been inclusive of the new issue. On the 30th March, 1889, the capital paid up was increased from the £700,000 by the issue of new shares, and they were issued at a premium, I think, and the capital shown here is £1,124,000. 41. Hon. Mr. Seddon.] You admit that the paying of that dividend on the 31st March, 1889, without having made provision for losses, was improper ? —I do not quite follow you. If you mean the £800,000 of losses, they had been provided for. The deficit I referred to 1889 was not an ascertained quantity, but a probable deficiency on the globo assets. 42. You remember the half-yearly meeting on the 26th April, 1888? —No; I was in Wellington then, 43. Did you, with others, sign a joint remonstrance to the directors ?—No, not a remonstrance as to the dividends. I have a copy of the letter here, if you would like me to read it : — " Though it is but a comparatively short time that we have been working together in the general management, the conclusion has now forced itself upon us that the provision made last year to meet losses is inadequate, and that developments since the period referred to —among other things, the continued heavy loss of foreign deposits—is so crippling earning-powers as to render it impossible to make good out of current profits the insufficient provision for old losses. We deem it our duty to at once place our convictions before you, and to respectfully state that—assuming it be so wished —we will continue to carry on the business of the bank until there has been opportunity of ■communicating with the shareholders and also the London directors." That was signed by myself, Mr. Buller, and Mr. Andrews. When Mr. G. Buckley published this letter he did not quote the precise words of the concluding paragraph. 44. You partly say there that provision was not made for losses?—We say that the provision was inadequate; and, I think in October, 1889, when that letter was read to the shareholders by Mr. G. Buckley, Mr. Murray answered it fairly: " That at so early a stage of the liquidation of the globo assets, though some trading concerns had not turned out so well as the committee of inquiry had estimated, it was quite too early a stage to make further provision in respect of losses that this letter pointed to." And the amount had not been at that time ascertained, except that Mr. Buller, who was in charge of the globo assets, had made a forecast as to deficits in some dependencies, but others, if I remember rightly, had turned out better than the committee of shareholders had allowed for; and therefore the directors carried out the wishes of the shareholders by recommending a dividend out of the net profits for the half-year. 45. You say that " The conclusion has now been forced upon us that the provision made last year to meet losses is inadequate." Now, how could you know that the provision made was not enough to meet losses unless you had ascertained the losses ?—I explain that some accounts had not turned out so well as the shareholders' committee had expected; but, if you look at the resolution of October, 1888, the shareholders decided to treat the assets in globo, and it was too early in the day to deal with that point. I think, in the light of what we now know, we can see that it was highly imprudent to pay any dividend then : but this is 1896. 46. You say, " That the provision made last year to meet losses is inadequate " ?—For " globo assets." 47. That is what you were referring to ?—Yes. 48. And this is in March, 1889 ?—Yes. 49. And, in the face of that, they paid a dividend?— Yes. 50. Did you not send that communication to warn them?— Yes; to warn them of the true position. Mr. George Buckley, when he received that letter, asked me what I thought the deficiency was, and I said I had not had an opportunity to gauge that, and that he had had more opportunity than I, seeing that he had been twelve months in Auckland. 51. You remained general manager. What steps did you take to ascertain what the losses - were ? —The globo assets were put under the charge of Mr. Buller temporarily, and subsequently under Mr. Hanna, who reported to the board what he considered necessary; and these reports I have no recollection of now, but I think you have them before you. 52. You could not fix any amount ? —We thought before Mr. Hean's report was sent in that £300,000 would be necessary, and, subsequently to that report, I observed that about that amount was written off by the bank. 53. As general manager you would be able to give an opinion as to the report of what was known as the shareholders' committee ?—I might be able to do so, but it is rather a long time after to express any opinion. 54. In a paragraph on page 9of "Banking Extracts, Parliamentary Report 1.-6, 1896," it says, " The loss made in Auckland was £500,000, very little loss having been made in any other part of the Island. In the South Island the loss had been about £250,000, and the other £250,000 was
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about equally divided between Adelaide and Sydney. If the old directors had not sufficient respect to resign, they could not remove them. He contended that the connection with the Loan Company had been a curse to the bank. Managers of the bank had been made use of in every possible way. Holt, the manager in Sydney, who had received a cheque for £10,000 as manager for the Loan Company, had replaced it out of the bank's funds, and was able to deceive the officials, who did not know whether he was acting for the Loan Company or for the bank. The late general manager had turned round and said the bank must pay this £10,000, and they had to pay it " ?—That was Mr. Buckley's statement to the shareholders. 55. He states that £750,000 was lost in this colony and £250,000 in Adelaide and Sydney?— That in itself shows a million. Presumably, they must have had some undisclosed profits not allocated to the reserves. But I know nothing about the history of the bank at that date. 56. You were only a manager at Wellington ? —I was only a manager at Wellington. 57. On page 23 it says, " The accounts in No. 1 were not altogether satisfactory, but of this, of course, the committee could only judge from personal knowledge of the parties. For instance, he noticed in one account there was a considerable sum due by a well-known political leader who was not now in the colony, and that was stated to be perfectly good, sound, and so on." Who is the political leader referred to? —I should not like to answer that question, even if I knew to whom he referred. But let me say this: I think it was a gross libel on the political leader, because it was a paltry amount, and it was, I believe, subsequently paid. That is my belief. 58. Would that refer to this account: " There were then two accounts against Mr. Thomas Russell. A deed connected with these did not come under the notice of the Committee until some time after they made their report, or else he thought they would have been compelled to take notice of it. However, there was one item there of £20,000, in regard to which it was said there was little or no prospect of recovery; and he, knowing as he did that Mr. Russell was living at Home at the rate of some £6,000 or £7,000 a year, he (Mr. Buckley) certainly thought he should be made to pay this debt to the bank, and in December last he gave instructions to the Home office that they should ask for the payment of this debt. But no sooner were instructions given than this deed was discovered, and it debarred the bank from making any demand for the £20,000 " ?—I remember Mr. Buckley making that statement. 59. It goes on to say, " An advance had been made in London, and secret from the board, and for no other purpose than to enable Mr. Russell to speculate on the Stock Exchange and get a living there." And you say that was all made good?—Oh, I do not know. I could not tell you. I should think that Mr. Russell's debts were paid, that are referred to there, but I really could not tell you. 60. There is another case here : there was £160,000 divided among the directors in Auckland. Did you find that to be the case?—l am afraid I cannot help you there. 61. As general manager you would find that out, would you not? On page 5 it says, " And, finally, we find that advances have been made to some of the directors upon insufficient security, and from those advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action." Ido not want you to disclose the names of directors, but did you find as general manager that advances had been made on insufficient security to the directors ? That is a thing which would come under the notice of the general manager, would it not ?—I do not think the proceedings of the Committee were ever canvassed by me in any way, except that I told them they had not made sufficient provision for bad and doubtful debts. That is the only feature lam criticizing of their proceedings. 62. But, outside the committee of shareholders and your criticism, is it not the duty of the general manager to see what advances were made and to whom ?—Those current, certainly; but I do not think any losses were made during my term as general manager. 63. Then, you think the position of the bank improved while you were general manager?—l would not presume to say that, but I took care to guard the business we had. 64. Taking the losses at £800,000, as set down here by Mr. Buckley : he says, " The total of deficits was something under £750,000. But, although the committee knew well that anything in addition must come out of capital, they took a margin of £50,000, making a total of £800,000? — Yes. 65. Very well, we find that, taking the losses in regard to the Estates Company, and the losses on the bank itself, it tots up to over £4,000,000 ? —Yes, so I have seen. 66. Take £800,000 from £4,000,000 ?—lt leaves a very big gap. 67. And none of that heavy loss occurred during the time you were general manager?—l trust not. 68. You trust not, but will you say it did not ? —None, to my knowledge. 69. When did you leave the bank ? —ln March, 1890. 70. Then, from March, 1890, to 1894, we will say that, according to your evidence, these losses were made. Are we right in assuming that ?—Yes, apparently. 71. Were there advances made to the directors during the time you were general manager— heavy advances ?—I do not think the directors owed the bank a penny while I was acting general manager. 72. You do not think so?— No. You see, there were five of the gentlemen who had newly joined the board. 73. Who were the directors at the time you were there? —Mr. George Buckley, Major George, Mr. Arthur Bull, Captain Colbeck, Mr. John McLean of Redcastle, Mr. W. S. Wilson of the New Zealand Herald, and Mr. William Taylor. Those are the seven directors. 74. How did you come to leave the bank ?—I thought it was better for the bank that I should retire from it, because I thought they should appoint as general manager some one who was
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wholly new to it in every way. As the new directors were discredited, so I thought the officials were discredited. 75. You still see no reason to alter your opinion ?-—Not any. 76. By that, I presume, I am right in assuming that you considered that the officers of the institution were to a great extent responsible for the position of the Bank of New Zealand ?— Not those who were associated with me. Neither I nor those associated with me. 77. This was prior to your holding the position of acting general manager ?—Yes. Unquestionably, bad judgment must have led to the enormous losses. 78. I want to put the saddle on the right horse. Were the directors responsible, or the general officers of the bank, for the losses prior to 1888 ? —I really could not help you in that. I have only knowledge of my own branch. The analysis of the losses which you have or may make I never made. You have it fairly allocated here in Mr. Buckley's statement, where it says that the losses made in Auckland were £500,000 —that was immediately under the supervision of the directors ; while it states that the losses in the South Island were £250,000. I have no knowledge of the details of that, nor any knowledge of the losses in Sydney. It is obvious that the managers of these respective branches must have been responsible mainly. 79. Then, there is no responsibility on the officers of the bank? —Unquestionably the managers of the branches of the bank must be held to be largely responsible for the losses appertaining to their branches. 80. Who was the manager in Auckland ?—Mr. Kissling was the manager during the most of my term of service, but the general management was in Auckland. 81. Who was the general manager prior to you?— Mr. John Murray. 82. When did Mr. Murdoch go out'?—I think he resigned in 1888, but whether in April or October I do not recall. 83. Prior to September, 1888, Mr. Murdoch was general manager?— Yes. 84. The heavy losses that occurred would be during the time of Mr. Murdoch?— Yes; the losses the committee reported upon. 85. Turning to page 23, you will find there a number of names and corporations through whom heavy losses are mentioned : Was all this cleared up before you were appointed to the position of acting general manager ?—There was nothing cleared up. I was summoned from my home to take charge, and I did so. 86. Did you find things as mentioned here ? They must have been brought under your notice? —There was a schedule of losses made, which is mentioned by Mr. Buckley. That is the document I had seen, no doubt; but I was rather dealing with the living than the dead. 87. You were acting general manager at the time the final arrangements were made for the separation of the accounts of the Estates Company and the bank ?—No; the Estates Company was formed after Mr. Hean's report, and I had left the colony some months before he made it. 88. You were not in the bank at the time arrangements were made for the Globo Estates Company ?—No. 89. Who was general manager at the time Messrs. Johnston and Horton went Home ?—I really forget. 90.- Do you recollect being asked to make out a statement and report to those gentlemen when they went Home ?—No ; it was before I went to Auckland that those gentlemen went Home. 91. You have stated that you do not think, from what has transpired since, that it was right for the board to declare those dividends year after year in the Bank of New Zealand ?—Tt would not appear to be so from the published statements. But you must really excuse me from criticizing them : I could not do that. 92. Do you think such legislation as was passed in 1889, making things retrospective, was right ? —lt was essential if the bank was to carry on. 93. Why ? —They were trading under certain Acts, and they had to get an Act to carry out the resolutions of their own shareholders. They had to get this enactment to legalise what they proposed to do, because the Act of 1861 gave them no power to treat an aggregation of assets separately from the current business of the bank. 94. If they had had legislation of this kind in Australia at the time of the bank troubles it would have been very convenient for a number of banks, would it not ?—I do not think it was necessary. They seemed to have managed without any legislation. 95. By going into liquidation ?—I think they were reconstructed under a general statute. 96. I suppose there is a general aggregation of assets and losses and accounts put in liquidation in all banks —that each hank has got its globo ?—I have no doubt whatever that every bank trading has a large number of properties on its hands ; but you can see by the property-tax returns what they hay very considerable, I think, here. 97. You were in 1893, 1894, 1895, and 1896 general inspector of the Union Bank of Australia in the Colony of New Zealand ?—Yes. 98. Of course, holding that position, you would be naturally anxious in connection with what was occurring in financial circles in Australia ?—Yes. 99. The financial crisis in Australia, I suppose, detrimentally affected every banking institution doing business in the colonies ? —Hardly, in one sense ; but in another, yes. The profits have been very much reduced —tremendously curtailed. We have had to keep so much unemployed capital to be ready to meet all demands. 100. Was the effect of that crisis in Australia felt in New Zealand?— Not in any material way. 101. We have then, as a colony, been very fortunate?— Certainly. 102. You remember that in 1893 legislation was passed in respect of the note-issue ?—Yes. 103. Were you present at a conference held at the Government Buildings ?—Yes.
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104. When myself, as representing the Government, and the representatives of the whole of the banks, were there ?—Yes. 105. What was discussed at that conference ? —A proposal to pass a Note-Issue Bill on somewhat, if not exactly, the same lines as the measure which was law in New South Wales. 106. Now, at that time there was a general concensus of opinion on the part of the gentlemen representing the banks that the financial trouble in Australia might come to New Zealand?—l cannot agree with that. 107. What was the meaning of your meeting there ? —Because we were invited to come and meet the Colonial Treasurer, and we came. 108. Did any member of the conference protest against the legislation and say his bank would not have it?— Certainly not. 109. That being the case, if it was wanted, why should they not practically agree to it ? —I do not know what you call agreement. My recollection is that you produced the Bill and said that you intended making it law, and merely wanted our opinion as to whether it would be a suitable time to do it. I think I have, probably, a keener recollection of it than you. I said, in reply to your questions, that if it was to be done it should be done promptly ; and I speak from a note I have which I made at the time. I clearly indicated that we did not want the enactment for our protection in any way, and I think I also told you —I am pretty sure I did —that by the measure under which we trade our notes are an unlimited liability to our shareholders, and are thereby safe enough for anybody to hold, because our liability under our note-circulation is not considerable. 110. If your memory is'so good you will probably remember ?—Pardon me, I would not say my memory was so good, but I have a record of what took place. 111. You did not take down, I presume, what I stated, and I must therefore rely upon my own memory rather than upon yours. Do you remember my asking the first question, whether or not this had been done in New South Wales—whether we should follow what had been done and make ourselves sure about any contingency that might arise ?—I remember your discussing the measure, as to whether it was a prudent step to take, and I think the Government were very wise in proceeding as they did, with the views they entertained; but I also made it clear that we did not want the measure, and I think I made it clear, also, that we should not avail ourselves of it even if it was proclaimed. 112. Do you remember my putting the question as to whether anybody objected to it?— You probably did. 113. Did you object to it?— No. 114. Was anything discussed at that time about the Loan and Mercantile Company and its troubles, and did not that have an effect upon the Colony of New Zealand ?—I have no recollection of that. If it were mentioned—it possibly was, I cannot say—l have no recollection of it. Referring to what the Government had done in my advices to my employers, I certainly did not make any allusion to that point. 115. You remember the date of the Loan and Mercantile Company's failure—lB93? —No, I do not. I remember that the occasion of this measure was the run on the Auckland Savings-bank. 116. You do not recollect a circumstance of such vital importance to financial institutions as the date of the failure of the Loan and Mercantile Company ?—No; I do not think it had any very serious effect on this colony. The loan business is quite inconsiderable in New Zealand. 117. You do recollect the date of the run on the Auckland Savings-bank?—lt was on the date of that run that the measure was brought forward. 118. How can you say what you do when it is not disputed that the Loan and Mercantile Company's troubles arose to a great extent under what was occurring and had occurred in Australia?—l have no recollection of that. 119. Then, if the Australian crisis had no effect on New Zealand, or, as you say, only slightly affected it, where and how did the Loan and Mercantile Company's troubles arise ?—I cannot tell you about their affairs. 120. It would be known to you from your position as inspector of the Union Bank then ?—lf it were of importance I should be glad to look at it from any point, but I have no recollection of any disturbance which affected the Loan and Mercantile Company. Possibly it might have been through their inability to get advances in Australia that the stoppage was caused, but I do not know that that was stated. 121. Was it not on that account that the uneasiness occurred in regard to the Auckland Savings-bank ? —I am not aware. It was entirely local. 122. It would not be of sufficient importance to you ? There seemed to be great anxiety at that conference about it ? —I do not think so. I was not at all anxious. 123. You said that you had been saving up and increasing your reserves? —Pardon me; I did not say that. We had been making large reserves so as to be prepared for all emergencies. 124. What did you increase them for?—l know it has been stated that we increased our reserves here ; but that is not correct. Our gold reserves all through 1892 and 1893 were about the same. 125. What was the amount of gold you had in 1890 ?—About £600,000. 126. And in 1893?— About £800,000 to £900,000. 127. Then you had increased it ? —Only proportionately. If you look through the records you will find that we maintain our gold reserves on a certain level with our liabilities. They were increased throughout Australia and in England. At this moment they are nearly equal to 10s. in the pound—what we call liquid reserves—gold and Government securities. That is not because we would not employ those reserves, but we cannot. 128. Had you not withdrawn from the colony £360,000? —No. I do not know what you mean by withdrawing. If you mean that our advances decreased, unfortunately, they have been decreasing for some time, because we cannot get money out. * 53—1. 6.
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129. Compared with 1889 there was a difference of £360,000 in the advances ?—I am not aware that there was so much as that. 130. You will probably look them up? Did you see in the chairman's statement to the meeting of shareholders of your bank a short time ago that he said, owing to the large reserves which will have to be made to meet possible contingencies, they had to pay a lower dividend than formerly ? —Some such remark as that has been made by the chairman. 131. He says that owing to the financial troubles in the colonies that has been found necessary. I understand you to say that you were not affected—that it was the normal condition ? —I have not said that. 132. I asked you whether this trouble had affected New Zealand, and you said " No " ?—Yes, I think it has not affected New Zealand. 133. The next question I asked was, taking the financial troubles in Australia, had you not made ncreased reserves on account of the crisis ? —I must refer you to the chairman's statement. I think he indicated in his last speech the importance of keeping the bank strong, which diminished dividends, but I think he also said there was a difficulty in putting out money. 134. You say there was no anxiety whatever on the part of the representatives who attended the conference ? —I do not know as to others, but certainly not as to myself. 135. Do you think if the run on the Auckland Savings-bank had gone on that it would have stopped at the Savings-bank?—l could really venture no opinion on that. 136. Were any other institutions interested ?—I am not aware that they were in the Auckland Savings-bank. 137. Do you not recollect its position with the Bank of New Zealand being discussed ?—We had some of their money at that time, and I think the Bank of New Zealand was keeping their account, but I am not sure. 138. There was £64,000 in one account, and £100,000 in another?—lt was a very large sum. They had, according to law, to keep half the amount they held on deposit in some form of bank deposit. 139. And you still adhere to your opinion that the run on the Auckland Savings-bank was a matter we might look upon without concern ? —I cannot think any one can look upon such a thing without concern, even although it is only local. 140. You admit it was a crisis?— Undoubtedly, for them. 141. Then, you do not think it was necessary to protect the note-issue in that crisis ?—lf I recollect rightly, the Colonial Treasurer made some allusion to that, and also to what theGovernment proposed. I think the measure was a very prudent one. 142. Mr. Montgomery.] You were not in Auckland at the time, but you will know that on the 26th April, 1888, a dividend was declared ? —Yes. 143. And that the directors who declared that dividend had at that time reports in their hands showing that the bank had gone to the bad to something like £800,000 ?—Yes. 144. Do you consider that they were justified in declaring a dividend under such circumstances ? —They explained the thing. You have the report. They explained why they paid the dividend. I think the chairman was going to appoint a committee of shareholders, and, as a matter of fact — I am only speaking from hearsay—-before the meeting took place the intended committee went through the matters with the directors. 145. The committee had not been appointed? — Well, I do not recollect about that. Anyhow, the directors apparently covered themselves. I forget whether the directors recommend the payment of the dividend. 146. They do recommend it ?—Well, they recommend the shareholders to adopt their report, which was to pay themselves a dividend. 147. You recollect that my question was not what they did, but whether you as an expert banker thought it was a proper thing to do ?—I think I must ask, after so many years have elapsed, to be excused from giving any opinion. 148. That is your explanation ? —I shall now say that in 1888 and 1889 we were all wrong in paying dividends. 149. The directors were wrong in paying dividends ?—I should think so ; and, recommending a dividend in 1888, they were apparently unwise; and in 1889 they were wrong, as we know now. With the knowledge we have in 1896 we see that it was entirely a mistake to have done so. 150. You have said that this legislation of 1889 was in accordance with the resolution of the shareholders ? —Yes. 151. Will you show me anything in the shareholders' resolutions suggesting that the profit and loss on the globo assets shall not be taken into account in declaring dividends ?—The preamble of the Act recites the resolutions of the shareholders: " (3.) That the several assets and accounts held for realisation, and outside the category of what may be regarded as ordinary and current business, be liquidated by the directors as speedily as may be, having regard to advantageous realisation thereof, and that in the meantime such assets be transferred to, and held and treated in globo, in a separate liquidation account." 152. The question I ask you is if you can find some part of the resolution which authorises the dividend out of current business. Subsection (3) of clause 5 says, "In making up balance-sheets from time to time for the purpose of declaring and paying dividends the board may, if it thinks fit, discard the said liquidation account." Do you see anything in the resolutions about paying dividends from the profits on current business?— Apparently not. I have not the precise words, as far as I know, used at the meeting of October, 1888. 153. Have you any reason to doubt that the preamble of the Act is correct ?—Oh, no. But does the preamble state the resolutions verbatim ? It is in the Act, "In making up balance-sheets from time to time for the purpose of declaring and paying dividends the board may, if it thinks fit, discard the said liquidation account, and may make up such balance-sheets without reference to the
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state of such liquidation account or the said assets, and may pay dividends from profits on current business without regard to the estimated surplus or deficiency of the said liquidation account or the said assets at the time of making up such balance-sheets or paying such dividends." lam perfectly satisfied that those directing the bank had no intention of paying dividends unless they were earned. Although I do not recollect very clearly about the net earnings, I have a clear recollection that the dividend of March, 1889, was paid out of the net earnings on current business. 154. You cannot say whether this was a direction to the directors ? —No, I cannot. It never struck me before. Do these words meet your question —before the words " Special meeting" on page 7 : " authorising the speedy liquidation of several assets and accounts held for realisation, and outside the category of what may be regarded as ordinary and current business." Do these words cover the thing in any way ? 155. There is nothing said about paying dividends out of profits while there were losses going on in the Estates Company? —I have not studied the point. 156. It is an important point, it is not ? —lt is ; very much so. 157. It is in virtue of that clause that all the dividends have been paid since ?—Certainly, while I was in the bank. Was there not legislation after 1889 ? 158. Not that I know of between 1889 and 1893. No dividend could have been paid without that clause? —Certainly not. 159. There were heavy losses going on in the Estates Company without the bank ?—I cannot speak from my own knowledge. I have said that we believed there would not be any losses further than the £300,000, but at the time our letter was written there had been no definite estimates formed by me as to the probable deficiencies; but I said there were deficiencies. 160. Was it not rather a case of putting off the evil day ?—I hardly think so, as we then believed. In that letter it was suggested to the directors that we would continue in their employ if they desired until they had had an opportunity of conferring with the London board. They conferred with the London board, because they sent Mr. Murray for that purpose. The London board presumably had all the information that could be laid before them, and yet they seemed confident that they could, carry on the bank ; and when the legislation of 1889 was proposed, it was in terms of the advice received from London, and power was sought to transfer the head office to London if it should become necessary. 161. The 1889 Bill was a private Bill?— Yes. 162. Who took charge of it?— Mr. Stafford; and I think Mr. Bell was counsel with him. 163. Who took it through the House ?—I think, Mr. James Lance. 164. Did Captain Russell have anything to do with it?— Mr. G. Buckley asked Sir George Grey to do so, and he promised to do so; but he subsequently wrote that he was not able to, as he was not going down to Wellington, and Mr. Lance was good enough to take charge of the Bill. 165. Captain Russell did not?—No, I think Captain Russell was in the Government. 166. Did the Government support the Bill ?—I think so ; but I should prefer you to look up the records. 167. Sir Harry Atkinson was Premier?— Yes. 168. Who invited you to this meeting about the Note Issue Act ? —A telephone message was sent that I should come down to see the Colonial Treasurer at his office, and I went. 169. Was it from the House here ?—No ; it was a Treasury official. 170. Were you anticipating the crisis that came about in 1894, when the Bank Share Guarantee Act was passed ? —No. 171. Did you not know that the Bank of New Zealand was shaky ?—No. 172. It has been stated here that it is impracticable to give more details in Bank of New Zealand balance-sheets because other banks will not fall in with that ?—I should strongly urge the banks to give any reasonable details in their balance-sheets that it might be deemed wise to require. They are in the hands of the Legislature in the matter. lam quite sure we should not resist it. 173. Presuming that the Legislature passed an Act making the publication of certain details compulsory, do you think that would be objected to by the banks?—l should say, certainly not. You would not, of course, expect us to give a list in detail of all the obligations of persons. 174. Certainly not ?—lf you want my opinion, will you suggest to me what details are wanted? Is it true that in this one published in 1888 or 1889 the Bank of New Zealand showed certain assets in shares in the Globo Assets Company ? 175. They have to show that by the legislation of 1894 ?—But had previously to that showed it as they did other assets. But what would you have ?—they show bills receivable, bills discounted, and other securities and debts due. 176. We have herein a lump sum, " Other advances and debts due to the bank, £7,000,000." Could not that be split up to show how far there were Overdrafts and how far they were advances on land?— The sworn quarterly returns show the details—all the bills under discount, other advances and securities, and debts due to the bank. There still comes the point that you would like to have " Other advances and securities and debts due to the bank" separately. 177. Yes?—l think it would be a fair thing to show the globo assets or properties in a bank's hands. 178. You do not mean, in detail ?--No. I think if this were done it would show. If there were alterations desired in the returns it would be easy to plan out some balance-sheet that would give you what you seek to require from the banks. 179. On some such line as Mr. Larnach's balance-sheet?—l do not think Mr. Larnarch's balance-sheet would serve the purpose you apparently seek. I think, when we know what the Legislature has a desire to have we might confer about it with some Government official—say, the Secretary to the Treasury, or some such person—and arrange the matter. You will not probably be able to do it this year, but the Government could settle upon what they require from us, and we could probably help them to get such a balance-sheet.
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180. There would be no objection, in the case of securities and advances on land, to show the date of the last valuation ?—No ; I should think not. That is to say, in the aggregate —that the bank's advances under discount are so much, and the securities they hold in the aggregate, so much. Is that what you mean ? 181. Yes? —I do not think any bank would object to that. 182. In the Bank of New Zealand balance-sheet we have the Colonial Bank's landed properties and bank premises put in as a book item, without the real value being stated ? —I think no bookvalue should be shown when it has been ascertained that there is no such value existing. 183. You would say that that value should have been ascertained before the balance-sheet was issued—the £125,000? —Well, I presume that the value was estimated to be that, or it would not have been so stated. 184. Do you see the note at the bottom of the balance-sheet ? —I consider that the position is not normal with regard to that balance-sheet. Ido not think there is any objection to that. I think it would be objectionable in the case of ourselves or any other bank not in the position the Bank of New Zealand is placed. I think it is candid enough. 185. Mr. Tanner.] Have you any knowledge of who prepared the draft Act of 1889, before it was submitted to Parliament?—l think, Mr. Stafford. 186. Was he acting on behalf of the bank?— Yes. It was drafted to some extent, and the rough draft was sent down from Auckland. He would prepare the Bill then, and with the assistance of Mr. Bell—l am not sure of that —they would prepare the measure together. 187. Do you know if the bank authorities communicated with the Government at the time or before it was introduced ?—I should have done so, if it was done. Of course, the Government must have known that we intended to try and get effect given to the resolutions of the shareholders. 188. Did they gather that knowledge from you or any one else?— Undoubtedly they would know it from us. They would know it from the resolutions themselves. I have no doubt whatever that the Government were fully cognisant of our intention. But I used to come to Wellington, and I have no doubt I saw the Premier about it—no doubt whatever. 189. And had a conference with him on the subject ?—I have no doubt whatever that I did. 190. Was it the intention of the bank authorities to obtain the retrospective legislation in the first and second lines of clause 6 ?—Yes; that is part of the resolutions of the shareholders passed at their special meeting of October, 1888. 191. Can you give us any proof of that ?—You will find it in the reports. If you have the Insurance and Banking Record of October, 1888, you will find it there. 192. The first meeting given is the 26th April, 1888. Is there any account of the meeting of October, 1888 ?—I do not see it there, but I am pretty confident you will find that the resolutions of the shareholders covered everything, and I cannot but think it covered what Mr. Montgomery referred to. If it is of any use to the Committee, I would be very glad to look up what I have seen and let you know; but I feel perfectly confident that the shareholders passed that resolution to make it retrospective. It would be necessary to do so; and they would naturally have been guided at the meeting by their solicitor in Auckland, who would necessarily guide them, and guard against any omissions and errors. 193. Are we to gather from your statement that the public accounts of those meetings of some years ago failed to convey a complete account of what took place in 1888 and 1889, and previously ? —I think, looking at the reports of the 1889 meetings, they are tolerably full, but they are very much confined to generalities. The chairman certainly spoke hopefully, and you will observe that Mr. George Buckley referred to Mr. Murray's mission to London. 194. Did the draft copy of that Bill contain the provision in clause 6, or was it afterwards inserted ?—I am afraid I cannot help you ; I really do not know. This report apparently does not contain the details. I think I could find out. 195. Have you any knowledge that the Government was asked, or held promises out that their assistance would be given in passing such a Bill as we now find on the statute-book?—I do not know that. 196. Turning to another point, you have told Mr. Seddon that the disturbance in financial circles in Australia had no effect upon the banks in New Zealand?—lt was quite immaterial. 197. Did it affect the price of the bank shares ? —Certainly. 198. Did not that disturb business ? —All bank shares were affected by that. 199. Then, you draw a distinction between the effect on business and the effect on shares ?— All shares were affected. Our shares used to stand at £64, and went down to £30. All shares have gone down tremendously, and the bank's earning-powers have been affected. Henry Mackenzie, General Manager of the Bank of New Zealand, sworn and examined. 200. Hon. Mr. Seddon.] You are at the present time General Manager of the Bank of New Zealand ?—Yes. 201. What position did you hold before that ?—General manager of the Colonial Bank of New Zealand. 202. For how long? —From 1884 until the bank was purchased. 203. What position did you hold before that ?—lnspector and assistant-inspector in the Oriental Bank Corporation. 204. How long —approximately ?—About five years, perhaps. 205. How long is it since you first joined the banking institutions ?—Thirty-five years. 206. You have had thirty-five years' banking experience in various capacities?— Yes. 207. You have said that you were general manager of the Colonial Bank in 1894 ?—I was. 208. And 1895 ?—Yes. 209. And until you were appointed to your present position ? —Yes.
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210. You know the balance-sheet of the Colonial Bank at 31st August, 1895 ?—Yes. 211. Did that fairly set forth the position of the Colonial Bank?—lt fairly set forth the position of the Colonial Bank as a going concern. 212. You went through the accounts which are in the "A," " B," " C," and " D " lists at the time of the negotiations for purchase ?—Those lists were made up a considerable time after this balance-sheet was made up. 213. Subsequently to that balance-sheet you went through the accounts with the officers of the Bank of New Zealand?— Yes, after the lists were finished. 214. Were you present at the time the accounts were being investigated, prior to the lists being prepared?—l was. 215. £327,000 was taken as cover in respect of those accounts ?—lt was. 216. Did you concur that that was a fair cover, or otherwise? —I thought at the time it was an excessive amount. 217. As you are now General Manager of the Bank of New Zealand, and have the working of those accounts, are you still of that opinion ?—Circumstances have transpired since which were not known at the time, consequently I think it is premature to give an estimate of what I consider the position now. 218. Has the legislation we have passed putting those accounts into liquidation been prejudicial or otherwise?—lt has been very prejudicial to the Colonial Bank. 219. Have you any suggestion to make?—l think the liquidators should have more general and extended powers, and be able to compromise without going to the Court. 220. In working the accounts it has been stated here that those persons whose accounts are in the " B " list have not been fairly treated by the manner in which their accounts are worked; that they do not know whether they are personally in the lists; that the liquidators will not give the necessary accommodation by which their accounts could be worked satisfactorily, because they are only supervisors of the accounts, and that in the meantime their clients are crippled ?— That is neither the fault of the liquidators nor the directors—it is the fault of the wire-drawn nature of the legislation. -221. You think the legislation, then, is prejudicial to the Bank of New Zealand and to the Colonial Bank shareholders?—l think so, on account of its wire-drawn nature. 222. You think that the liquidation under the Companies Act was a mistake, then ?—I think it was a very great mistake to liquidate the bank in that way, although at the time I confess the exact character of the liquidation did not present itself to me ; nor do I think any one in connection with it foresaw what would happen. Ido not think it occurred to any one that the latitude of the liquidators would have been so curtailed as it has been. 223. I suppose you have watched closely the proceedings here ?—I have. 224. You have read, no doubt, in the newspapers that the evidence which has been given here is somewhat prejudicial to yourself?—l have noticed that. 225. Have you anything to say in reference to that?— Well, after all, it is simply somebody's opinion, which I cannot help. I would like to say, however, that Mr. Watson and I have known each other for upwards of thirty years. We have worked together, and have been connected pretty well all over the world. I know him to be a man of absolute rectitude, of great ability, and trust him implicitly. I cannot say that, in working with Mr. Watson, he has no influence over me ;on the contrary, his opinions have very great influence with me; but I think my influence in the same way with him is as great. In discussing matters, we manage to arrive at conclusions without quarrelling about them or arranging our difficulties in public. Ido not think I should put it too strong if I illustrated it in this way : that, while the Minister of Lands sits on the same bench and does not constantly disagree with the Premier, it would hardly be fair to say that he was completely under his influence, and consequently had no backbone. The Minister and I come from the same Hills, and such a description of him there would not be recognised. 226. You are not hypnotized by Mr. Watson ?—No. I think Mr. Watson will, if you will recall him, admit that he is just as much influenced by my opinion as I am by his. 227. Are you likely to be influenced by any one else, and then influence the minds of the directors of the bank?—l do not think so. 228. You are not like the Hibernian, who said he was always open to conviction, but would like to see the man who could convince him ? —Well, I think it is the other way —I am always open to conviction if I find my own opinion is wrong. 229. The outside world say that there have been heavy losses in connection with the Colonial Bank, and that the condition of the bank, as shown by recent developments, was not the same as was shown in the balance-sheet issued on the 31st March ; and the question is, who is responsible for that ?—lf you put any bank through the same process, I think it would come out worse than the Colonial Bank has. The values of the securities in the Colonial Bank were taken by the directors to be considered fair at the time. The circumstances which surrounded the bank then were considered, and whatever action was taken was so taken in good faith. Possibly, since then the values have not been so great, because circumstances have altered. With your permission, I would like to read a short paragraph from the speech of Mr. James Service, chairman of one of the banks in Melbourne. It is taken from the Sydney Morning Herald of July, 1896, and was delivered at the annual meeting of the shareholders of, I think, the Commercial Bank of Australia, in July. He says, "In the light of past experience, the directors had reason to anticipate that cheap money would bring about a corresponding jincrease in the value of real estate and other securities, but, unfortunately, the want of confidence resulting from the banking crisis and other causes had brought about a fall in values without precedent during the last forty years. Estimates by the directors of the value of the assets held for realisation on account of the old bank, carefully and laboriously made at the end of 1893, were found to be out of touch with the market at the end of 1894 ; and the close of last year—which, but for the disastrous drought, would probably have been the turning-
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point—still further marked the downward tendency." I think these remarks are very much on allfours with what took place in New Zealand. Estimates of values as fair as possible were constantly made, and, while thinking there was reason to believe that the turning-point would come, the reaction did not come to the Colonial Bank. 230. In working the accounts of the Colonial Bank, do you think that the good-will paid by the Bank of New Zealand was a fair value ?—I do. I think it was not too much. 231. You know the obligations of the Bank of New Zealand, and what it has to earn to pay its way. Do you think it will he able to do it ? —Yes, I think it will. 232. Knowing its financial position, what it has to pay in the way of interest on its share capital and the advances made by the colony, do you think the colony is likely to be called upon to make any loss ?—I do not think the colony is likely to be called upon to make up any deficiency. I think it will come out all right. 233. Mr. Montgomery.] You were speaking of the fall in property from various causes. Was there any considerable fall after the 31st August last year, the date of your last balance-sheet? — Ido not think there has been very much improvement. There has been an improvement in produce perhaps, but not in the value of properties. 234. They have kept about the same?—l think that values have gone down. There have been such a number put into the market. 235. Well, between the 31st August and the time when the inspectors investigated your accounts there was not any fall?— There is no great interval between the two dates. 236. Very well, then, the question of falling values will not come into the consideration of what was the actual value of your properties at the time of your balance-sheet last year. Amongst your assets you included as good assets the whole of the " A," " B,'" " C," and " D " lists? —Yes, the total amount comes up to the amount of those lists. 237. That is to say, you put all the "D " list in as good assets on the 31st August?— All those lists make up that total. 238. Did you put the "D " list in your asset?— Yes, they were represented in that amount. 239. Were they represented as good assets in the balance-sheet ?—Yes. 240. Were they all good assets ?—They were estimates of what was considered to be their worth, in a going business, with provision held. Since that time I have seen that Mr. Justice Williams, in Dunedin, stated they were worthless ; but I also saw that almost immediately afterwards he sanctioned a compromise in that list of £8,000 for a debt of £9,000. 241. I was asking you whether they were good assets. Do you not know that some of them were not good? —Some of them might have required provision, but I do not think there was a single bad asset. The whole thing was a question of estimate from beginning to end. There was not a single totally bad account in the Colonial Bank that I know of. 242. You mean, by bad account, worthless ?—Every account was secured against property or personal security; and when the security was defined—that is, sold—the debt was written off. 243. But these assets in the " D " list would not be estimated at 20s. in the pound ?—Some of them I should estimate at that. 244. But a lot of them ?—With the provision that we held and were laying up against them, and with the prospective values, I think the lot were fairly good. lam not prepared to say what the value was. 246. Did you consider at the time the balance-sheet was assented to by the directors that these estimates were worth 20s. in the pound?—l considered, with all the information I had, and which was laid before the directors, that, in passing the balance-sheet and making the report they did, they acted in the best interests of all concerned. Had they acted otherwise, probably a large and unnecessary loss would have been the result. 247. I did not say anything about that. I asked if at the time the directors assented to that report the assets in the " D " list were considered good? —The assets were not in the " D " list at that time. They composed a quantity of accounts in the bank that the directors thought they were justified in valuing as they did. 248. I am asking whether you considered at the time the balance-sheet was assented to by the directors these assets put in the " D " list were worth 20s in the pound ?—With the reserve against them, it was thought so. 249. What do you mean by reserve ? —The undivided profits, the reserve fund, and the earningpower of the bank. 250. But you took in the reserve fund also as a liability. You do not say in your balance-sheet that you would have to write off part of the reserve to get 20s. in the pound for your assets ?—We were not certain that we should have to do so. There was no necessity for asking for a thing that we were not certain about. 251. Between the 31st August and the time the balance-sheet was assented to by the directors and passed, did you not find out that some of the amounts were not of the value you had estimated them at ?—That was found out later on, but that would not necessarily alter the balance-sheet. 252. If you had known that before, would that have altered the balance-sheet ?—I cannot possibly tell you that. 253. Why not ?—Because you cannot say what you would do under different circumstances. 254. I think so? —Well, I cannot. 255. Put it in this way : You find out that a certain supposed asset was not worth the amount set down for it: would you not have estimated that sum differently if you had known it before ?—lt is impossible to say what the directors would have done under a different set of circumstances. They might take an entirely different course ; but I could not say what would have been done under different circumstances. 256. Would the directors have approved the balance-sheet, knowing at the time the assets were bad ?■—They did not know the assets were bad.
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257. Have you not told us that subsequently to August and the board approving the balancesheet they found out that some of the assets were bad ?—I do not know that I told you that; but I would like to say, if I did, that we did not know that they were bad. 258. Well, they were not worth what they were considered to be formerly ?—I do not follow you. 259. For instance, on the 31st August, we will say, debts were owing to the bank from A., 8., and O, and you had certain securities against them which you thought were quite safe. We will say that on the sth September one of the inspectors looked round the properties and reported that there had been fraud, and the securities were not safe, and that you ought to allow a good deal for bad and doubtful debts. That is why I say that they were not considered worth so much as they were before ?—I simply say that Ido not think there were any debts that were thought bad after the 31st August and before the issue of the balance-sheet. 260. You did not discover after the 31st August and before the directors signed the balancesheet that certain accounts were not so good as you expected ?—We may have done so, but I am not prepared to say that at the time we thought they were bad. 261. I want to know whether you did as a matter of fact. You will recollect the instance I refer to, probably ? —No, I did not think it was bad. 262. Did you on the date the directors assented to the balance-sheet think the accounts were as good as they were on the 31st August?— Because I might have considered them perhaps not so good, I am not prepared to say that I considered them bad. 263. Did you consider them as good when the directors assented to the balance-sheet ? —I cannot answer that. 264. You have no recollection of an alteration in the value of the accounts taking place?— I have answered already that there might be an alteration in the values, but we did not consider that alteration made any of them bad. 265. You cannot remember whether you considered the assets of different values ? —I had not come to a conclusion then that I should have to face a loss on the alteration you refer to. 266. You thought it would not involve a loss ?—Not that I should have to face a loss on that. - 267. As a matter of fact, out of the large sum of £1,730,000 put in as assets on the 31st August, you assented to a sum of £327,000 being placed to cover on two lists?— The bank did. 268. The bank also assented to over £100,000 being thrown out altogether for the purpose of being taken over ?—That is so ; but about this £100,000 thrown out, it was not because they were bad accounts. They were what are called dormant accounts—accounts in process of liquidation. 269. There was no reason why the bank should not take them over if they were worth 20s. in the pound ?—They did not take over any dormant accounts; they only took over the living business. 270. So that the money which the shareholders of the Colonial Bank actually received for their share of the bank's interest was something like £55,000, was it not. That was their interest unless they got something back from the cover? —I think it was £133,000. 271. The shareholders' interest, not considering the goodwill, was £55,000, or thereabouts? With the goodwill it is £133,000 and whatever else there is to come ? —Yes. 272. Do you think there is anything to come? —I saw an estimate made to the Committee that I did not agree with. I think it is impossible to form an estimate now. There were two years given to work the accounts. 273. There was a private agreement in the amalgamation proposals of 1894 that you were to be appointed General Manager in the event of amalgamation ? —I was to be joint General Manager with Mr. Butt. 274. Did you consider that that agreement was actually current under the purchase agreement of 1895 ? —That agreement seems to have disappeared with the other documents. 275. You thought you had a claim to that extent ?—Yes. 276. Was there any agreement in 1895 on the subject, that you are aware of ?—There was no agreement beyond this : that I remember, at one time I met Mr. Booth and the President, and Mr. Booth asked me to do what I could to bring the banks together, and said I should certainly, in such case, be made General Manager. 277. When was this?—lt was in the Club in Wellington. I cannot remember the date. 278. Mr. Booth subsequently changed his opinion ?—Apparently. I did not know this until I saw his evidence given here, except that I saw his dissent to my appointment in the minutebook. 279. As a fact, there has been no disagreement between Mr. Booth or any of the directors and yourself in the working of the bank ? —None at all, to my knowledge. 280. Whatever opinions the directors may have, they have not interfered in any way with the harmonious working of the bank?— Not in the slightest. 281. You attend meetings of the board?—l do. 282. And in what has happened there, as far as the bank officials go, you have been as harmonious as you possibly can be ?—Perfectly so. 283. You told Mr. Seddon that the legislation had been very prejudicial to the accounts of the Colonial Bank ?—Yes, I did. 284. Will you explain to the Committee in what way ?—Because from the wiredrawn nature of the legislation, the Bank of New Zealand's hands are tied by the supervision of the liquidators, and the liquidators apparently do not consider they have sufficient power to work the accounts with elasticity; and between the two the Act of Parliament comes in, and the want of latitude militates against accounts which possibly would, with time and nursing, come out very much better from coming out so well as they otherwise would. 285. How do you suggest that that can be remedied now ?—I think it could be remedied by the liquidators being given more extended powers; possibly by liquidating the bank under its own
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deed of settlement; but Ido not think that the harm already done can be undone. It could be prevented from going any further. 286. Mr. Guinness.] You stated that you were in the Oriental Bank ?—I was. 287. Were you engaged in New Zealand in that bank ?—Never. I was in the East most of the time. 288. Then, when you were appointed general manager in 1884 to the Colonial Bank you came from abroad ? —I was in London at the time of my appointment. 289. And came out to take charge of the Colonial Bank ?—I came out in 1884 to be inspector of the Colonial Bank, and six months after they appointed me acting general manager. 290. The President and Auditor of the Bank of New Zealand, I believe, report monthly to the Government official the business of the bank?— Yes. The Auditor reports to the President, and he forwards the report, with his confirmation or otherwise, to the Colonial Treasurer. 291. In its confidential reports are the whole of the transactions of the bank divulged to the Government ?—No individual accounts are mentioned, only the gross total of the different accounts is given. 292. Showing the liabilities and advances ?—The gross total of the balances of the different accounts is shown —that is, the sum total of all the advances is given in one amount. 293. Nothing is given by which the Government can ascertain more information with regard to the accounts than the general public?— No. 294. Since the purchase of the Colonial Bank, has the business increased ? —The business of the Bank of New Zealand ? 295. Yes?— Yes, the business has materially increased. 296. Has that increased solely by the new customers obtained from the Colonial Bank, or through getting additional customers from the general public ?—lt has increased by nearly the entire business of the Colonial Bank coming over, and has been further increased by the general public patronising the bank. 297. Through the public having confidence in the bank as guaranteed by the Government?— Yes. 298. Mr. McGowan.] As General Manager of the Bank of New Zealand, in your system of management have you made any general change other than what was carried out while you were general manager of the Colonial Bank? —Large changes were effected in the Bank of New Zealand management, by Mr Watson, immediately before I went into the Bank of New Zealand, and since then I have, amongst other things, instituted rules and regulations for the guidance of officers. 299. What is the nature of the changes you have made ?—There has been a considerable change in the manner of returns and in the way of focussing particulars of different accounts, and also in defining rules and regulations for the guidance of officers as to the way in which the business of the bank is to be conducted. 300. Have you made any change as to the method of making advances to the customers?— Yes, a considerable change has been made in that. Applications for advances are now brought more under the view of the board and the Government Auditor. Small advances are made at the branches, but advances of any importance are submitted and revrewed in Wellington; if necessary, they can be applied for, by urgent wire, without any delay. 301. I may take it from that that the obtaining of advances is more difficult under the present system of management ?—Not in any way more difficult, but the securities are more carefully looked into. 302. You mean that you take better securities ? —The whole system of advance is more carefully looked into and criticized. At the same time our object is to prevent any delay in business. 303. Did you state to the Committee that your system of management would be different from what it was when you were in the Colonial Bank ? —No, the system of returns is somewhat similar to that of the Colonial Bank. 304. The management, then, is the same ?—The whole constitution of the Bank of New Zealand is different, and, owing to the constant supervision of the President and Government Auditor, much stricter. 305. What I wanted to bring out clearly is that. I do not wish to entrap you in any way. From the evidence the Committee has had before it, we can see distinctly that under the previous management of both the Bank of New Zealand and the Colonial Bank a large amount of capital has been lost, and we find the same officers managing the two banks. Unless there is a change in the management the Bank of New Zealand might continue to show losses?— The losses have been mostly owing to the depreciation of values which no one could avoid. Properties, stock, and produce have gone steadily down year after year. 306. You are not prepared to admit that the losses in the Bank of New Zealand, and also the Colonial Bank, were made partly through the method of management ?—The method of management Ido not think has had very much to do with it. Errors of judgment possibly took place, but the main cause was the steady fall in values of securities and commodities. 307. You do admit that there were errors of judgment? —Yes, undoubtedly; but not more than men ordinarily make, having a multiplicity of transactions and interests to attend to. 308. Hon Mr. McKenzie.] What is the limit local managers can advance to ?—I am afraid I should be divulging bank matters if I told you that. 309. If I received a letter from a client of yours saying that the limit was £10, would that be right ?—I say at once that it is not right. 310. He would be drawing on his imagination?— Yes. We give what are fair limits, according to the importance of the branch. 311. Do you think you have made full provision for bad and doubtful debts in the bank? Have you cleaned the slate ?—I have only been ten months in that bank, and I have done my best to get a knowledge of the current business and attend to the working of the general
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management of it; but I think it is a, little premature to pin me down absolutely to an estimate which men who have been a much longer time at it. than I, have had considerable difficulty in correctly forming. 312. You would like to have a valve for escape if anything does go wrong, I suppose ? — I am ready to take my share of responsibility, but I think it is too early to parade my knowledge. 313. With regard to the "B" accounts you got from the Colonial Bank, I suppose the position is this: You cannot advance over the Colonial Bank guarantee ?—-We cannot advance over the amount that each account stood at on a certain date, when it came over to us, without the authority of the liquidators, and the liquidators sometimes refuse to guarantee any furtheradvances. 314. That is why you say it might improve the position of the client if you were allowed to make him some advance ?—Yes ; if his account were nursed. 315. In other words, you could keep other wolves from his door, and enable him to recruit himself ? —Yes. 316. How often do the directors attend at the bank?— The President is there all the time, Mr. Macarthy is pretty well there every day, and the other directors attend once a week. 317. Can you tell us what remuneration the directors of the Colonial Bank received ? —£loo a year each, and the chairman something more. John Marten Butt, Government Auditor of the Bank of New Zealand, re-examined. 318. The Chairman.] I understand you desire to make some alteration or to give some explanation with reference to your previous evidence ?—Yes. During my examination on the 23rd instant I was asked this question by the Minister of Lands : " And do you not think you should have been more guarded when you stated that the bank was now clean, knowing that this inquiry was going on?" I wish to add to my answer to that question that the report was an attempt at a preliminary estimate of the probable deficiency, in anticipation of more searching inquiries. It accorded with my own views of the position, and I regarded it as likely to prove a pretty close approximation. The next question was, " Can you rely on that inspector in the future to give a proper report, seeing that he has been discovered making a mistake this time?" My answer was, "Well, he was not able to get the information that the subsequent report was based upon." I wish to add, "I do not consider he made a mistake. He gave us the ideas he had formed upon the material at his command." I was asked to produce a model balance-sheet for the bank, and I now put that in. I was also asked to ascertain the apportionment of writings-off to the different districts and colonres. I have had that prepared by the officers of the bank, and now hand it in. I think that completes all I was asked to obtain.
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CORBESPONDENCE, ETC., WITH ME. JOHN MUEEAY.
John Murray, Bank of New Zealand, Sydney. Banking Committee desire your attendance. Kindly telegraph when intend leaving. 28th July, 1896. John Graham, Chairman.
John Graham, M.H.R., Chairman Banking Committee, Wellington. Only received telegram last night. Not practicable go to-day's steamer. Am writing. 30th July, 1896. John Murray, Willoughby, Sydney.
Sir,— Chatswood, Sydney, 30th July, 1896. I have the honour to acknowledge the receipt of your telegram as follows : " Banking Committee desire your attendance. Kindly telegraph when intend leaving." To which I replied this morning: "Only received telegram last night. Not practicable go to-day's steamer. Am writing." I am most desirous to afford the Committee every information in my power, but apart from the hardship to a man of my age and health of a voyage to New Zealand at this season —it would, for domestic reasons, be extremely inconvenient for me to leave Sydney at present. I therefore respectfully ask that I be examined here by Commission—which request'l trust will not be deemed unreasonable, as it is a facility which would be accorded me by the Supreme Court, were I called as a witness in a case before it. In the meantime, to facilitate as much as possible the proceedings of the Committee, I am forwarding to-my lawyer, Mr. C. E. Button, M.H.R., a sworn statement setting forth all which I can imagine the Committee would want to elicit, and as to which it is in my power to speak, with instructions to tender it to the Committee. It may be that after perusal of that statement, anything which has not occurred to me might be elicited by written queries, or indications of directions in which the Committee desire further information, without the machinery of a Commission. I have, &c, John Graham, Esq., M.H.R., John Murray. Chairman of Banking Committee, Wellington.
Sir,- — House of Representatives, Wellington, 28th July, 1896. I have the honour, by direction of the Banking Committee, to request your attendance at Joint Committee Room, at 11 o'clock a.m. on Tuesday, the 11th day of August, for the purpose of giving evidence on the matters referred to in the order of reference, copy of which is enclosed. I have, &c, John Murray, Esq., John Graham, cjo Bank of New Zealand, Sydney, Chairman of Committee. New South Wales.
Sir, — Ancram Heights, North Sydney, 6th August, 1896. I have the honour to acknowledge receipt of your letter of 28th ultimo, conveying the request of the Committee that I would present myself for examination on the 11th instant. Having in response to your prior telegram to similar effect requested that I might be examined here by Commission, to which request I have as yet no reply, I await further communication. I intended to have forwarded a sworn statement by last opportunity, but found it quite impracticable to have it ready in time. It goes forward by the mail which takes this. If the Committee will be good enough to consider this statement, I venture to hope and think that even if it be held to be defective in any respects, such defects may easily be supplied without subjecting me to the discomfort and inconvenience of a voyage to New Zealand. All the more as I pledge myself to respond in a frank and unreserved manner, with a bond fide wish to facilitate the Committee's inquiry, to any questions within my competence to answer, and even to any indications of a general kind as to directions in which the Committee would wish my statement supplemented or elucidated. I have, &c, John Graham, Esq., M.H.R., John Murray. Chairman of Banking Committee, Wellington, New Zealand.
Sworn Statement by John Murray, of North Sydney, for submission to a Committee of the House of Representatives of New Zealand (or of the Legislative Council, or both) appointed to inquire into the affairs of the Bank of New Zealand and other matters. I understand that the Committee's investigations go back to the year 1888, with which, therefore, I begin. In the previous year, realised bad debts had so accumulated on the bank that it was found impossible to pay a dividend without deliberate dishonesty on the part of those responsible; the October dividend was therefore passed. This naturally caused some commotion, and a shareholders' Committee of investigation was talked about—notably by the late Mr. Justice Gillies. The then General Manager of the bank, Mr. D. L. Murdoch, having occasion to proceed to London to consult with the bank directors there—and also, as I believe, with the Board of the Loan and Mercantile Company, of which he was managing director in the colonies—in regard to the threatened crisis, I was left to deal with the emergency in New Zealand.
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I am not revealing anything which is not notorious, when I say that the difficulty of the position was aggravated by circumstances which tended, more or less, to impair the freedom or efficiency of the board of directors themselves in dealing with it, and which threw upon me a most exceptional responsibility. The liabilities of the bank at the time were about thirteen millions. A few years ago, when the failure of Baring Brothers, with liabilities of twenty-one millions, was imminent, it was felt that even the London market would be so seriously compromised by such a catastrophe, that extraordinary measures were adopted to avert it. I need not say that twenty-one millions is a trifle to London as compared with thirteen to New Zealand. And I submit that such a responsibility entitles those called upon to face it to the utmost consideration. The problem was not so simple as some may now think it. It seemed to me, and in this I was supported by other senior members of the staff, that the only proper course, under the circumstances, was that the bank should, as soon as practicable, be placed in the hands of its shareholders, and I co-operated with Mr. Justice Gillies to that end. I may say here that when he came to understand the magnitude, gravity, and difficulty of the crisis, he was staggered, and it was with some reluctance that he consented to go on. Preparatory to an investigation, and to facilitate it, I instructed Assistant-Inspectors and managers to forward carefully-prepared returns and valuations of the entire assets of the bank. Securities or properties set down at over £5,000 to be valued by outside experts of respectable standing, whose certificates were to, and did, accompany the returns. These instructions were issued in circulars dated, I think, early in March, 1888. I ask the Committee to call upon the bank for copies as documents in the case. A list of qualified shareholders, holders of not less than two hundred shares, as provided by law, was prepared. These were comparatively few T , and when those who were disqualified as being directors were excised, and others as not being men of any business experience, it was with difficulty that a sufficient committee, at once qualified and eligible, could be formed. Some Sydney shareholders were asked to come over, but declined. A list of gentlemen willing to act was at length made up, and approved by Sir Frederick Whitaker on behalf of the directors, and by Judge Gillies on behalf of the shareholders—to whom it was proposed, and by them accepted. The labours of this committee extended over the ensuing six months, some of the members—notably, Mr. George Buckley —devoting nearly their whole time to the work; and at the meeting in October, 1888, they presented their report, which was adopted. If the Committee have not already obtained a copy of this report, I ask that it also be called for and read. In the meantime a mission had been despatched to London, a new issue of capital underwritten, and other measures taken, but to recount all that was done would be an undue tax on the attention of the Committee. A new Board was constituted, including Captain Colbeck and Mr. George Buckley, members of the shareholders' committee, and I was appointed General Manager. But, owing to the strain to which I had been subjected for years previously, and more especially during a crisis of twelve months' duration, I had to ask for sick-leave, which was granted. Before I had been two months away dissensions occurred in the Board, and certain senior officers signified their opinion that the provision made for bad and doubtful debts was inadequate. In the case of at least two of them, this opinion traversed their own report as managers little more than six months previously. I had to return to Auckland to confer with the Board on the position, and I began to feel that the bank could not be carried on by an Auckland Board; while to ask shareholders for a further large appropriation for bad bebts, unless by some entirely new authority, would be futile and disastrous. The only available course appeared to be to transfer the control of the bank to London ; and I suggested that I proceed thither to feel the way towards this. The suggestion was adopted, and I went to London, returning to Auckland in October of the same year (1889), barely in time for the half-yearly meeting. The dissensions in the Board had in the meantime been bitterly accentuated. Mr. George Buckley had resigned, and at the shareholders' meeting he made a violent attack on the bank. This dispelled any doubt I had as to the necessity of moving the head-quarters of the bank to London. The question of moving it to any other point in New Zealand was discussed, and considered not feasible. I send as a document in the case, a letter from Mr George Buckley to me, dated 7th May, 1889, bearing on the question. I had in the meantime retired from the management, partly because of medical advice given me in London that this was imperative, partly that the. way might be cleared for entirely new management as well as a new directorate, both of which I considered necessary to the re-establishment of confidence in the bank; but I continued in responsible connection with it as a director. My recommendation to shareholders to move the head office to London was adopted, and Major F. Nelson George, an Auckland director, was deputed to visit London to make arrangements there. Before agreeing to assume responsibility for the bank, the London board sent out Mr. David Hean to investigate its position on their behalf. Mr. Hean was a retired banker, then resident in London, of long experience in New Zealand, and good position and repute there; and he had not been previously in any way connected or mixed up with the Bank of New Zealand. Mr. Hean came to the colony, made his own investigations, personally visited the various branches of the bank, appointed his own valuers of properties, all without reference to me direct or indirect, and, as I believe, without reference to any other director or officer of the bank, except to managers in course of his examination. He then returned to London, and reported that he considered that a further appropriation of £400,000 for bad and doubtful debts was required. I quote from memory and approximately. This appropriation was made, the capital further written down, and a new Board constituted in London consisting of some members of the old London Board, and some new men of good standing there; the Auckland directors, including myself, vacating their position,
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At this stage it seems fitting to review what took place, as bearing on accusations which have been levelled at me that I misrepresented the position of the bank and tried to conceal it from shareholders. I should think that an attentive perusal of what I have set forth, and which the Committee can easily verify, might of itself rebut such accusations. I, however, briefly recapitulate : — (1.) I submit that the circulars to which I have referred clearly evince an honest desire to arrive at a fair estimate of the bank's position. (2.) The promotion by me of an investigation by a shareholders' committee of unquestionable standing, and approved as I have described, is not consistent with any such design. (3.) When the finding of that committee was impugned, I next advocated the transfer of the control of the bank to a new body, over whom I could exercise no influence whatever, and who made an investigation by their own appointee on their own behalf. And I voluntarily vacated a lucrative position that the place might be occupied by a new General Manager. If these measures betray a disposition to conceal anything, I am at a loss to know what else I could have done to facilitate arriving at and revealing the truth. As to how matters were held to stand six months subsequently to the committee's report, and after the sufficiency of its provision had been questioned, I can hardly do better than forward for the private perusal of the Committee a memorandum sent to me in London by the late Mr. George Buckley, and dated the 20th April, 1889. The memorandum is not marked private; but, as it contains references to other persons which might be considered offensive, I ask that it be not published. Mr. Buckley had been by that time six months a member of the shareholders' committee, and a further six months President of the bank, with absolutely unrestricted facilities for satisfying himself as to its true position, which facilities he freely availed himself of, attending daily at the bank, in fact giving practically his whole time to it. He was, moreover, a man of capacity and much business experience. It will be seen that he quotes the further provision which he thinks may be required at £350,000, or £50,000 less than Mr. Hean subsequently put it at, and he even admits that under favourable conditions the necessity for this provision might be reduced by one-half. And he concludes : " The estimate I keep to myself, but you may depend upon it as at present a-reliable one." Further, writing me a month later—the 22nd July, 1889—he says: " Looking at the worst side, your ideas agree with mine that it would be better for all concerned to get even a 5 per cent, dividend for a few years with the certainty of pulling through at last. It only requires confidence and good management; but the first may be lost in a week, while the second seems almost impossible to obtain meantime." My intention to retire was well known to him, my resignation being then in the hands of the directors. Neither is this letter marked private ; but as, besides being personally offensive regarding other persons, it is, I believe, libellous, I cannot hand it to the Committee, but am willing to submit it for verification of the extract, in any manner which will not lay me open to an action for libellous publication. I now pass to the next stage of the bank's history. The London Board having assumed control, appointed a new General Manager. They at same time asked me to become a member of a local Board. But, being of opinion that under all the circumstances such a body in Auckland would be detrimental to the bank, I declined. But as the new officer was a total stranger to the colony I offered to give him any information or help I could, in an unofficial way, till he got fairly into the saddle. This was agreed to, and for some considerable time I was, so far, at Mr. Holmes's disposal. But I took no part in the administration of the bank. I did not accompany Mr. Holmes on his business tours. I had no powers whatever, and I resided fifty miles from Auckland, only occasionally visiting town. My knowledge of what went on was quite fragmentary. In an increasing degree I found the position useless and equivocal, involving ill-defined, quasi responsibilities, without any powers, and I after a time vacated it. What little I may have seen or heard has, for all practical purposes, vanished from my memory, and I am quite unable to fnrnish the Committee with any evidence in relation to this period. The Bank of New Zealand Estates Company was constituted during Major George's visit to London. It was formed on the basis of Mr. David Hean's report, that gentleman himself being in London at the time; and the figures at which properties were taken over, and stand, or stood, in the Estates Company's books were, as I understand, his figures. It certainly was not formed on any representations or misrepresentations of mine, as has even lately been erroneously stated. Major George retured to the colony as the company's authorised representative ; but a local Board was by-and-by constituted. I was not at first, nor for a year or more, a member of that Board, nor had I anything to do with the company. Subsequently I became one of the local drrectors ; but finding that in that capacity I could be of very little use, I notified that unless I were made Chairman, with certain powers of ordinary administration, I would retire altogether. I was then (1893) appointed Chairman—the other local directors retiring, except the General Manager of the bank, and I think the late Mr. PI. J. Le Cren, who, with the Inspector of the bank and myself, formed the newly constituted Board. The bank Inspector's position on the Board was almost nominal—his appointment being made chiefly to facilitate the execution of deeds. As Chairman I attempted in the ensuing year to gauge the real position of the concern, and travelled much with that object. But owing to the fluctuating profits of sundry large commercial businesses which formed a material part of its assets, to variable seasons as affecting its agricultural and pastoral resources, that particular season being an abnormally bad one, and, finally, owing to steadily falling prices of produce and general depreciation in values, 1 found it quite impracticable to arrive at any estimate which I could myself regard as reliable. But, on the whole, my conclusion was unfavourable, and learning from the executive of the bank that it was in an unsatisfactory, and even precarious position, I concurred with them in representing to the Board in London that in our opinion the bank could not and ought not to go on under existing conditions. lat the
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same time said that the bank ought not to be closed without previous consultation with the Government of the colony. This was approved, and I was asked to undertake the mission, the General Manager being instructed to proceed to London to confer with the Board there. This brings me to the legislation creating the two-million guarantee. In Wellington I naturally communicated first with the Colonial Treasurer, who immediately arranged for me a formal interview with the Premier and himself. I subsequently saw other members of the Government, and ultimately the full Cabinet. The representations I made to the Government are on record, and are mainly three : — I. That I felt the utmost confidence that the State would not lose by the guarantee sought. This assurance I gave, not upon any direct knowledge, or even opinion, of the precise value of the assets of the bank, which it was not practicable to arrive at except by liquidation, and which could not be ascertained even to any reasonably close approximation in the time available— I wa.s informed, and believe that the bank executive could not have complied for many days longer with the provisions of the Bank Act as to coin reserve. Bat upon the following considerations : That in 1888 the bank's affairs had been overhauled by a committee of shareholders, and the capital written down in accordance with the conclusion they arrived at. That they were again examined by Mr. Hean in 1890, and the capital again written down in compliance with his report. The estimate of deficiency made by Mr. Hean being £50,000 in excess of an estimate by Mr. George Buckley, which he wrote me I might rely on. And that no such subsequent losses or depreciation were known to me or apprehended as could be conceived greater than must be amply covered by £900,000 of remaining paid-up capital, and £1,500,000 of shareholders' reserve liability to call. And I find no evidence yet that the State will or is likely to lose. On the contrary, I observe that Mr. Booth, one of the present directors, is reported to have testified before the Committee that in three or four years the bank ought easily to pay a dividend of 5 per cent, on the call now being collected. This, with the fact that, as I understand, only two-thirds of the reserve liability has been called, is obviously incompatible with the idea of the State losing. If it is not, it must be due to other legislation than that with which I had anything to do. 11. That two millions of additional capital would be ample for the requirements of the bank. As financial provision for the bank's needs, I hold it absurd to suppose that this large sum, with a million and a half of shareholders' liability, of which a million has been called, was not more than ample. I have heard that the bank is voluntarily refusing to renew London deposits, thereby of its own accord reducing its resourses ; and it may, also voluntarily, have invested in Estates Company debentures, or other stocks. But, apart from such, or other voluntary action, I refuse to believe that conditions have arisen in the ordinary course of business under which two or three millions have been absorbed. If this is asserted I should want to see the proofs. 111. That even if the State were ultimately to lose by its guarantee, such loss would be less than must be entailed by a banking collapse. A proposition which I take to be self-evident, and which was supported by the universal chorus of approval, in the public Press of New Zealand, with which the Government's action was greeted at the time. Though some publicists seem to forget this now, and to forget that the State had any interest of its own in the matter to conserve. The Colonial Bank amalgamation : At one of my interviews with Mr. Seddon, when the question of the two million guarantee was under consideration, he said to me that the Government would not move for any one bank, but that all the three New Zealand banks must be brought in. I pointed out that this was practically impossible, even if the other two wished it; but that if the Bank of New Zealand were made strong it could be the medium for taking up either or both, if occasion arose. And I pledged myself that, so far as I could influence it, no obstruction should come from the Bank of New Zealand. In terms of this pledge, I was at all times frankly ready to facilitate the Colonial Bank's admission to the advantages of the State guarantee. And it was primarily in consequence of it that I visited Wellington last year at the urgent request of the President of the Bank of New Zealand. Moreover, I regarded it as of much importance to the latter, that it should acquire an augmentation of its business, which had been much dilapidated by events of recent years. I understood that the Government favoured the purchase, but this seemed to me so clearly in the public interest that no idea of impropriety in that attitude ever entered my mind. The Auckland Agricultural Company is also, I observe, in the order of reference, and it may be well that I state my general recollection of the circumstances which led up to the existing position. About eleven years ago this company drifted into financial difficulties. It had raised about £300,000 by debentures, through the firm in Scotland who were deposit and debenture agents there for the Bank of New Zealand, and the Loan and Mercantile Agency Company ; and another similar large land company with which the bank was indirectly somewhat mixed up, and which had raised about a quarter of a million through the same agency, was understood to be also in difficulties. It was considered by the bank Board that the suspension of these companies would not only occasion heavy direct or indirect loss to the bank, but would precipitate a disastrous financial crisis. For these reasons the bank directors agreed to stand by the company —the late Mr. James Williamson, who, with Mr. Thomas Eussell, were the principal shareholders, putting into it a further large sum—and an independent expert certifying that the company's lands, carefully handled and developed, were sufficient to cover its total liabilities. Mr. Eussell, being heavily committed in connection with the other company I have referred to, represented that it was quite impossible for him to carry ou under his liability for both concerns —and, in fact, declined to attempt to do so. But he undertook to devote his energies and any means he had left to seeing the other company through; the Loan and Mercantile Company, as I understood, agreeing to stand by it. He also gave the bank what security he could for his own indebtedness. Upon these considerations the bank directors, I think, consented to relieve Mr. Eussell from his liability in connection with the Agricultural Company. Subsequently it was attempted, under expert advice, and by considerable expenditure of capital, to render the company self-supporting. In which connection I ask reference to Mr. George Buckley's remarks in the
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memorandum of the 20th April, 1889, to which I have already referred. Among other things he says :" I have been a week in the Waikato district going over properties. Have been over all the Auckland Agricultural Company's properties—some of them promise well. No doubt, £40,000 to £50,000 should be expended in improving the best portions of these properties during the next three or four years." What measure of success has attended these operations I cannot say. But it may be feared that, owing to the continued fall in the value of produce, the results have not come up to expectations. Generally, if there be any matters upon -which the Committee desire information which I am in a position to furnish, and which I have omitted to deal with, or have dealt with inadequately in the foregoing statement, I shall be most ready to give it frankly on learning what is required. In the meantime, I conclude by remarking upon the question of the great depreciation in the bank's assets which has occurred in the last eight years, and which has done so much to create the impression that the position was not fairly faced—that allowance never seems to be made for the persistent decline in the prices of produce, and, therefore, in values of property, which has been going on all the time up to this year, and which also manifests its effects in the aggravation of ordinary banking losses, and in the collapse of large accounts which otherwise might easily have pulled through. Suppose similar decline to go on, what in a year or two hence would be the worth of any person's estimates of to-day ? Those of Mr. George Buckley and Mr. David Hean were right enough at the time; it was the subsequent and unforeseen course of things which invalidated them. The bank's assets in 1888 stood in its books at fourteen millions and a half. Twenty per cent, only on this amount comes to nearly three millions. And though a material proportion of these assets suffered no depreciation, another large proportion underwent a greater than 20 per cent. Much became total loss. It is interesting to note that the Chairman of so great, so old, and so conservative an institution as the Union Bank of Australia, in his speech the other day, proposing transfer of £250,000 from the reserve to a contingency account, for apprehended losses, makes the following significant admission, " Of course, I am quite aware that no opinion which can be put before you on such a matter can rest on anything but estimates." Precisely. And does any one imagine, if prices continued to fall in the next year or two, that the Chairman, or somebody else, dealing with the matter, would not have to report that the provisions now sought had proved to be quite inadequate ? It is comforting to reflect that owing to the greatly increased yield of gold in the world the fall in values has been stayed, and the contrary process probably set in. It unhappily fell to many of us in the last ten or fifteen years, in consequence of depreciation of unprecedented persistence, to bear a burden of anxiety and disappointment in our honest endeavours to conserve great interests committed to our charge, such as can hardly be realised by those who had not to bear it. And I confidently claim the sympathetic consideration of the Committee for any of us (if there be any) who, in the light of later knowledge, may be held to have failed in any point of wise dealing with most perplexing problems. I hereby declare the foregoing statement contained'in this and the preceding twenty-two pages, which I have initialled as relative hereto, to be, to the best of my knowledge and belief, a true statement; and I make this solemn declaration as to the matters aforesaid according to the law on this behalf made, and subject to the punishment by law provided for any wilfully false statement in any such declaration. John Murray. Subscribed and declared at Sydney, this 7th day of August, 1896, before me —R. S. Beach, J.P.
Sir, — Ancram Heights, North Sydney, 26th August, 1896. I have the honour to ask permission to hand your Committee the enclosed copy of a letter I have addressed to the Chairman of the Legislative Council Committee in answer to certain questions put to me, as it deals with matters as to which I apprehend your Committee also may wish for information. I have, &c, The Chairman, Banking Committee, John Murray. House of Representatives, Wellington.
(Copy for House of Representatives' Banking Committee.) Sir,— 26th August, 1896. I have the honour to acknowledge the receipt of your letter dated 17th instant, and I have, as desired, replied by cable as follows : " Your letter 17th. Cannot answer questions properly by cable, but, under protest, I reply. Question 1: I have no recollection or record such statement, but subject was discussed. Question 2: I did not submit any representation to Government regarding Estates Company's values beyond confident conviction Government would not lose by guarantee, which was all the case admitted of. This Hanna's estimates justified, and is further justified by recent official testimony. I beg reference my letter to Premier 25th June, 1894, and ask Committee to wait fuller statement by post." In case the Committee shall have complied with my request, I am sending such fuller state ment to my agent, Mr. C. E. Button, M.H.R., with direction to hand it to you. I have, &c, The Chairman, Banking Committee, John Murray. Legislative Council, Wellington.
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(Supplementary letter referred to above.) I have the honour to supplement as follows my cable reply to your letter of 17th instant: — As regards Question 1: My position about the date referred to placed me in close business contact with Mr. Hanna, and communications of an informal character frequently passed, of which I kept no record. Whether the statement in question was one of such lam quite unable to say after the lapse of more than two years, during most of which period these matters were entirely out of my mind. But I submit that if a statement of this importance were intended to be used in a forma] manner, more especially as evidence to define any responsibility, it ought, for record and for the protection of all concerned, to have been properly minuted at the time, which I do not understand to be alleged of it. As regards Question 2 : I made no pretence, when proposing the two million guarantee, that upon any immediate liquidation or even valuation, the Estates Company's assets would not show a deficiency. It would have been absurd to do so, in the face of the great and notorious depreciation in such property which had been going on, and of which the Government and the Legislature were alike aware. But more than this, in my letter to the Premier of 25th June, 1894, which letter formed the main basis of my proposals, I distinctly refer to the failure of returns; and, inter alia, say, as a suggested condition of the guarantee, that " No dividend be in the meantime paid on the present capital till the Estates Company's assets be disposed of"; a suggestion which surely is not consistent with the idea of even an implied representation that no deficiency was to be apprehended. I, at the time, hoped and believed that any then existing deficiency would be greatly lessened by the progress of the colony, which was inevitable, and by recovery in prices which I was confident would come about, and which has since to some material extent come—though in the year 1895, in which the valuations of the new directors were made—a level of depression had been reached, which, had it continued, must have involved widespread ruin in all these colonies. And I contemplated that by devoting, in aid of the liquidation of the Estates Company, the large sum per annum which it had been usual to pay to shareholders as dividends, the deficiency would be extinguished, or at least brought within manageable dimensions in the ten years for which I sought the guarantee. Had I been asked for a valuation of Estates Company's assets I should, at all hazards, have refused to commit myself to one. I had seen two careful and elaborate valuations successively falsified by the subsequent course of events. And had I taken Mr. Hanna's estimates as a basis, I should, according to later findings, have been wrong by nearly one-half. To have gone into the more or less precise value of that three millions' worth of very miscellaneous property would have been futile—probably misleading—and would certainly have barred any effectual measures for dealing with an imminent public crisis of the gravest kind ; because it must not be forgotten that the question was not merely, or even primarily, a bank but rather a colonial question. And I submit that my action, so far as it went, was instrumental in averting from the colony a great disaster, and in saving a numerous body of colonists from ruin : and, upon the testimony of Mr. Booth, one of the new directors, without the probability of costing the State a shilling. Further, upon the same testimony—and I know of none entitled to carry more weight—-it is likely to save bank shareholders nearly a million sterling, viz., one-third of a million and a-half reserve liability not called, and another third called; but upon which Mr. Booth believes that in a few years the bank will be able to pay 5 per cent., and so make it a good asset. Regarding my letter to the Premier, dated the 29th June, 1894, which I believe was read to the House at the time, and in which I make reference to the state of the bank's immediate business. In case this reference be held in any way inconsistent with the later finding of the present directors, I wish to say briefly, that I had not for five years been a member of the bank executive, that any knowledge I had of its later affairs was quite partial and fragmentary. That I believe, and had reason to believe, that what I said of it was correct, and that I was only conveying the views of the then General Manager, Mr. T. W. Holmes. I have a letter and memorandum from that gentleman dated the 7th June, 1894 : the latter prepared, I believe, first for his own use, but afterwards handed to me for my guidance as to his views of the position. In it he ascribes the difficulty to the causes I stated, and not to losses in the bank's own business. He suggests, as I did, that dividends on the bank's paid up capital be suspended till it has quitted, or fully provided for, any possible loss on its interest in the Estates Company. And his estimate of the position is such that he contemplates ultimately, after providing for such possible loss, the payment of a dividend on the bank's ordinary capital. I forwarded the originals of the letter and memorandum to my agent, Mr. C. E. Button, M.H.R., for verification in case of need. I have, &c, The Chairman, Banking Committee, John Murray. Legislative Council, Wellington.
Sir, — House of Representatives, Wellington, Bth September, 1896. I have the honour, by direction of the Banking Committee, House of Representatives, to forward you a list of questions formulated by the Committee for you to answer. For convenience three copies of the same are enclosed. Will you be good enough to answer the questions as fully as possible, and in the order they are asked. In order to facilitate matters, and to aid you if necessary, I forward you the following Acts and documents, viz.:— 1. New Zealand Bank Act 1861 Amendment Act, 1889. 2. Bank-note Issue Act, 1893. 3. Bank and Bankers Act, 1893.
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4. Banking Act, 1894. 5. Bank-note Issue Act 1893 Amendment Act, 1894. 6. Bank of New Zealand Share Guarantee Act, 1894. 7. Bank of New Zealand Share Guarantee Act Amendment Act, 1894. 8. Bank Shareholders Act, 1894. 9. Bank Directors and Shares Transfer Act, 1894. 10. Bank of New Zealand and Banking Act, 1895. 11. Bank of New Zealand and Banking Act Amendment Act, 1895. 12. Proposed Amalgamation, Bank of New Zealand and Colonial Bank, 8.-26, 1894. 13. Proposed Amalgamation, Bank of New Zealand and Colonial Bank, 8.-26 A, 1894. 14. Select Committee, Bank of New Zealand, 1.-6, 1895. 15. Agreement, Colonial Bank and Bank of New Zealand, 8.-27, 1895. 16. Banking Committee, 1896 : Extracts. 17. Banking Committee, 1896 : Order of reference. 18. Banking Committee, 1896 : Order of business, Sub-Committee's report. It is important that the Committee should receive these answers by return of mail. I have, &c, John Murray, Esq., John Graham, Chairman. Ancram Heights, North Sydney, New South Wales.
Questions to Mr. J. Murray. 1. Please state what has been your connection with the Bank of New Zealand from time to time, giving dates ? The Bank of New Zealand Estates Company. 2. The history of its formation ? How did the company come to take over the properties of the bank at £54,000 in excess of Mr. Hean's valuation ? Was subsection (3) of section sof the New Zealand Bank Act of 1889 inserted at the wish of the Bank of New Zealand ? Do you consider that such legislation is in the interests of sound banking finance, seeing that it permitted the directors to declare dividends when, owing to the position of the Estates Company, the bank was going from bad to worse every year ? 3. Do you consider, from your knowledge of the facts, that the references made to the condition of the Bank of New Zealand Estates Company by the directors of the Bank of New Zealand from 1890 to 1894 were straightforward, or misleading, particularly the following statements:— 1891, sth August: Ordinary general meeting at London. The chairman said (inter alia), " As regards the Estates Company, we have every reason to believe that this is a satisfactory asset. The sales of the property as far as they have gone have come out well above the valuation of the late Mr. Hean, and they have consisted almost entirely—l may say entirely—of properties which return the very smallest revenue. The return was something under 2 per cent., and we have not yet begun to touch the properties which are returning us a reasonable rate of interest. The revenue of the Estates Company for the past year was not quite up to expectations, but this, you can easily understand, was owing to the very bad season through which the country passed. The prospects for the present year are, we are advised, excellent. Therefore, on the whole, I think it is fair to say that we believe that the shares which we hold in this company are steadily enhancing in value, for we are advised that quite a demand has sprung up for station properties, and generally the tone of things is very much better in the colonies; and I think that asset may be looked upon as worth a great deal more in the future than it is worth to-day." In 1892, at the half-yearly general meeting, held in London, the chairman said, referring to the proposed sale of a number of the Estates Company's properties in the South Island, " Of course, in the meantime, until they are sold, we shall have the profits which these properties make; and, up to the present time, all the reports are satisfactory." In 1892, at the half-yearly meeting, held in August, the chairman said, " . . . Now, the next thing I have to come to is the Estates Company. This is the first time we have had a complete year's balance-sheet from the Estates Company, and it is, on the whole, fairly satisfactory. The result shows an improvement on the estimates formed by Mr. Hean, when the properties were handed over to the limited company. . . ." In 1893, at the half-yearly general meeting, the chairman said, re the Estates Company, " We now know that these estates are coming out well, that the liberal expenditure and prudent management which have been exercised are leading to larger profits, while the less desirable properties are being got rid of. Therefore, we may say with confidence that the bank has now emerged from its difficulties, and that we can look forward to a future of steady and substantial progress." 4. Did you, when appointed chairman of the Estates Company in 1893, take steps to ascertain the exact position of the company and the value of its properties ? Did you report on the same ? and, if so, will you send the Committee a copy of your report ? 5. What instructions did you receive from the directors in London with respect to your negotiations resulting in the Share Guarantee Act of 1894 ? Will you send to the Committee all written instructions which you received, and all your correspondence with the directors of the Bank of New Zealand, the Ministry, or any member thereof, or with any other persons, relative to the negotiations of 1894, or to the legislation which took place then and subsequently ? 6. State in detail the history of the negotiations leading up to the banking legislation of 1894, and in particular what interviews you had with the Ministry, or any member of the Ministry, and what took place at such interviews, giving the exact dates ? 7. What information was given to the Ministry, or any member thereof, as to the position of the Bank of New Zealand at or about the time of the banking legislation of 1894 other than that which appears in your letters of the 25th and 29th June, and of the 4th July ?
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8. Referring to your letter of the 29th June, 1894, in which you state, " By the measure I have proposed lam absolutely convinced that the State will not lose one penny. . . ." Was your knowledge of the affairs of the Bank of New Zealand so intimate and exact that you could with confidence make such a declaration ? In particular, were you acquainted with the real value of the properties of the Estates Company ? If so, how was your knowledge obtained, and were the Government informed of such values ? Could you have made a reliable declaration without being thoroughly acquainted with the real value of the properties belonging to the Estates Company ? 9. Did you at the time of the banking legislation of 1894 anticipate that further provision would subsequently require to be made for the safety of the Bank of New Zealand; and, if so, did you advise the Government to that effect ? 10. Referring to your letter of the 25th June, 1894, to the Colonial Treasurer, in which you state, " As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000 ; reserve liability, £1,500,000 : total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin." Did you know at the time that if the bank's losses (including the Estates Company) were written off its capital that there would be no capital left, and also that a considerable portion of the reserve liability would also require to be called up and written off? If so, did you inform the Government of the fact? Did you not know that the book-values of the properties of the Estates Company were purely fictitious, and represented over £800,000 more than their actual value ? If so, did you inform the Government. 11. Had you been aware of the position disclosed to the Committee in 1895, namely :— £ Deficiency in bank ... ... ... ... ... ... 376,900 Contingent ... ... ... ... ... ... ... 200,000 Estates Company— 576,900 Deficiency against which no assets exist ... ...£467,077 Trading concerns and foreign properties ... ... 444,601 911,678 Less (cross-entry)... ... ... ... 148,110 763,568 £1,340,468 Besides the deficiency in the value of properties handed over to the Realisation Board (altogether over two millions) ? Would you still have made the statement above referred to in your letter of the 25th June? The Colonial Bank Purchase. 12. Will you inform the Committee if you have any knowledge of an alleged proposal for amalgamation between the Colonial Bank and the Bank of New Zealand in 1889. If so, please give the Committee any information in your possession on the subject ? 13. When was an amalgamation between the two banks first proposed in 1894 ? Was it previous to the passing of the Bank Share Guarantee Act ? 14. When were the Ministry, or any member thereof, first informed of the proposed amalgamation? 15. Trace the history of the negotiations culminating in the amalgamation agreement of the 11th September, 1894. 16. Were you kept informed of the progress of the negotiations in 1895, previous to your visit to Wellington ? 17. Trace the history of the negotiations for amalgamation or purchase in 1895 so far as you are aware of them. 18. Did you assist in the negotiations for amalgamation or purchase in 1895 ? What was the amount estimated by you to be given by the Bank of New Zealand as consideration for the goodwill of the Colonial Bank ? Were you aware of any guarantee being given by the Colonial Bank of £25,000 and, if so, was such guarantee given by the Colonial Bank on certain accounts—in particular, one of £20,000, and another of £5,000 ? Did you make an estimate of the value of the Colonial Bank premises ? The sum of £125,000 having been paid therefor, what loss, if any, under this head do you estimate will be made ? 19. What was the value of the consideration allowed to the Colonial Bank for the goodwill, taking into account the said guarantee accounts (£25,000) and the excess value, if any, paid for the Colonial Bank premises ? 20. In your opinion is the interest of the Bank of New Zealand or the colony sufficiently safeguarded under existing arrangements in respect of the bank business in Australia and Fiji ? Have you any suggestions to make in respect to this matter ? 21. What are the particulars of the efforts, and by whom made in London in 1893 or 1894, to raise additional capital for the Bank of New Zealand, and what was the result, and when was it known in the colony that such additional capital could not be raised? 22. Were balance-sheets and reports prepared at this time so as to enable Messrs. Johnson and Horton to place the position of the bank before London capitalists, and if so, will you supply copies of same ; failing which, supply any information you may possess of such documents. 23. What were the particulars —the whole of them in respect to the position of the Bank of New Zealand and Estates Company —submitted by you to the Government before the introduction of the Guarantee Bill ? * 55—1. 6.
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24. Were the terms or effect of the agreement mentioned in clause IV. of the terms of proposed amalgamation communicated or in any way brought to the notice of any one or more members of the Government? 25. What were the terms, or, if you cannot give the terms, what was the effect of that agreement, so far as related to Mr. H. Mackenzie, the general manager and other officers of the Colonial Bank or the Bank of New Zealand? 26. What were the arrangements made as to the investment of part of " the second " million guaranteed by the Act of 1894 in the purchase of New Zealand Consols ?
Sir, — Ancram Heights, North Sydney, 18th September, 1896. I have the honour to acknowledge the receipt of your letter of the Bth instant, enclosing a series of questions by the Committee for me to answer. And I now beg to hand you the answers given to the best of my power. I desire, however, to explain that when I broke up house in New Zealand, being quite uncertain of my future movements, and supposing that chapter of my life closed, I destroyed nearly all my papers. lam therefore unable to reply to many of the questions with that precision and detail which access to records would have facilitated. I have, &c, The Chairman, Banking Committee, John Murray. House of Representatives, Wellington.
Answers by John Murray to Questions addressed to him by the Banking Committee of the House of Representatives, Wellington. Question 1: I entered the service of the Bank of New Zealand in 1863. Retired from it in the following year. Rejoined it in 1866 as " visiting officer," which title was subsequently changed to " inspector " —I cannot say at what date, probably about 1880. In that capacity my sphere was restricted. I never inspected Auckland office, nor visited Australia, till about the end of 1886. Early in 1888 I became virtually General Manager, and was formally appointed to that office towards'the'end of that year, but almost immediately went on sick-leave; then on a mission to London. Returned to the colony in October, 1889. Retired then from the executive of the bank, but became a director, till the directorate was removed to London soon after; ceasing then to have any effective connection with the administration of the bank, till in 1894 I was asked to undertake the mission to the Government of which the Committee are aware; and last year I visited Wellington for about ten days on bank business. Question 2: In my statement already sent to the Committee I gave all the information I can as to the history of the Bank of New Zealand Estates Company. But at the bidding of the Committee I repeat:— The company was formed in London under the auspices of Major F. Nelson George, one of the then new bank directors, who was deputed to visit London for that purpose and for other business. The assets it purchased were, as I understand, taken over on the basis of the report of Mr. David Hean, who was in London at the time. Major George returned to the colony as managing director of the company in the colonies, and a local Board was soon after formed. I was not a member of that Board, nor did I take any part in the administration of the company, or, in fact, know anything of its affairs for some considerable time, probably about a year, when I joined the local Board as a director. Up to that date, therefore, I am unable to say more about the company. Mr. J. C. Hanna was Colonial Manager; he had been taken from the bank staff while I was in London in 1889, and put in charge of the then so-called " Globo Assets." He had full charge of the administration of the company in the colonies, and when I was a director was under the more immediate supervision of Mr. Holmes, the General Manager of the bank. The arrangements under which the Estates Company took over the assets were made in London at a time when I had no connection with the company. lam therefore unable to say " Why properties were taken over at £54,000 in excess of Mr. Hean's valuation." Subsection (3) of section 5 of " The New Zealand Bank Act, 1889," was, no doubt, inserted at the wish of the bank, as it was in terms of a resolution of shareholders. The bank could not have been carried on had the half-yearly profits and the declaration of a dividend been made dependent on the necessarily fluctuating results of a gradual liquidation of these assets, and upon a fresh valuation of them on each occasion. I was in London at the time, but I have no doubt that this was explained to the Legislature and understood by it. Such a provision was necessarily intended to be acted on within reason, and in good faith ; and, so far as I can judge, I believe it was so acted on. Question 3 : So far as my acquaintance with the circumstances warrants an opinion, I should say that the references made to the condition of the Estates Company by the bank directors in London from 1890 to 1893 were straightforward, and made upon a condition of things and upon reports to them which justified such statements —" 1894 "is included in the general question, but obviously by mistake. lam of this opinion for two reasons, mainly (1) the realisations of Estates Company's assets up to 1892 —a report made to shareholders in London in 1893 necessarily dealt mainly with 1892—showed a surplus on book-values, and these were not on a paltry scale, but amounted to over half a million sterling. I must be understood to be speaking from memory and approximately, but I believe with substantial accuracy. (2) The revenues from the Estates Company, after providing over £80,000 per annum for the very onerous debenture-interest, left about £40,000 per annum for dividend to the bank. In 1893 things began to look more clouded—harvests were bad, prices of wheat and other produce reached a ruinous level—trading concerns, owing to bad trade and lowered value of stocks, showed greatly reduced profits. Under these conditions I became local Chairman, and for the first time got into effective touch with the administration of the company.
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Question 4 : As such Chairman I did take measures to inform myself of the condition and prospects of the company. The result was unfavourable, but I did not make any general report in writing. I advised the London Board of the bank to send out their manager for conference, and to him I expressed the opinion that under existing conditions the bank need not expect any dividend from the Estates Company. Upon his return to London the Board determmed that without this contribution to the bank's profits it could not be carried on, and I was authorised by cable to communicate with the Government. Question 5 : The circumstances being as stated, I did not receive any written instructions. The views of the General Manager of the bank were communicated to me in a memorandum, which I have already made accessible to the Committee. For the reasons explained in the letter accompanying this document, I am unable to send copies of correspondence. My letters to the Government are already in the possession of the Committee. Question 6 : I am unable to add anything to what is set forth in my first statement to the Committee, to which I respectfully refer, as to the history of the negotiations. Nor can I give " exact dates." I kept no diary, and, as lam not a young man, my memory of what happened two years ago is very general, and not equal to details. Question 7 : I do not recall any information given to Government, other than is contained in correspondence laid before the Committee. Question 8 : I respectfully submit that it did not require an " intimate or exact knowledge " of the affairs of the bank or Estates Company to warrant an expression of confidence that a margin of £2,400,000 was sufficient to protect the State from loss. I had, or believed I had, general knowledge or information which warranted the statement. And surely it is a point in the case that, upon the testimony of the President of the bank and two directors, it is reasonably anticipated that the State will not lose, and that without by any means exhausting the margin. Question 9: I did not anticipate that any further provision would be required for the safety of the bank, a point I dealt with in my first statement. But I expected that if the State did take up the bank at all it would, without increasing its direct liabilities, co-operate in any reasonable manner in measures to strengthen the bank's position, and increase its profits. I, for instance, expected that " the second million " would be permitted to be used, temporarily or otherwise, and with proper safeguards to facilitate the conversion or otherwise dealing with the 54--per-cent. debentures. I hoped that the Government, in connection with its policy of resumption of land for settlement, would co-operate in measures for dealing with Estates Company's lands. I anticipated—and not without grounds—that amalgamation with or purchase of other banks might be arranged, which also I expected the Government would facilitate, assuming it satisfied with the conditions. But it was quite impracticable to go into these matters in connection with the two million guarantee. An imminent crisis had to be dealt with—at any moment the fact of the existence of this crisis might leak out—it was afterwards a wonder to everybody that it did not. The question was, and had to be, narrowed to these points: (1) Is it expedient for the State to interpose to avert a financial catastrophe from the colony ? and (2) In a general way, having in view a paid-up capital of £900,000, and a reserve liability of £1,500,000 as margin of cover, is the position of the bank and the Estates Company such as to warrant the belief that the State may intervene without such risk of loss, or loss of such magnitude as the evil to be avoided does not warrant. In point of fact, the calamity was averted —the State has not suffered loss, and upon competent testimony is not likely to lose. On the contrary, the colony and colonists escaped a loss of grave magnitude. Question 10 : I did not know that losses had accumulated on the bank since 1891 approaching to anything like the amount now set out; and lam sure the bank officials themselves did not at the time anticipate such a development. Of this the General Manager's memorandum, to which I have already referred, affords evidence. That a large deficiency in the Estates Company had to be faced I fully recognised —though by no means so large as was, on estimate, declared in 1895. This was a thing I made no attempt to conceal. It was, in my mind, the sole reason for the difficulty, to cope with which measures so exceptional were proposed, and for a ten years' duration of the guarantee, and the recognised possibility of a call being required. Various ameliorating conditions might be confidently anticipated in much less than ten years, to some of which I have already alluded. No time has been given for these to act, but a trenchant valuation, upon or almost upon liquidation conditions, was made immediately, and in a year in which a long period so disastrous to producers culminated. I believe lam right in saying that of all the reconstructed banks in Victoria, not one has faced any such valuation of its assets, and that it is generally felt that it would be unreasonable to expect it. Question 11: It is difficult to say what one might have done in a hypothetical case. I might have made the statement referred to and yet have been right, notwithstanding the development of conditions so adverse. But had I supposed, or had reason to fear, that the bank itself had gone to the bad more than half a million, and its earning power been so seriously impaired, I think I should have stayed at home and left the General Manager to deal with the position. Question 12 :If I ever heard of such a proposal, I have quite forgotten the circumstance. I do not believe it was ever seriously entertained. Question 13 : The question of amalgamation of the two banks was first mooted in 1894, after the passing of the Share Guarantee Act, but I am quite unable to give dates. Question 14: In view of the relations to the bank which the State had assumed it was incumbent upon me to keep the Colonial Treasurer informed of any matter so important as this : and I did so. But, again lam unable to quote dates. Question 15: It is quite impossible for me to trace any history of the 1894 negotiations for amalgamation. I think they first arose in conversation with Mr. Mackenzie. And they went on —with the discussions, difficulties, compromises usua) in such cases —till the provisional agreement which is on record was reached.
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Question 16 : I knew nothing of the 1895 negotiations till I was asked to visit Wellington, in connection with them. I had, in fact, only arrived in Sydney from South Africa a few days previously. Question 17 : For the reason just given I am unable to trace the history of the 1895 negotiation further than I set forth in answer to the next question. Question 18 : On arrival in Wellington, I found that these negotiations had been going on for some time, but had been hanging fire very much ; had even been publicly alluded to as "off." I found antagonistic influences at work, suspicions and even ascerbities prevalent. Acting as mediator I overcame these sufficiently to bring the parties together in a real disposition for business. In conference with the President and Auditor of the bank, I discussed the position and its various elements—primarily to satisfy myself that the proposals were really in the interests of the State and of the bank. I concluded that they certainly were, and expressed that opinion, with the grounds for it, to these gentlemen. I also expressed it to Bank of New Zealand directors. But I attended no Board meetings. Nor did I attempt to interfere in any way with the directors in their measures for satisfying themselves as to the value of the Colonial Bank assets. Nor did I name to the Board any sum which, in my opinion, the good-will was worth. My final conclusion, in my own mind, on this point was that £100,000 should not be exceeded. I was not aware, and am not now aware, what sum was actually allowed. I left Wellington immediately I saw matters brought to a stage which meant business, hut before its actual conclusion. I was not aware of any guarantee given by the Colonial Bank. I did not make any definite estimate of the Colonial Bank premises, having no proper means of doing so—though it was one of the points I discussed in its approximate bearings. What loss, if any, will result from an allowance of £125,000 for these lam quite unable to say. Much, I imagine, depends on the Dunedin premises, if they could be turned to good account; and, assuming fairly prosperous conditions for the colony, I do not think the amount named need involve any serious burden. Question 19 I find I have inadvertently dealt with in answering the preceding question. Question 20 : I am not, so far, aware of the arrangements for safeguarding the interests of the Bank of New Zealand, or the colony, in Australia and Fiji as to be able to express an opinion whether these are adequate. Nor have I suggestions to make of any consequence. I entirely concur in the opinion expressed by the President, that the bank ought not to retire from Sydney and Melbourne. I think a conservative business should be cultivated there, and that the arrangements for conducting and supervising it should be of a character not to unduly hamper this. Question 21: lam quite unable to give particulars of the efforts made in London to raise additional capital there for the Bank of New Zealand, or to say when it became known in the colony that the measure was impracticable. The matter was, of course, in the hands of the directors in London, and the impression on my mind is that the idea was dropped because it was found that the terms must be too onerous. Question 22 : The balance-sheets and reports which accompanied Messrs. Johnston and Horton on their mission to London were those furnished by managers in 1888 in response to the circular to which I referred in my first statement. These are bank documents, and, as they were most voluminous, and I have no copies, I am unable to supply any further information regarding them. There seems to be some confusion in coupling this mission with efforts to raise capital in 1893-94 in the use of the phrase "at this time," as apparently connecting it with Question 21. The mission of these gentlemen to London was undertaken in 1888. Question 23 : I am unable to give any particulars beyond what are set out in the letters on the subject which are before the Committee, or to add anything on the subject to what I have said herein in answering Question No. 9. Question 24 : Though I have no precise recollection of the matter, I have no doubt that the effect of the agreement in question was made known to the Government at the time. Question 25 : I do not recall the terms of that agreement, which was quite provisional, and I have no record of it. As the proposals of that year were for amalgamation, not purchase, it seemed reasonable that each body of shareholders should have representation of its own staff on the new management, if the directors in either case made a point of it. Question 26 : So far as I remember, the " second million " was not invested before I left Wellington, at all events I had nothing to do with its investment, further than that I repeatedly brought under the notice of the Colonial Treasurer the great loss the bank was sustaining by its noninvestment. I ask permission to add, in reference to the payment of a dividend to Bank of New Zealand shareholders in April, 1888, which I observe was animadverted on in Committee, that this was done with the approbation of the gentlemen who became the shareholder's committee, as being in the vital interests of the bank. In evidence of which I point out that the action was not taken exception to in their- report, nor by shareholders at the meeting when the report was presented. North Sydney,. 18th September, 1896. John Murray.
John Murray, Bank of New Zealand, Sydney. The Banking Committee desire to ask you : (1.) Whether you received a confidential communication on or about the 9th February, 1894, from Mr. Hanna, giving information as to the position of the Estates Company, and suggesting a Government guarantee. (2.) Whether you communicated particulars of such information to the Ministry prior to the 30th June, 1894. Wellington, 28th. John Graham, Chairman.
John Graham, M.H.R., Chairman Banking Committee, Wellington. Have no recollection such statement or of seeing it among my papers. Did not communicate particulars to Government. Sydney, 29th. John Murray.
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BANKING COMMITTEE.
EXTBACTS FBOM THE AUSTEALIAN INSUBANCE AND BANKING EECOED. 1888, BANK OF NEW ZEALAND. The half-yearly meeting of the Bank of New Zealand was held at Auckland on 26th April. Sir Frederick Whitaker, the chairman of the directors, presided. The report and balance-sheet for the half-year ended 31st March, 1888, were presented to the shareholders, and were as follow :— The result of the half-year's operations is as follows : Net profit without appropriation forbad and doubtful debts, £54,755 Os. Id., to which has to be added balance from half-year ended 30th September, 1887, £6,106 Bs. 2d., making a total of £60,861 Bs. 3d., which it is proposed to appropriate as follows: To payment of dividend at the rate of 7 per cent, per annum, £35,000 ; balance carried forward, £25,861 Bs. 3d. The dividend will be payable at the head office, Auckland, to-morrow (Friday), the 27th instant, and at branches on receipt of advice. Aggregate Balance-sheet at 31st Mabch, 1888. (Including London office at 31st January, 1888.) Liabilities. Dr. £ s. d. Capital paid up .. .. .. .. .. .. .. .. 1,000,000 0 0 Beserve fund .. .. .. .. .. .. .. .. 500,000 0 0 Notes in circulation .. .. .. .. .. .. .. 494,178 0 0 Bills payable in circulation .. .. .. .. .. .. .. 1,308,800 110 Deposits and other liabilities .. .. .. .. .. .. 11,156,607 18 1 Balance of profit and loss .. .. .. .. .. .. .. 60,861 8 3 £14,520,447 8 2 Cb. Assets. £ s. d. Coin and cash balance at banker's .. .. .. .. .. .. 2,274,014 0 7 Money on short call in London .. .. .. .. .. .. 185,400 0 0 Bullion on hand and in transit .. .. .. .. .. .. 179,752 11 0 Government securities .. .. .. .. .. .. .. 11,470 2 6 Bills receivable and securities in London .. .. .. .. .. 1,424,488 6 2 Bills discounted, and other debts due to the bank .. .. .. .. 10,071,527 6 8 Landed property, bank premises, &c. .. .. .. .. .. .. 373,795 1 3 £14,520,447 8 2 Profit and Loss Account. £ s. d. To Dividend on 100,000 shares of £10 each, at rate of 7 per cent, per annum .. 35,000 0 0 Balance carried forward .. .. .. .. .. .. .. 25,861 8 3 £60,861 8 3 £ s. d. By Balance from half-year ended 30th September, 1887 .. .. .. 6,106 8 2 Profit for half-year ended 31st March, 1888 .. .. .. .. 54,755 0 1 £60,861 8 3 Reserve Fund. To Balance .. .. .. .. .. .. .. .. 0 0 The Chairman, in moving the adoption of the report and balance-sheet, said : The circumstances of the last meeting invest this one with an interest and importance which the board felt. Referring to the balance-sheet, I would remark that under the head of deposits and other liabilities there is a decrease of £900,000, but this is almost entirely due to items coming under the designation of other liabilities, and is of a casual character, without significance. In deposits proper there is a decrease of £64,000, which upon a total of over ten millions is quite immaterial. The coin and cash balances at the banker's and money at short call in London show the respectable total of £2,400,000. This is £800,000 less than at our last balance, when the amount was exceptionally high. The reduction is in large measure accounted for by an increase of £500,000 in bills and securities held in London. I come finally to the important item of profit, which, apart from deduction for bad debts, amounts to £54,000, by no means so satisfactory a feature as you have been used to. The shrinkage in clear profit of late is indicative of the extent to which the bank's earning power is crippled by the accumulation of advances and securities from which interest cannot properly be taken to profit, and which, nevertheless, we feel reluctant to realise at the serious sacrifice which would be entailed in the present depressed state of values. It is at the same time satisfactory that, notwithstanding this burden and the unprofitable condition of general business in the colony, we have been able to earn an amount equal to over 10 per cent, on the bank's capital; all the more that the bad debts properly pertaining to the half-year are quite trifling, and would not appreciably affect the result. How to deal with this profit has been the occasion of much perplexity I—l. 6.
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and anxious consideration to us, because on a strict valuation of our assets, and an equally strict compliance with the terms of the deed of settlement, we should not feel warranted in dividing it without an assurance that we had first provided for all bad and doubtful debts ; we have nevertheless come to the conclusion that because of an exceptional development of losses arising out of conditions inherited by the half-year, and because of a depression which we hope will not be of much longer continuance, the shareholders should not be entirely deprived for two half-years in succession of the income from their bank shares, upon which some of them, no doubt, in a measure depend, especially at a time when many other investments have become less productive. We think that we are, on the whole, best consulting the interests of the shareholders in recommending that a dividend at the rate of 7 per cent, per annum be declared, leaving the balance of the profits of the half-year for appropriation to bad and doubtful debts account. A lift in our commercial horizon would entirely change the aspect of affairs, and in view of the very hopeful prospects of the goldmining industry and of our neighbours, and looking to the general revival which has occurred in Australia, we think we should be blamable if we adopted too pessimistic an attitude in dealing with the large and important interests committed to us. It will, no doubt, be in the mind of many of you to inquire what amount, in the opinion of the board, would have to be sacrificed in order to insure an early realisation of the assets to which I have alluded, and the consequent restoration of the bank's profits to their old standard. But you will, I think, recognise the difficulty of giving a categorical reply to such an inquiry when you consider the present condition of the market for property in this country. It must be much a matter of opinion, and is a point on which opinions would vary. We should be glad, however, if you would appoint a committee of your number with whom we could confer on this and some other important matters which call for consideration. We have reason to believe that this course would be satisfactory to many shareholders, and would certainly be satisfactory to us, and we think it would be advantageous to the bank. To fill the vacancy in the bank created by the death of Mr. James Williamson, we have, in accordance with the deed of settlement, nominated Mr. Walter Johnston, of Wellington, and in place of Mr. G. B. Owen, resigned, we have nominated Mr. George Buckley, of London, but a New Zealand colonist, at present in Auckland. These appointments, we feel sure, will give satisfaction to the southern shareholder's, and will add strength to the board. As no other shareholder has given notice of candidature, we ask you to confirm our action. Gentlemen, it now only remains for me to move, " That the report and balance-sheet be adopted." Mr. F. G. Ewington : Mr. Chairman, —I have great pleasure in rising to second the adoption of this report and balance-sheet. I think no ordinary interest attaches to this meeting. At a time when the colony is emerging from a very severe trial, it is only natural that the eyes not only of all persons throughout New Zealand, but also throughout the Australian Colonies and Great Britain, should be turned to us to see how the Bank of New Zealand will be affected in passing through that trial. Especially does this interest attach to us in New Zealand, because there can be no doubt that every man in every town and hamlet in this colony is directly or indirectly affected by our welfare. Now, I think that this report and balance-sheet laid before us to-day will allay a great many misgivings. It is no good hiding the fact that there have been misgivings in the past; all of us have had our misgivings about this gigantic institution. They may have arisen, and doubtless have, from ignorance, and that ignorance is due in some measure to the fact that the directors have not from time to time given the shareholders very much information. In your address this afternoon you say the directors ask that a committee of investigation may be appointed. Now, I think that that is virtually challenging hostile criticism. The directors have examined the affairs of the bank and know them thoroughly, and they say, " We know the worst, and we ask that this committee may be appointed." I, as a shareholder, will be extremely glad if this committee is appointed, and I hope that it will consist of gentlemen who are. above suspicion ; men who are independent; men who will fearlessly examine the affairs of the bank, and tell us honestly the result of their investigations. If that is done, I think it will be found that this institution is resting on a firm basis; and the worst enemy of New Zealand could not but wish that it is so, because there can be no doubt that if anything went wrong with the Bank of New Zealand it would throw back the progress of this colony by at least twenty-five years. I have much pleasure, therefore, in seconding the motion. The question was then put to the meeting, when the report and balance-sheet were unanimously adopted. Mr. A. G. Horton said : Gentlemen, —I have a motion to propose which I hope will meet with your approval, and it is that the nomination by the board of directors of Messrs. Buckley and Johnston to the two vacancies on the board be confirmed. I think that the appointment of these two gentlemen will be extremely valuable to the Bank of New Zealand, especially in the South. I know myself something of the South and of southern feeling, and I also know that the bank has there a large number of shareholders and a great number of constituents, and that there a very valuable portion of its business is conducted. I know something of Mr. Buckley, and I trust we may yet induce him to become a permanent resident amongst us, and I feel certain that his presence on the board will be valuable in many ways. Mr. Johnston is known to most of us, and I believe the appointment of these two gentlemen will give much satisfaction generally to shareholders, investors, and constituents. Mr. H. Green : I have very great pleasure in seconding the names of these gentlemen as directors. One of the gentlemen I have known for a number of years. I have resided in Wellington for fifteen years altogether, and I have known Mr. Waiter Johnston for many years. I know something of his business character, and I know something of the measure of his attainments as a financial man. Therefore, it is with great pleasure that I support the appointment of these gentlemen to the directorate of the bank. The motion was unanimously adopted.
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The Chairman : Now is the opportunity—supposing that any of the shareholders object to such a committee as that suggested by the directors being appointed. Now is the time to determine who should be put upon such a committee, if it is agreed to appoint it. I shall be very glad to hear any such proposition as has to be made by any of the shareholders. Mr. Justice Gillies : Mr. Chairman and fellow-shareholders, —I think it must be very satisfactory—as has been said by Mr. Ewington—to the shareholders that the directors have suggested that they should take the shareholders into their confidence. There can be no doubt that widespread doubt and uncertainty have prevailed among shareholders, both in New Zealand and elsewhere, in consequence of the sudden fall in the dividend of the bank at the last half-yearly meeting from 12-| per cent, to nothing ; and I think the directors were wise, even although they have been able to declare a dividend on this occasion, in taking the shareholders into their confidence, in order to support them in their action, and in order to reassure the shareholders as to the position of the bank. And I think the action they have taken, in making this recommendation, will recommend itself to the shareholders and to the public as an evidence of their conviction of the soundness of the bank. I beg to propose a committee, such as that suggested by the directors—a committee to confer with the present directors and to investigate and report thoroughly on the state of the bank. Those of you who have the deed of settlement of the bank will observe by the 100 th section of that deed of settlement that there is provision made for this very thing; that a special committee of investigation, or, as it is called, special auditors, may be appointed in order to investigate the affairs of the bank. lam sure the appointment of such a committee will give confidence not only to the shareholders, but also to the outside public; but, in order that that confidence may be given both to the shareholders and to the public, that committee must be one of a character which will leave their report, whatever it is, above suspicion ; and I propose to nominate a committee for your approval of gentlemen who, I think, you will find to be gentlemen of large business capacity, taken from all parts of the colony, who have had no relations hitherto with the management of the bank, who are in no way dependent upon or indebted to the bank, and whose report therefore may be accepted both by the shareholders and the public as thoroughly independent and above suspicion. I have every confidence that the appointment of this committee and their report will give increased confidence in the bank both to the shareholders and to the public ; because if there is anything wrong with the bank, I do not think the directors would have asked us to appoint a committee, in the first place ; in the next place, if there is anything wrong, it is just as well that we should face it. But I have every confidence that the appointment of this committee and the results of their investigations will be to show to the shareholders and to the public the soundness and stability of the bank. I therefore propose the following resolution : " That in accordance with the recommendation of the directors, a committee of the shareholders be appointed to confer with the directors, and to act as special auditors to inquire into and report on the affairs of the company generally, in terms of section 100 of the deed of settlement," and that this committee shall be: Mr. John M'Lean, of Otago—he is very well known throughout the colony, perhaps not so well known in Auckland as in the South, but having known him upwards of thirty years as a shrewd business man, and a man of means—an independent man—l think his name will be a guarantee not only to the southern shareholders, but also in wider circles, as to the entire independence of the committee. There is also Mr. Buckley, of Christchurch, whom you have already approved of as a coming director. He has not been a director or in any way connected with the bank previously; he has been a large and successful merchant, being a member of the firm of Dalgety, Buckley, and Co., and whose business knowledge and capacity, I think, is recognised not only here but in England. There is, then, Mr. Walter Johnston, of Wellington, whom you have also approved of as a director. He is well known throughout the colony, and I think also in London, as a business man of good capacity, and one who has been in no way connected with the bank hitherto, and who is under no obligations to the bank. There is also Captain Colbeck, of Auckland. He, as you know, has been a large business man in England; he is a man of independent means here, and his name will carry weight as having been in no way connected with the directorate of the bank hitherto, and being a capable business man. And I have been asked also to add to this committee the name of the mover. I confess I would prefer if some one else had been placed on this committee instead of myself, because my engagements otherwise will prevent me devoting as much time as probably would be required by this committee. At the same time, at the request of a large number of shareholders, I have consented, if it is your pleasure, to act to the best of my ability on that committee. There are five names which I think will guarantee the independence of the inquiry—the fairness—and the justice of it; and I hope it will tend to strengthen the position of the bank, and to reassure both the shareholders and the English public, as well as the New Zealand public. Gentlemen, I beg to move the resolution which I have read. The motion was seconded by Mr. A. Boardman, and carried without dissent. Mr. G. P. Pierce: There is one question I should like to ask, namely, whether this committee which has been appointed will bring up an interim report, or whether it will not bring up its report till the next half-yearly meeting. I presume if an interim report is to be brought up it will be necessary to adjourn this meeting. The Chairman : That matter will, of course, rest with the committee themselves. I should apprehend that they will find it convenient to make a report in a short time, and not delay it till next half-yearly meeting ; but of course I am not in a position to say what the committee will do, nor to dictate to them anything which they do not think proper or fit. You have appointed the committee now, and it rests entirely with them as to the action they will take, and the report they will make to the shareholders, and when they will make that report; but I may express an opinion that if I were placed under similar circumstances, I should be in favour of making a report before the next half-yearly meeting, and I should advocate its being done. But, as I have said, it is entirely in their discretion to deal with the matter as they think fit,
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Mr. H. Green: Two of the gentlemen who have been appointed special auditors have been elected directors. I would like to ask if that point has been considered. They will thus act in a dual capacity as auditors and also as directors. Mr. Justice Gillies : Permit me to explain why I proposed those two gentlemen to be members of the committee, they being appointed also as directors. The inquiry is into the state of the bank at the present time, the new directors having had nothing whatever to do with the direction of the bank previous to this date. Their duties as directors will be confined to the management of the bank in the future. The duty of the committee which has been appointed is to investigate the status of the bank at the present time, and consequently there can be no objection to the new directors, but it will be rather an advantage, because they will have an opportunity of making an investigation into the whole state of previous affairs at the time they take office. Mr. H. Green : With all due respect to Mr. Justice Gillies, I see an inconsistency in this matter, because these two gentlemen have joined the board, and therefore their- position as auditors is likely to be prejudiced. To my mind it would be more proper if their election as directors did not take place until their duties as special auditors were ended. A cordial vote of thanks to the directors and officers of this bank for their services during the past half-year was adopted. The Chairman : It is my duty, on the part of the directors, to thank you, gentlemen, for this mark of your confidence which you have shown towards us. There have been a great many adverse circumstances to the prosperity of the bank for the last few years, and the directors no doubt have had great difficulties in their way, and a great deal of anxiety, and a good deal of trouble. They have endeavoured during that time to do their best, and now they feel that they are compensated for the trouble they have taken by this expression of your confidence in giving them a vote of thanks. Mr. John Murray, Inspector : Gentlemen, —On behalf of the officers of the bank, I beg to thank you for this renewed expression of your confidence. I need say no more on this occasion, but lam sure that every officer of the bank will do his utmost to deserve the vote. The repcirt and balance-sheet were adopted without discussion, and the nomination of Messrs. Johnston and Buckley was confirmed. Mr. Justice Gillies, of Auckland ; and Messrs. John McLean, of Otago; George Buckley, of Christchurch; Walter W. Johnston, of Wellington; and Captain W. H. Colbeck, of Auckland, were appointed a shareholders' committee to confer with the directors. During the afternoon the committee issued the following circular : " In .case our appointment should create uneasiness in the minds of any shareholders, we think it well to state without delay that caretully compiled and certified returns prepared by the bank staff, supported where necessary by independent valuations, and which we have examined, satisfy us as to the soundness and stability of the bank. It has ample cash resources at command for all probable requirements, and though its earning power is for the present curtailed by the lock-up of much of its funds in assets, which are for the time unproductive, these assets are mainly of a substantial character, and must, with the progress of the colony, soon recover- the value which the prevailing depression has affected. We propose to examine the position more thoroughly, and to give mature consideration to such measures as may seem best calculated to enable the bank to utilise the whole of its resources in the development of its excellent and valuable business. As this will involve cbmmunication with distant points, some time must elapse before we are prepared with our full report and recommendations." The scroll minutes were then read, and the meeting terminated.
A special general meeting of shareholders in the Bank of New Zealand was held at Auckland on 3rd instant. There was a large and representative attendance. Mr. George Buckley (president) occupied the chair. The Chairman said that in order to see that the meeting was properly constituted it would be necessary before business commenced to see that the requisite number of shares were represented by those present. Subsequently, the Chairman said that it had just been reported to him that over 50,000 shares were represented, and they would therefore proceed with the meeting. Mr. Murray, general manager, then read the advertisement convening the meeting. He also read the minutes of the previous meeting. Report op the Special Committee. The unanimous report of the Shareholders' Committee was read by Mr. Justice Gillies, chairman of committee as follows : — " Gentlemen, —When at our last meeting you appointed us a Committee of Investigation into the affairs of the bank, we naturally felt that such an appointment implied a widespread anxiety on the part of the shareholders to have independent assurances as to the bank's real position, an anxiety justified by recent circumstances in its history. " Thanks to the prevision of the inspector, and the efficiency of the bank staff, our work was facilitated, and we were soon able to assure ourselves of the soundness of the bank in respect to its ability to meet all its liabilities —a conviction which further examination confirmed; but we at the same time found the position of things such as must be eminently unsatisfactory to shareholders, and that we were face to face with circumstances which necessitated a somewhat enlarged interpretation of our commission, mature consideration, and comprehensive measures in your interests. Hence unavoidable delay in the presentation of our report and recommendations. " Our examination disclosed a mass of securities, taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover
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for which had become obviously inadequate ; altogether involving losses which the directors had not faced, but which, upon a rigorous examination, we feel convinced will absorb not only the whole of the reserve fund, but also nearly one-third of the paid-up capital of the bank—say £800,000 in all. " The data supplied to us are of a clear and exhaustive character, amply authenticated ; and after a minute and careful examination of the various accounts and assets, we are satisfied that, under good management and judicious realisation of securities, the amount named should cover all losses. " You will naturally and properly expect from us something in elucidation of a state of things so startling, and which we had so little right to expect. "It is obvious to us that for years past the bank has been paying a rate of dividend which ought not to have been paid. Securities have been held and accounts kept going in the vain hope of a recovery of the values placed upon them in what was, in fact, a period of inflation ; and supervening upon this, within the last two or three years, heavy losses in Australia brought matters to the climax which we are now under the unpleasant necessity of facing. "The principal Australian losses have been made in Sydney and Adelaide, where the selection of managers was in each case, to say the least, unfortunate. In Sydney, after a gambling career long known to most people, the manager was convicted of embezzling the bank's funds, and in Adelaide money appears to have been advanced, or rather squandered, in a way which can only be characterised as reckless and disastrous. " North Island, New Zealand.—ln Auckland we regret to find that, though the head office of the bank is there, and its affairs under the immediate eye of the directors, the general character of much of the business carried on has been most objectionable and the policy pursued open to censure. Inflated schemes or proposals coining from or influenced by certain persons appear to have met with ready support by lavish advances to companies and individuals without adequate security or warrantable prospect of advantage, or even safety to the bank. Such advances not only account for more than half the whole loss now disclosed, but the securities held being more or less unproductive, curtail the earning power of the bank pending their realisation. " South Island, New Zealand.—ln the south of New Zealand heavy losses in the past, incurred to a large extent through rash or dishonest management, have been so far previously written off and provided for, but securities, in themselves of a sound enough character, have been held without adequate allowance for fall in values, and the deficiency has now to be recognised. " And, finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure, if not for more specific action. " The connection between the bank and the New Zealand Loan and Mercantile Agency Company, by the chief and other officials of the bank acting for the loan company, and being interested in the working of both, has not, for many reasons, been advantageous to the bank, and should on no account be allowed to continue, as we consider the company has been unduly favoured by the bank. "As regards the responsibility for this state of things, the directors, as your nominees, entrusted with full power over all the officials and affairs of the bank, are no doubt primarly responsible ; and beyond remarking that the real control of the bank's policy appears to have been for many years in the hands of a limited circle, with which the late general manager was intimately associated, we should probably have said no more on this head but for the circumstance that, on application to that gentleman for explanation of certain accounts, he referred us to the inspector, who he alleged had been de facto general manager for five years, i.e., since 1883. We have been at some pains to clear up this question, and we are of opinion that Mr. Murdoch's allegation is not only unsupported by the bank records, but is distinctly negatived by the board minutes and other evidence. We find, further, that up to 1886, when the Holt frauds were brought to light by Mr. Murray, Mr. Murdoch was the only official from the head office of the bank who ever inspected or reported upon the branches in Australia, and that the effective control of that business, as well as of the accounts in New Zealand, which caused the bulk of the losses we now deplore, did not pass to Mr. Murray till the bank's money had been advanced, and the evil virtually done. We think it only due to him and the other senior officers to acknowledge their loyal adherence to the bank and their efforts to conserve your interest under circumstances of very exceptional difficulty. " Having now communicated to you the result of our investigations, we have next to explain the measures which, upon conference with the directors, we think should be adopted to rehabilitate the bank. " Considering how much a bank's prosperity depends on its repute, and on the confidence reposed in it by its shareholders and the public, the necessity for radical changes in the administration and for increase of the capital of our institution became immediately apparent to us. And we may here observe that through deaths and retirements the directorate and chief management have been virtually already reconstituted, and what we have further to say we ask you to regard as the joint statement and recommendation of the directors and ourselves. So much of the capital having been lost, it must necessarily be written off, and the shares reduced from £10 to £7 paid-up, otherwise no dividends could be paid till the amount lost had been replaced out of future profits. This would leave the paid-up capital £700,000, and the reserve liability £1,000,000. We have obtained the advice of London counsel that this writing off can be legally done, and you will be asked to give the requisite authority. We shall, however, ask your authority to apply for statutory confirmation of the alteration, and for power to the directors at their discretion to accept at some future time from shareholders who may be willing to repay the £3 per share written off, thus reinstating their shares at the original paid-up amount, without increase on the reserve liability
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already attaching to the shares. The expediency of increasing the capital is so obvious that we need not occupy your time in discussing that point further than to say that it is not due to financial need of the money, but to the necessity for an increased amount of capital sufficient to insure stability to the bank and confidence to its depositors. "It is proposed to take authority to create 100,000 new shares, and to issue 50,000, which would make the paid-up capital £1,200,000 and the reserve liability £1,500,000; and we are pleased to be able to announce that applications have already been secured in London for 20,000 shares, by firms and persons of the very highest financial standing, which not only insures the success of the operation, but gains for the bank new connections in the best financial circles—connections which the directors value highly, and will do their utmost to strengthen. Applications could have been secured for a larger number, if not, indeed, the whole issue, but it has been deemed better to reserve at least half for the colonies. Probably 25,000 will be offered in London at £1 premium, and 25,000 in the colonies at par. " We may say that our conclusions as to what should be done, and how it should be done, have been arrived at after months of anxious consideration, and after consultation with the London directors of the bank, and with other persons there of high standing; and in seeking your authority for what we propose, we ask you to hear in mind that we are shareholders like yourselves, that your interests are our interests, and that, while the circumstances of the bank require decided and well-considered action, it is not desirable to discuss publicly the details or the various considerations which have led us to the conclusions now laid before you. " We will only add that, notwithsthndmg the character of our report, we see no occasion for despondency about the future of the bank, or to doubt that the shares you hold, or those you may take up, will be a good investment. " Finally, as regards the bank, it should be borne in mind that the ordeal of such an investigation, at a time of depression so extreme, is one which would be trying to any institution. Other banks, now strong and prosperous, have had trying episodes in their history, and the trenchant character of our report may he taken as evidence that we have determined to face and disclose all the facts. The goodwill of the bank's business is of great value. It has in the past divided among shareholders over and above 10-per-cent. dividends—sums which aggregate nearly double the amount of the capital we now find to be lost; and, while desiring to guard against the creation of unduly inflated expectations, we are in a position to say, from the figures of the half-year just closed, that even now the bank's legitimate business is capable of yielding good dividends, notwithstanding the serious drawbacks under which it has of late been working. When time has been given to enable the directors to get rid of unproductive assets, and to develop the bank's legitimate operations, still better results may be confidently expected. On its merits, therefore, the investment is one which, it appears to us, may be expected to yield satisfactory returns, and within a short period to command a considerable premium. " And it is to be observed that the bank's business is by no means confined to New Zealand. In London there is a large and valuable deposit connection and exchange business, from which virtually no losses are ever made. In Australia there is business of a strictly legitimate character, represented by assets and liabilities aggregating over £3,000,000 sterling, and contributing a material proportion of the available profits to which we have alluded. And even as regards New Zealand there is no inherent reason why it should not be as prosperous and wealthy as any other colony of the Australasian group. Is it inferior to any of them in climate, fertility, or natural resources ? In its borrowing proclivities, which have been the subject of so much adverse comment, it is not singular; and in' so far as these have been excessively indulged in, that is but a passing incident in national history, the temporary consequence of which has been too sharply brought home to the people of the colony to permit of the lesson being soon forgotten. " We are, gentlemen, yours faithfully, "Thomas B. Gillies, chairman. " George Buckley. " W. H. Colbeck. " Auckland 3rd October, 1888." " John McLean. The Chairman said that unless any of those present wished to speak to the report he would proceed to move the special resolution. Mr. Ewington suggested that they should be allowed a little time to consider the report. Increase op Capital. Copies of the report having been circulated, The Chairman then moved the following resolution : " That the directors be authorised to increase the capital of the bank by £1,000,000 by the creation of 100,000 further additional shares at £10 each, and that the board of directors be and are hereby empowered to issue, dispose of, and allot 5,000 shares, or so many of them as they see fit, on such terms and conditions and payable at such time, and either with or without premium, as the board of directors may determine." Mr. Cherry asked to have the resolution read again, a request with which the chairman complied. Mr. Reader Wood thought that they were going too fast. They should first consider the report of the committee which had been submitted to them. He asked the ruling of the chairman upon the question of considering the report. Mr. Justice Gillies explained that nothing done to-day would be binding until confirmed at a subsequent meeting. He referred to the report. The proposal to increase the capital would take effect; but the alteration of the management would require confirmatron and more careful consideration. With regard to increasing the capital, instant action was necessary, in order to secure the London connection. Mr. Cherry said he thought it would not be justice to the committee for the shareholders to pass the report over without discussion.
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The Chairman said that other meetings would necessarily be held after this. At a meeting which would be called this day week the report would be further considered. The resolution was then carried. Deed op Settlement. The Chairman moved that the word " should not," in the deed of settlement, be deleted, and the word " may " substituted. He explained that at present under the deed of settlement any new shares must be paid for in one instalment. The proposed alteration was to allow them to be paid for by one or more instalments. Mr. W. Wilson seconded the resolution, which was agreed to without discussion. The Chairman further informed the meeting that a larger number than 50,000 shares were represented in the room. Directors. The Rev. Shirley Baker proposed that Messrs. Buckley, William Henry Colbeck, and Frederick Nelson George, being the only candidates for the vacant seats at the board of directors, be duly elected. Mr. L. D. Nathan seconded the motion. The motion was then adopted. Mr. F. G. Ewington moved a hearty vote of thanks to the committee for their report. Mr. S. Browning seconded the resolution, which was carried unanimously. Mr. Justice Gillies, chairman of committee, acknowledged the vote. It had been suggested that this vote would be taken as an acceptance of the report; but he looked upon the vote rather as an acknowledgment of the committee's labours. He was sure that every member of the committee would feel gratified at receiving the thanks. The principal work had been done by Messrs. Buckley and Colbeck. At the same time, others who had less time to spare had verified the figures. On behalf of the committee, he acknowledged the vote of thanks. Thanks also were due to Mr. Walter Johnston, whose services in London had been of great value. , This concluded the business, and the Chairman announced that there would be a confirmatory meeting held a week hence. - Mr. Murray then read the rough minutes, and, being confirmed, the meeting terminated. A special meeting of the shareholders was held on the 11th instant for the purpose of considering the proposals contained in the report of the committe of investigation submitted to the meeting held on the 4th. The was a long discussion, the past management of the bank being severely criticized. All the resolutions submitted by the directors were agreed to—namely : for altering the deed of settlement, reducing the shares to £7 ; empowering the directors to receive from shareholders willing to pay the same £3 per share, to reinstate their shares to the original amount of £10 per share, and pay dividends on such original amount; authorising the speedy liquidation of several assets and accounts held for realisation, and outside the category of what may be regarded as ordinary and current business ; and agreeing to ask Parliament for statutory confirmation of the resolutions.
Special Meeting to Confirm Resolutions. The special confirmatory meeting of shareholders of the Bank of New Zealand was held in Auckland on the 11th October. There were 108 shareholders present, and proxies were held from 820 others. Mr. George Buckley, president of the board of directors, occupied the chair. The Inspector read the advertisement convening the meeting, and also the minutes of the special meeting held on the 3rd instant, and which were confirmed. The President moved the first resolution as follows: "That the resolution passed at the special general meeting of proprietors held on the third day of October last, altering clause 13 of the deed of settlement, be, and the same is, hereby confirmed." The motion was seconded by Mr C. E. Button and carried. The President : The next resolution is of much more importance. It will commit you to writing off no less than £3 per share of your capital. Upon it I would offer some remarks; and first I would say that the committee consider their work done unless the accuracy of their statements is seriously impugned, which I fear is not likely, because their main conclusion that £3 per share of your capital is lost is only too accurate. It may be necessary that I say more on this head before the meeting terminates. What I have now to say is to be considered rather in the light of explanations from this chair- regarding the motion I shall presently put, than as any fresh deliverance from the committee. It has been suggested that the committee have undervalued the securities in favour of the future at the expense of the old shareholders; and it has, I believe, been suggested, on the other hand, that they have not cut deep enough. Such conflicting suggestions neutralise each other. The committee did not, in fact, themselves value at all in the first instance. They obtained independent valuations, and they carefully reviewed these, and they have certified that, in their opinion, they may be accepted with confidence, with the result already stated. There is accordingly really no alternative but to write off the lost capital, because otherwise no dividends could be paid for years, and it is, I believe, the intention of the board to declare a dividend at the half-yearly meeting to be held on the 22nd instant. The chairman then moved the second resolution, as follows: " That £3 per share of the present paid-up capital of the bank be, and the same is, hereby cancelled, such capital having been lost or being unrepresented by the available assets, and that henceforth dividends shall be paid on such shares as representing £7 each, instead of £10 each, the original amount thereof. But such reduction shall not interfere with or in any way alter the liability of shareholders to contribute a further sum of £10 as provided by the bank's Act and deed of settlement in the event of the assets of the corporation being insufficient to meet its engagements.
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Mr. C. E. Button seconded the resolution. A discussion was commenced by Mr. James Dingle, of Taranaki. Mr. F. Cherry followed, asking for more information than the shareholders' committee had given in their report. He moved the following amendment: "That before agreeing to the proposal to write off £3 per share (equalling 46-1 per cent, of the actual cash paid into the bank by the shareholders), it is desirable that further and fuller information should be supplied to the shareholders." Mr. Cherry went on to speak in support of this amendment, and said that for shares that were only nominally worth £10, they had paid a premium of £3 per share, so that they had really paid £13 on each of these shares. The average payment, therefore, cost them £13 per share, and yet they were asked to wipe out £3 off the £10, so that out of the £13 they would only stand at £7. He went on : That new shareholders are to be invited to come in at par is, I think, monstrous. Ido not think the committee have taken that matter into consideration. The old shareholders of the bank had a capital chance from the beginning, and made money ; if it did not make money largely then it would have been most absurdly badly managed. Everyone was making money then; everything was going on fairly in the colony, and the bank would have been making money up to this day if it had directors of sound and decent judgment; we would have been prosperous to this day. If the directors went in for lending money recklessly at the prices we saw two years ago, or anything near that, they will be spending money recklessly, and I think I know something of the matter from my connection with another local institution. Mr. Cherry went on to remark that they had been assured again and again from the directors' table that the business of the bank was perfectly safe, and yet they had lost £950,000 in two years. The directors had achieved more than anybody else on this side of the line. There was not a ring on this side of the line that had managed to lose a million of money as they had done. He considered that the directors ought to have laid before the meeting a balance-sheet showing exactly the condition in which things were. Mr. Cherry's amendment was seconded by Mr. C. Wallis. Mr. F. G. Ewington then put the following questions to the chairman on behalf of a lady : (1.) »Was it a necessary part of the arrangement with the English capitalists that the old shareholders should submit to a loss of £3 per share ? She thinks it very hard that they (the new shareholders) should have this advantage. (2.) If the securities on which the alleged loss is made recoups the loss, will the old shareholders have their £3, or any part of it, reinstated out of the realisation of these securities ? The President: In reference to the first question, I may say at once that in making the arrangements at Home these parties were made aware of the position of the bank, just as you have been made aware of it—in fact, the same information was placed before them as you have had in this report. We could not otherwise ask them to join in taking these shares. They have been made aware of the fact that we would write off the whole of the reserve fund, and the whole of the £300,000 capital. This resolution was made so that the original shareholders should have the right to pay up at some future time the £3 per share. With reference to the second question, I will say, in regard to resolution No. 4, that it is proposed to place all these assets and securities to one account. If there is a surplus on this account, the old shareholders and the new shareholders will share alike. If there is any loss, the old and new shareholders will have to bear this loss. Mr. J. M. Clark said he sympathized with Mr. Cherry's amendment, but thought, after the careful Teport of the committee, they should accept the situation. It would not do to give too explicit a balance-sheet, as such an amount of publicity would be given that it would be an injustice to customers of the bank. At the same time, there were things in the report on which further information should have been given. The Committee had gone too far, or not far enough. As to the loss of £160,000 through the directors, those concerned should have been specified, as at present the imputation rested upon all. The report said that certain transactions had come under their notice calling for the gravest censure, if not for more specific action. Shareholders should have been informed whether these were criminal charges, or charges on which a civil action could be founded. Mr. Clark defended the late manager in Sydney, Holt, stating that by his popularity he had increased the business in a way no other manager had done, and he believed the amount lost through him was small compared with the profitable business he had gathered. Mr. Reader Wood thought it would have been wiser to have moved a resolution to adopt the committee's report, as that would have given an opportunity for moving amendments as to details. Though agreeing with the conclusions of the committee, he thought there were portions of it which were neither clear nor business-like. He then dealt with various paragraphs of the report, criticizing them in detail. While the directors were held to be responsible for what had taken place, no meaning was attached to the word "responsible," as they found a majority of the committee turned into directors, sitting alongside three of the directors whose conduct was impugned, and who were said to be deserving of censure. Then as to the loss of £160,000 made by directors, which, it was said, called for censure, "if not more specific action." If words meant anything, that meant that legal responsibility had been incurred. One of the late directors, Dr. Campbell, had thrown down a challenge in regard to this, and they should take it up. If the committee felt justified in going so far, they should go further in the interests of justice. With regard to the paragraph in the report of the shareholders' committee, which refers to the connection between the Bank of New Zealand and the New Zealand Loan and Mercantile Agency Company, Mr. Wood said : "I think justice demands that they should give the reasons, and if this statement is not supported by facts, I think we have a perfect right to dismiss it as absolutely unnecessary. I myself am a shareholder in the Loan Company, and I have taken some little pains and trouble to ascertain what the real meaning of this is, and I will state some facts which will perhaps lead the shareholders to believe that there is some considerable exaggeration in the statement made in this paragraph if, in point of fact, it is not altogether unfounded. Sir, the bank has never lost a single sixpence by its connection with the Loan Company. The Loan Company has never received any undue favour of
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any kind from the bank in its business with the bank. It has been placed by the bank, I believe, upon precisely the same terms as large business firms in this place, such as Nathan and Co., and others of that kind. It has had no advantage over them ; whilst, on the other hand, at the close of the last half-year the Loan Company's account was in credit. It is quite true that some years ago the Loan Company was under considerable advances to the bank, that the bank had lent its money to the Loan Company upon its credit as a business company with a large amount of capital uncalled up, and on valuable securities deposited with the bank as securities against the overdraft. Well, Sir, that is banking; and if every transaction that the bank has had with its customers had turned out as well for the bank as its transactions with the Loan Company, we should not be here to-day mourning over the loss of a million of money ; but, on the other hand, we should be anticipating in a few days to come large and handsome dividends; and it seems to me to be a most extraordinary and inexplicable thing that the only customer of the bank mentioned in this report should be the Loan Company, by which the bank has never lost anything at all, whilst the names of gentlemen who have had the squandering of the bank's money to any imaginable extent, are carefully withheld." Mr. Wood urged Mr. Cherry to withdraw his amendment, in the hope that the directors would give information shareholders had a right to expect. The Chairman said a report dealing with details would be too long, and therefore only totals were given. The loss made in Auckland was £500,000, very little loss having been made in any other part of the Island. In the South Island the loss had been about £250,000, and the other £250,000 was about equally divided between Adelaide and Sydney. If the old directors had not sufficient respect to resign, they could not remove them. He contended that the connection with the Loan Company had been a curse to the bank. Managers of the bank had been made use of in every possible way. Holt, the manager in Sydney, who had received a cheque for £10,000 as manager for the Loan Company, had replaced it out of the bank's funds, and was able to deceive the officials, who did not know whether he was acting for the Loan Company or for the bank. The late general manager had turned round and said the bank must pay this £10,000, and they had to pay it. Mr. Murdoch, the late general manager, was brought to his feet by this statement, and defended the action he had taken. He also justified the formation and connection with the Loan Company, which, he said, had been of great service to the bank in the past. Mr. Cherry's amendment was put and negatived by a large majority. The Chairman explained that the committee considered their task completed, and they declined to open a controversy unless their statements were challenged seriously. The matter now rested with the board of directors to take such further action in regard to the past as they thought proper. The committee did not say that directors took the shareholders' money, or that the others permitted it to be advanced in any corrupt manner, and they declined to puhlish names. Having said so much on behalf of the committee, Mr. Buckley said he would make a few remarks on his own account, and would ta-ke notice of a letter published that morning by Dr. Campbell. He had not had time to prepare a reply, but had made a few notes of accounts by which losses had been made. Dr. Campbell asked, " Were the securities insufficient at the value of the day " ? A minute dated 2nd November, 1884, said : " Reported to the board. After consultation with the majority of the board the following reply had been sent: ' Patetere Company must not be a failure at the last moment. Let Rich make necessary subscriptions, taking his guarantee irrespective of amount guaranteed here, which lam endeavouring to arrange.'" "At this meeting," continued Mr. Buckley, " there were present Messrs. Browning, Firth, Owen, Clark, Williamson, and Campbell. What was the security ? Why, the shares your money was advanced to pay for. How was this company floated in London ? Simply by your directors, or, rather, the majority whom the general manager consulted, advancing your money to a lot of dummies. Tour money then went into the hands of other people ; big commissions were paid ; lots of money spent. Once into it, the bank got drawn in bit by bit. At the last meeting we had to advance more money to pay a call—some thousands—or* else loose everything. As it is, a very big loss of your money has come out of that company floating. Ido not know whether it is what Dr. Campbell calls proper business for a bank. I think it was a discreditable piece of business altogether. If I had more time I might have given you other minutes that would have interested you, but it is needless. I say that a lot of your money has been lost through land speculation. If the ridiculously high prices had continued certain parties would have made money and been reckoned very smart. Naturally they did not continue, and your money is lost." Mr. Buckley then explained what he meant by " specific action." They found one of the loss accounts in the name of James Williamson overdrawn on shares account £16,170. Inquiry showed two or three years ago it was resolved to transfer some shares belonging to certain persons to the London register, and to make a good parcel the bank bought some of its own shares, which was illegal. The market was fed, but the appetite was not good, and they went slowly. He remembered about that time last year or later- reassuring telegrams were published in London, one of which said, "With any revival have no reason to fear trenching heavily upon the reserve fund." When he reached the colony and found how things were, he thought this rather queer, but he thought it more so when he found that the shares being placed on the London market belonged to the New Zealand Loan and Mercantile Company, James Williamson, J. C. Firth,.and D. L. Murdoch. He was sure those who bought these shares would not think "specific action" out of place. These shares and some others, including shares the bank bought, were supposed to be sold pro rata, and in fact some of the parties, including the Loan and Mercantile Company, got their share of the proceeds. But for some reason the late Mr. Williamson claimed the first slice, —a claim difficult to allow, because others had already had their share. However, he ultimately got it at the expense of the shareholders, because he got the money at the rate of £12 per share ; the shares now belonged to the bank. This was the transaction which Dr. Campbell spoke about as " from its incention in the bank's interest." 2—L 6.
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Upon the last matter referred to by the president, the following discussion arose : —■ Mr. Murdoch : Mr. Chairman, may I be allowed a few words with reference to your remarks. Very grave charges are levelled at me, amongst others, in connection with certain shares of the bank, and I have very little hesitation in giving a frank account of what that transaction was. It was resolved by the board that 3,000 shares should be added to the register in London, and it was determined that any shareholders within the reach of the executive The President : The limited circle ! Mr. Murdock : We will call it the " limited circle " —should have the privilege of transferring their shares to London to make up those 3,000 shares. Was it for the advantage of that " limited circle"? The arrangement was that those who put their shares in should get the local market price ; the difference between the local market price and the price in London was at that time £7. Whose was to be the £7 ? The " limited circle's " ? No, Sir ! the bank's. The President: The bank did not get it. Mr. Murdoch : Did not get it! Was the limited circle blamable for that? The bank did get a very considerable portion of it. It got all the profit made on that sale of shares. Unfortunately, circumstances have arisen which have depressed the price of shares, and turned what should have been a very large profit into a loss. But lam not aware that there is anything in this transaction that either the directors or myself need blush at. I had 100 shares in this transaction. It was undertaken three years ago, and how many shares have I sold ? Seven ! Was it with any desire of clearing out of the bank ? I had other shares on the register here. Have I attempted to sell them ? They remain as they were three years ago. The President: I made no reference to your shares. It was to the transfer generally; but I will go a little further and say that it may yet become a question for a Court of law, so that the less said about it the better. I think it was an illegal act, and therefore the shareholders are bound to be held harmless. Therefore the directors will have to proceed against the directors at that time, and it may become an action in a Court of law, so that the less said about it the better. Mr. Murdoch: I think your statement, prior to the one just made, is of a character dealing in inuendo, .and leaving a sting that is meant to be very mischievous, and damage the credit of those you point to. And you think it right that no further notice should be taken by those connected with it, and that they should lie under the imputation made ? The President: I say that immediate action will have to be taken against the parties who are responsible. Mr. Murdoch: Dr. Campbell, in his letter this morning, pointed specially to the fact that the transaction was undertaken in the interest of the bank, and that the bank was to have the whole of the profit. That cannot be controverted. Again, I assure shareholders that as far as those who contributed the shares were concerned, there was no advantage given. They could have got the same price they got out of this transaction if they had put their shares on the local market. The bank expected to make a large profit, but, unfortunately, the thing having turned out a misfortune instead of a success, the parties are to be held up to public reprobation. Mr. Justice Gillies: Permit me to state that those shares were to be transferred from this register to the Home register in order to keep up the share-value here, and that can be proved by the minute of the directors resolving to send them Home, stating that there was a large number of shares coming on the market here and depreciating the market. It was not in the bank's interest. Mr. Murdoch : I still insist that it was in the interest of the bank. It surely cannot be held that if there were large numbers of shares to be placed in the market, and so shares became depreciated, that this would be in the interests of the bank. Mr. Justice Gillies : It was not fair to those who were to buy, bolstering up the market. Mr. Murdoch : It was no bolstering up on the part of those who contributed the shares. Mr. Justice Gillies : I am not speaking of them, but of the action of the board. Mr. Murdoch: The shares were transmitted to London, because London offered a better market than the local market, and the profit attaching to it was to come to the bank. The second resolution was agreed to with only one dissentient. Resolution No. 3 was agreed to as follows : " 3. That the directors, at their option, be empowered to receive, from shareholders willing to pay the same, £3 per share to reinstate their shares to the original amount of £10 per share, and on all shares so reinstated to pay dividends on the original amount of such shares. Provided that such payment to reinstate shares shall not render the shareholder liable to pay any further or larger amount than he would have been liable for if the shares had remained at £10 each as originally created." The President: As to the fourth resolution, I would explain that the directors propose to put all accounts and assets which, being of a doubtful or undesirable character, ought to be realised as soon as judiciously may be, into a separate department, under the more immediate supervision of the directors. Some of these accounts may turn out worse than is expected, others better; and if we took these surpluses or deficiences as they occurred into profit and loss account of each halfyear, it would occasion fluctuations misleading and perhaps injurious. It is expedient, therefore, that we seek your authority so far to alter or suspend the operation of clause 99 of the deed of settlement, and I move accordingly. Mr. Wallis said he understood that the bank was going extensively into farming operations, and he was afraid if that were so the loss would be excessive. In case of any loss, would that be met by a further reduction of the value of the shares ? The President: We hope, if things go on satisfactorily, there will be no loss at the end of the time. With regard to farming operations, the bank has had to take certain properties, but we do not wish to hold some properties any longer than we can help. Many properties might be sold now at the sums advanced on them. As to holding these properties, I can assure you it is no wish of the board of directors to hold them one moment longer than they can help, but we do not wish to sacrifice them. They will be got rid of, and they are being got rid of. During the last six
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months properties have been sold even above the valuations, and offers have been made for others at the valuations. They will be disposed of as speedily as possible. Mr. F. G. Ewington seconded the motion. The fourth resolution was then put and carried, as follows: " That the several assets and accounts held for realisation, and outside the category of what may be regarded as ordinary and current business, be liquidated by the directors as speedily as may be, having regard to advantageous realisation thereof, and that in the meantime such assets be transferred to,.and held and treated in globo, in a separate liquidation account, and so as that surplus in realising any one asset may be set against deficiency in realising any other without passing such surpluses or deficiencies respectively through the ordinary profit and loss account." The President: The fifth resolution deals with the formation of a reserve fund. We think it better that shareholders' hands should be free in this matter, so that, if they think fit, surplus profits may be simply carried forward as the half-yearly rest, and this is the effect of the alteration we propose. The clause as it stands now makes it compulsory to devote part of the profits every half-year to the reserve fund. We wish to do away with that, but it will still be open to the shareholders and directors to propose that a certain amount be placed to the reserve fund. Mr. C. E. Button seconded the resolution, which was put and carried as follows: "That the words beginning ' And if,' in clause 102 of the deed of settlement, to the end of the clause be, and the same are, hereby deleted." The sixth and seventh resolutions were then adopted as follows : " That, in disposing of the new shares created and authorised to be issued by the resolution of the special general meeting of proprietors, held on the third day of October last, the board of directors may make it one of the conditions that payment for such new shares may be made by such instalments as the board of directors may think fit." "That the directors are hereby requested and empowered to apply to Parliament for statutory confirmation of the resolutions passed at this meeting." In regard to the seventh resolution, the President stated that it was formal, and had reference chiefly to the power conferred under the third resolution to accept £3 per share on the old shares, and which required legislative sanction. ' The President announced that there would have to be another meeting to confirm these resolutions, because the half-yearly meeting was to be held on the 22nd instant, and it was necessary that all these matters should be cleared up before that date, so that at the half-yearly meeting they should be able to start afresh.
Half-yearly Meeting. The proprietors of the Bank of New Zealand held their half-yearly meeting at Auckland on the 22nd October; Mr. George Buckley, president of the board of directors, in the chair. There was a large attendance. The Inspector read the advertisement convening the meeting, and he also read the minutes of the special confirmatory meeting held on 11th October. The report and balance-sheet, as follow, were taken as read : — Fifty-fourth report to the directors of the Bank of New Zealand, to the half-yearly general meeting of the proprietors, held at Auckland, on 22nd October, 1888:— The result of the half-year's operations is as follows : Net profit for the half-year ending 29th September, 1888, £32,607 2s. 5d.; to which has to be added, balance from half-year ended 31st March, 1888, £25,861 Bs. 3d.; making a total available of £58,468 10s. Bd., which it is proposed to appropriate as follows : To payment of a dividend at the rate of 7 per cent, per annum, £24,500; balance carried forward, £33,968 10s. Bd.: £58,468 10s. Bd. Aggregate Balance-sheet at 29th September, 1888. (Including London office at 31st July, 1888.) Dr. Liabilities. £ s. d. £ s. d. Capital paid up .. .. .. .. .. .. 1,000,000 0 0 Less amount written off to bad and doubtful debt account .. 300,000 0 0 700,000 0 0 Notes in circulation .. .. .. .. .. .. .. 479,510 0 0 Bills payable in circulation .. .. .. .. .. .. 1,262,647 1 8 Deposits and other liabilities .. .. .. .. .. .. 10,719,653 18 3 Balance of profit and loss .. .. .. .. .. .. 58,468 10 8 £13,220,279 10 7 Or. Assets. £ s. d. Coin and cash balance at banker's.. .. .. .. .. .. 2,303,213 5 6 Money on short call in London .. .. .. .. .. .. 461,228 17 9 Bullion on hand and in transit .. .. .. .. .. .. 353,093 15 11 Government securities .. .. .. .. .. .. .. 19,377 9 0 Bills receivable and securities in London .. .. .. .. .. 640,593 4 11 Bills discounted, and other debts due to the bank .. .. .. .. 9,069,390 1 2 Landed property, bank premises, &o. .. .. .. .. .. 373,382 16 4 £13,220,279 10 7 Profit and Loss Account. £ s. d. To dividend on 100,000 shares of £7 each at rate of 7 per cent, per annum .. 24,500 0 0 Balance carried forward .. .. .. .. .. .. .. 33,968 10 8 £58,468 10 8 By balance from half year ending 31st March, 1888 .. .. .. 25,861 8 3 By net profit for half-year ending 29th September, 1888 .. .. .. 32,607 2 5 £58,468 10 8
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Reserve Fund. £ s. d. To amount transferred to Bad and Doubtful Debt Account .. .. .. 500,000 0 0 By balance from last half-year .. .. .. .. .. .. 500,000 o^o The President, in moving the adoption of the report and balance-sheet, said : On this occasion we present to you our half-yearly report under exceptional circumstances. The bank has undergone a trying ordeal; and while the result, in certain aspects, has been reassuring and even encouraging, the conditions have been in some measure paralysing to our ordinary operations, and therefore unfavourable to the earning of profit. You will, no doubt, scan the figures of the balance-sheet with more than ordinary interest, to see for yourselves how the bank has fared under the experience of the last twelve months ; and I now, without further preface, review those figures by way of elucidation. An all-important feature in a bank's balance-sheet is the cash resources it is shown to command. In this respect I think you will agree that the position is strong, and therefore satisfactory. Our coin in the colonies and cash balances with London bankers amount to £2,300,000, and money at short call in London £460,000—in all, £2,760,000; besides £350,000 of bullion in hand or in transit. Such figures speak for themselves. I will only add that, as compared with last half-year, there is an increase in cash resources of £500,000. In deposits there is a decrease of £300,000, which, by itself, is no doubt a considerable sum, hut upon a total of some £9,000,000 is insignificant; and, in view of the circumstances in which the bank has been placed, such a result is, I venture to say, gratifying and even surprising. Bills receivable are less by £800,000, which is a fluctuation due to the less active half of the year, when there are few or no wool-bills current. Ordinary advances are less by £150,000 —a matter rather of choice than of necessity. The larger apparent decrease shown in the balance-sheet is caused by the amount written off. On the whole, we have been doing less business, and keeping a larger cash reserve—a policy imposed on us by prudent regard to existing conditions; but which, as I have already said, necessarily curtails our earning-power, otherwise lessened by lowered value of money and less active trade, of which most of us are, in one form or another, personally cognisant. The net profits for the half-year amount, as you see, to £32,607 2s. 5d., out of which we propose to declare a dividend at the rate of 7 per cent, per annum —absorbing £24,500, and leaving £8,107 2s. sd. to be added to the amount carried forward, which will then stand at £33,968 10s. Bd. The sum available would have admitted of a higher dividend, but it must be borne in mind that we are yet in the convalescent stage, and do well to go soberly. This outcome of so large an aggregate of business as our balance-sheet shows would be discouraging if our assets were all available for earning profit, which, unfortunately, they are not. If they were we should have much more satisfactory results to set before you; and we hope ere long to attain that gratifying position, because it will be our immediate care to realise these unproductive assets as speedily as it may be done with advantage, and make the proceeds available to the very material increase of your returns. We believe we shall be assisted in this by better times and brisker trade, of which there are already palpable signs. You will have observed that settlement on the public lands has of late been more active than for many years past. There is a noticeably-increasing inquiry for property, while sales have taken place at prices something more than encouraging. From any such improvement in the general state of the colony you may hope to profit in a double sense ; more of your resources will be set free for legitimate employment, and employment for them will be more remunerative. I need hardly add that we shall not neglect to see what can be done to increase net profits by judicious retrenchment and concentration. You are aware that it is proposed to increase the capital of the bank, and you have been fully informed of the reasons for this step. We are glad to be able to say that we have satisfactory assurances that the capital will be readily taken up. Sir F. Whitaker, in seconding the motion, called attention to two points in connection with the accounts. He said : You will find in the Profit and Loss Account that the profits made during the half-year ended 29th September, 1888, amounted to £32,607. This would have enabled the directors to have declared a larger dividend than that which they have ; but upon the whole I think you will agree with me that it is far more prudent to have a small dividend and carry over a considerable sum to the next half-year, which account will then stand at £33,968. When you come to look also at the statement of liabilities and assets you will see at once a remarkable fact in this, that the coin and cash balances at banker's, money at short call, bullion, and Government securities—all of these available assets at hand at any time they may be required. These amount to a very large sum, and must place the bank in a strong position. Mr. Reader Wood, after referring to the losses made by the bank, proceeded to say : I think, Sir, for many reasons, it is unfortunate that we should know nothing more of this loss than the large round sum that represents it; that the directors should have declined to give any details of this loss, or to tell the shareholders how it has come about. I think that is the more unfortunate because in the few details we have had they do not fairly represent the facts. There is one detail that the president gave us the other day which requires further examination. I refer to that part of his speech in which he said: "We found in the accounts one named James Williamson, share account overdrawn, £16,170 —one of the loss accounts." Now, I should fancy that it must have occurred to almost everybody who has read these words : How could it come about that there could be a loss account of £16,170 through the late Mr. James Williamson? for surely if his account is overdrawn to that amount his estate is liable, and all that the directors have to do is to come down upon that estate. Yet it has been telegraphed throughout the whole of the colony that there has been a loss account through the late Mr. James Williamson's share transactions of £16,170 to the bank ; and yet it will be found upon examination into this matter, if anybody takes the trouble to examine into it—and I say it ought to be inquired into still further—that Mr. James Williamson's share account never was overdrawn £16,170 ; that he never had £16,170 of the bank's money advanced to him for any share transaction whatever, and that .the bank has not lost one single sixpence by the late Mr.
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James Williamson, but on the other hand the bank has actually had £16,170 of Mr. James Williamson's money, which Mr. James Williamson found it very difficult indeed to get out of the bank. I simply mention this because I was sorry to see that the good name of James Williamson should have been, I may say, perhaps, traduced, in the manner it has been—a gentleman who has occupied a conspicuous position in this colony, who has been from its very inception one of the leading lights of this bank, and who unfortunately is now dead and cannot speak for himself. Mr. R. Rose, as the business representative of Mr. James Williamson, stated that the representatives of Mr. Williamson' were quite prepared to meet in Court any action for the recovery of this money, and to produce proofs of the figures Mr. Wood had referred to. Mr. Law, late manager of the Adelaide branch of the bank, said that he had come from Adelaide to openly deny the charge that he had recklessly squandered the shareholders' money. He then proceeded as follows: There is a clause in the deed of settlement which makes it absolutely necessary that the directors should lay on the table a statement of the losses. I now ask that that should be done. Clause 118 says : " That if at any time hereafter it shall appear to the board of directors that losses have been sustained equal in amount to one-half of the then subscribed capital of the company it shall be incumbent on the board of directors to submit a statement of such losses as soon as possible to a special general meeting of the proprietors, and it shall thereupon be referred to the auditors for the time being, and such other special auditors as such general meeting may appoint to assess the said losses, and to examine the whole state of the company's affairs, and to report thereon to a subsequent general meeting, to be convened for the purpose of receiving and considering such report; and if, at such subsequent meeting, the said auditors shall confirm the estimate of loss previously submitted by the board of directors, the business of the company shall, from and after the date of such subsequent general meeting, be confined to the winding-up of its affairs and converting into money all its funds and property, and distributing the same." Now, what I say is that we have had no statement of the losses of this £800,000, and I say that, according to the deed of settlement, it is incumbent upon the directors to furnish such a statement. A discussion here ensued between Mr. Law, the president, and Mr. Justice Gillies on the meaning of the clause in question, the two latter gentlemen holding that the clause did not apply to existing circumstances, as, after writing off the reserve fund, less than one-half of the subscribed capital had been lost. Regarding Mr. Law's connection with the bank, the president said :It is recorded in the minute-books of the board of directors that, upon the representation of the general manager, Mr. Law was called upon to resign owing to his reckless and incompetent management at Adelaide. The committee took some time to go into the Adelaide question ; and we came to the conclusion stated in our report, that in Adelaide money appears to have been advanced—or, rather, squandered—in a way that can only be characterized as reckless and disastrous. Mr. Law rejoined that as to anything that can be said or done in relation to his management at Adelaide at the time he was asked to send in his resignation, he was perfectly prepared to go into that in the fullest, freest, and most determined and elaborate way before a disinterested tribunal; and if he could not get what he wanted in any other way, he would have it out in a Court of law. He thought that the directors were bound to give the statement of losses which had been asked for by Mr. Wood and the attorney of the late Mr. Williamson. Sir F. Whitaker : I really wish to call your attention to what is now before the meeting. We are not now sitting to investigate the affairs of the Adelaide branch of the bank. Whether Mr. Law's conduct has been good, bad, or indifferent, I am quite unaware, further than is stated in the report of the committee which you have appointed; but, looking at the very erroneous way in which Mr. Law reads this 118 th clause, I do not wonder at his having made a good many mistakes elsewhere. The clause reads : " That if at any time hereafter it shall appear to the board of directors that losses have been sustained equal in amount to one-half of the then subscribed capital of the company " —that is, a million of money; the loss is said to have been £700,000 ; therefore, it does not come within that clause at all. What was done by the directors? The directors were not aware that such losses had occurred, and upon the closest investigation which had taken place it was quite clear that such a loss had not taken place ; and therefore it was impossible for the committee to act upon that clause. What the directors felt was this : that there had been large losses, and also that there was a feeling of want of confidence in the bank at the time, and the course they took was to suggest to the shareholders that they should appoint a committee to make a complete and fair investigation, and the shareholders took that view also, and appointed a committee. That committee's report is before you ; you have acted upon it, and the whole matter is so far concluded. It is impossible to go back upon that; the clause referred to has never been acted upon. It is perfectly plain and clear that a loss of one-half or even one-third of the subscribed capital has not taken place. I would refer you to the balance-sheet of to-day. You will find there that what has. taken place is this : That there is a loss of £300,000, as stated by the committee, but you will find that the bank premises and the landed property are worth £373,000, so that it may be a question in point of fact whether any loss of capital has taken place at all; in fact, it may turn out the opposite if the realisation of the assets proceeds favourably. , Mr. Law again insisted that the directors should lay a statement of losses before the proprietors, and moved the following resolution : " That the report, as read, be not adopted until a full and complete list of all the losses of the bank has been laid before the shareholders in accordance with clause 118 of the deed of settlement." Mr. Cherry seconded the motion, expressing his opinion that the losses had exceeded one-half of the capital. He then referred to the subject of audit in the following terms: It appears to me that the gentlemen who have acted as auditors were paid that £50 each simply as a gift. lam aware that the question was raised some years ago as to the audit. A necessary qualification of an auditor is that he should hold two hundred shares. I know a number of Auckland shareholders, but I do not know one who owns two hundred shares, therefore I could not propose a gentleman
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for that office. No shareholder outside the select circle of the bank knows who holds that number. The auditing itself has been a farce, and the election to the office has simply been handed about from one to another. I would like to ask also whether there has been any system of passing shares from one person to another to qualify for directors or auditors ? As things have turned out, it is quite possible that it has been done. There are but few amongst us who hold the qualification for these offices. Of course it was kept in a very small ring. I have quoted figures, and unless they are disputed—and I do not think they will be —to show that £993,500 has been lost since this time two years. Mr. E. Hesketh : I should not have risen if it had not been for what has fallen from Mr. Rose and Mr. Reader Wood, and I do not rise for a moment to advocate the laying before the meeting of any statement of losses, but I rise with very great diffidence to venture what I think to be the meaning of this 118 th clause. It appears to me that the object and meaning of that clause is this : That no matter whether there is a reserve fund or not, if there is a loss equal in amount to £500,000 —if that loss has been made —then a statement of the particulars of that shall be laid before a meeting of the shareholders. In other words, to make myself plain, supposing there is a reserve fund of a million of money, and there are losses amounting, say, to the extent of £600,000. There is a reserve fund, it is true, quite sufficient to pay the whole of the amount lost; but if so large a loss has been made, I do with very great diffidence venture the view that this clause was intended to mean that a statement shall be laid before the shareholders, no matter whether there is a large reserve fund out of which it can be paid or not; and for this simple reason the 118 th clause does not say, "Ifhalf the subscribed capital shall be lost," but it says if "Losses have been sustained equal in amount to one-half of the then subscribed capital." That is what it says ; and then we go a little further in that clause and we find that at a subsequent meeting to be held there is power given to write off the losses from the capital. But the opening of the clause is, "If losses have been sustained equal in amount," —it does not say anything about the reserve fund, —then a statement of those losses must be laid before the meeting. With very great diffidence, Ido venture that view as the proper reading of the clause. The President: With respect to the question which has been raised as to the 118 th clause, I think what has been said shows that it is a matter of opinion as to how it is to be read. When the Attorney-General and others who are learned in law have come to quote a different opinion upon the point, I do not think it is for us to decide it. I have read the clause very carefully, and I do not think it conveys the meaning which has just been suggested. If that were so we should have to begin everything de novo. I feel more the effect of the clause is that such and such shall be done if the loss is as stated after deducting the reserve fund and profits. If you do not deduct that portion of the profits how can you come to the loss, because the reserve fund is merely a reserve of profits which has not been paid away in dividends. However, I do not think it is for the shareholders to decide such a question as this. It is a question, perhaps, for the solicitor of the bank. I am quite sure clause 118 was never intended to act in the way just suggested. I grant if the losses had been one-half after taking off the reserve fund, that would have been another matter; but it is not one-half; it is less than one-third of the subscribed capital. With reference to what has been said as to the auditors, I believe that certain resolutions are to be brought forward on that subject, and perhaps when those resolutions are proposed would be the proper time to deal with that question. With reference to previous balance-sheets, as to whether they are right or not, there they are, and they have been certified to by certain persons, and they are responsible for that. It is no business of mine, at all events. As to the losses, I stated at the meeting held on the 12th instant, that the losses now reported upon and the losses previously written off did amount to about a million, and I gave the details where the losses occurred. Mr. Law's amendment was then put, and negatived. The President: I will now briefly reply to the remarks of Mr. Reader Wood. He has complained to-day, as he did previously, that we declined to give any details. I explained that we gave all the details we considered necessary, and all the details we could give. Does Mr. Wood expect us to give every item of the list—A, B, C, and so on, alphabetically ? Do I understand that is what he wishes done ? A Shareholder: Publish the names of those by whom the loss has been made. The President: They cannot do that. Under clause 106 they are precluded from doing it. With respect to the late Mr. James Williamson, I am very sorry that any remarks I made should be taken in the way they appear to have been taken. I knew Mr. Williamson very well, and should be very sorry to say anything that reflected on him. We simply referred to an account we found in the bank's books. What I said at the previous meeting was this :" We found in the accounts one named James Williamson, share account, overdrawn £16,170 —one of the loss accounts." And I afterwards explained that matter, and said as to this particular share account I should not have taken the least notice of it if Dr. Campbell had not referred to it in a letter, because he must have known that it was illegal, and was prohibited by the Bank Act, and must have come out some time or other, so that the least said about it the better. I also said: " But this is not all. These shares and some others, including the shares the bank bought, were supposed to be sold pro rata, and, in fact, some of the parties, including the Loan and Mercantile Company, got their share of the proceeds, but for some reason the late Mr. Williamson claimed the first slice—a claim difficult to allow, because others already had their share. However, he ultimately got it at your expense, because he got the money at the rate of about £21 per share, and now you have the shares." Was that an explanation of the account ? Mr. Reader Wood : Those were Mr. Williamson's own shares sold in London by Mr. Thomas Russell, and on Mr. Williamson's own account. The loss is through the bank's blunder, and not through Mr. Williamson. The bank never bought or sold any of Mr. Williamson's shares. There is where the mistake is.
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The President: I have already explained that 3,000 shares were sent Home, part of the Williamson's, and they were to be sold pro rata. Mr. Reader Wood : Then, why did not Mr. Williamson receive his pro rata quota ? The President: I suppose he would have received it. Mr. Reader Wood : He was never offered it. The President: The matter in dispute between Mr. Williamson and the bank was referred to the board, and there is a minute in the board's books that it was referred to them, but they declined to give any decision; but the money was afterwards paid out of the bank, and that is why it appears in this instance. The only authority we could find on which this was paid was the authority of the general manager. The general manager said it was paid by authority of the board. We have never been able to find that authority. That is how the matter rests. It does not in any way reflect on Mr. Williamson, unless in that he was able to get the first slice of the three thousand shares, instead of getting his proportion pro rata. Mr. Reader Wood : If he owes the bank £16,000, why not sue his representatives ? Instead of Mr. Williamson getting the proceeds of his own shares, he got nothing at all, and would have got nothing at all if he had not threatened the bank that he would issue a writ if he was not paid the money. The President said the whole thing was complicated. It was an illegal thing, however. Their duty, as special auditors, was only to make a note of it. It would be inquired into again. It was never intended for a moment to reflect on Mr. Williamson in the matter. The motion for the adoption of the report and balance-sheet was then put and carried. Mr. Law rose to speak on the question of a statement of the losses being submitted to the shareholders, but he was ruled out of order. Mr. A. Boardman : I rise to move the resolutions of which I have given notice, relative to the qualification for the position of auditor. The object of these resolutions is to place the bank, with regard to audit, in the same position as all other joint stock companies with which I am acquainted are in. The provision to which I refer in the articles of association is entirely unique. I have examined the articles of many other institutions, and in none of them have I found an article of association' of this kind, providing that the qualification for an auditor should be the ownership of at least 200 shares. This means that no man can be an auditor of the bank, no matter what his capabilities are, unless he holds bank stock to the value of £2,000. I have searched myself, for a good while, the bank returns, and have gone into the matter very carefully, and as regards Auckland I think it may be said that outside the past and present directorate of the bank there are exceedingly few shareholders who hold more than two hundred shares. I doubt if there are six or seven outside of those I have named who hold that number; and the consequence of this is that the shareholders have no power. Mr. Boardman read his proposal, and said that it was the rule adopted in the Loan and Mercantile Company, New Zealand Insurance Company, South British Insurance Company, and, in fact, in every association whose articles he had seen. Were the motion carried, he would propose other resolutions, altering words so as to adapt the third and fourth clauses of the article. He moved, "Re clause 95 : That the whole of clause 95 be omitted, and the following substituted therefor —' The auditors need not be members of the company. No person shall be eligible as an auditor who is at the time of such election interested otherwise than as a member in any transaction of the company, and no director or other officer of the company shall be eligible during his continuance in office.' " Mr. A. O'Niell seconded the motion. The President: There is no doubt that efficient audit is a delicate question, and it is especially difficult when the bank is not merely established in Auckland, but has branches all over the world. The question is important, and I will read to you what I have to say on the subject: The object of Mr. Boardman's proposed alteration is to give shareholders greater scope in the selection of auditors, in the hope of securing more elaborate audit. The need for this depends upon what the functions of auditors are held to be. The business of a large bank, having numerous and widelyscattered branches, obviously cannot be effectively audited by even professional accountants, who devote only a short time to the work, and are remunerated with £50 a year. Nor is it in the matter of audit that the trouble has been in this bank. The losses by fraud or dishonesty have been very exceptional, and on the wdrole trivial, and, such as they have been, auditors would not have discovered them. The gentlemen who have acted as auditors appear to have adequately discharged the duties prescribed to them under the 98th clause in the deed of settlement. There is no question of incorrectness in the books or balance-sheets of the bank. The balance-sheets certified to by these gentlemen were correct as set forth from the books and returns, by which auditors (even professional accountants) must go in verifying balance-sheets. Because, even if it were contemplated that they visited branches—which it evidently is not —they could not possibly visit them all simultaneously so as to certify to the correctness of assets at one given date. If the idea is that auditors would value securities and detect bad debts, a very little consideration will show that this is quite beyond the scope of such audit, and the power of such auditors as the deed of settlement provides for. Nor could professional accountants do it unless they became permanent officials of the bank, devoting their entire time to the work. It is the duty of the directors to provide for supervision of this sort; they may fail in their duty, but so might auditors appointed directly by the shareholders. The directors are, in fact, and must necessarily be, the representatives of shareholders in this matter. It is the business of the shareholders to appoint efficient directors; if they fail to do so they will not mend matters by appointing auditors to do the work of the directors. The practice of all large banks with numerous branches is, as it necessarily must be, to entrust this part of their business to the directors. In America the Government exercises certain supervision, but there the system of banking is different, and lends itself to the Government audit, though there are plenty of instances to show that, as compared with the English system, Government interference in America does not secure shareholders against heavy losses.
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While we doubt if the alteration proposed would be attended with much advantage, we think that the qualification for auditor is too high. We had in view several alterations in the deed of settlement, which we think desirable, but have not thought this a suitable juncture to discuss them. If Mr. Boardman is disposed to withdraw his motion for the present we undertake to go into the subject at next half-yearly meeting, and to bring it up then with the other alterations I have alluded to for the consideration of the shareholders. I will only add that, of course, if Mr. Boardman's motion is carried, the alteration cannot come into force till next year. Mr. Boardman accepted the assurance of the president that the directors would take into their considertion the matter mentioned in the motion, and said that with the permission of the meeting he would follow the suggestion which had been made, that he should withdraw the resolution. Mr. D. L. Murdoch then rose to refer to the remarks made by the president at the special meeting held on the 11th October with regard to a telegram of a reassuring character sent to London last year, immediately after the bank passed its dividend. Mr. Murdoch said : I was not the author of that telegram ; but it was recognised by me, and therefore I unhesitatingly assume my share of the responsibility for it. It was sent on the best information at the disposal of the bank, and. it was sent for the purpose of lessening more or less excitement that existed in London, and which might have proved very much to the detriment of the bank. It was not sent on a consideration of the assets of the bank, as if the bank were going into liquidation, but on a reasonable estimate of the position as at that time, and the message specially pointed to a condition in case of revival. Now, I think, Sir, that not only has that revival not taken place, but that the depreciation which existed twelve months ago has up to a week or two ago, been much more pronounced; and therefore there has been no possibility of the recovery that was pointed out. Yet the statement you made to the meeting was that this telegram was a deliberate falsehood, and that no one knew it better than the directors and the general manager. Now, Sir, in all fairness, I ask you to remove such a stigma from the gentlemen who occupied the position of directors at the time, and from myself. Ido not ask you to credit us with great judgment in the position which we took at the time. Blame our judgment as much as you like, but all I ask is, in fairness, remove from us the imputation of untruth. The President: Well, gentlemen, in reply to Mr. Murdoch, I may say, that when I spoke the other day I spoke a great deal from memory. I had a copy of the cablegram amongst some private papers, and I have since made a search, and I now hold it in my hand. I made that cablegram a great deal more favourable than it was. At the previous meeting I spoke from memory, but the copy of the cablegram is now before the meeting, and any shareholder can see it. I will read it to you. The words of the message are simply these : "We have no fear of trenching heavily upon the reserve fund." This is the copy —I brought it from home—and there is no mistake about it. There is no mention of a revival. However, with respect to Mr. Murdoch's remarks, I can only say from my own knowledge of the affairs of the bank at the time, as a shareholder, that, as I said, I did not believe it; and certainly, since I have had the opportunity of going into the affairs of the bank, I have had no reason to alter my views. I can only say that the general manager and the board of directors must have been grossly ignorant of the actual state of the affairs of the bank. The committee have gone back some ten years, or even beyond that in some instances, and have no hesitation in saying that they can only excuse themselves by saying that they were grossly ignorant of the actual state of the affairs of the bank at the time that cablegram was sent Home; so that I decline to withdraw one word of what I said, because I believe now it was a falsehood ; and unless they can make that excuse it was a falsehood which they well knew to be so. Mr. Murdoch : At all events, you cannot say in the future that you have not been allowed an opportunity to withdraw a statement which I have no hesitation in calling a malicious libel. There was another statement, and that was in reference to a telegram also sent to London with regard to the Patetere Company ; and in a very mixed manner the chairman referred to the floating of the company in London, and to certain large commissions that were paid, and I ask any gentleman in this room who was present at the meeting on the Thursday whether he did not leave this room with the impression that the floating of that company and the payment of these commissions were all by the Bank of New Zealand. What are the facts ? They were not fresh in my memory at the time, but they have come back very vividly. The Bank of New Zealand had certain constituents who were deeply interested in this Patetere Company. Certain advances had been made by the bank to these constituents, largely on the faith of a company being floated in London to take this property up ; and at the last moment it appeared most likely that the floating of that company would be a failure unless certain shares were taken up by colonial proprietors. This was telegraphed throughout the colony, and the representatives of the company saw some one connected with the bank—very likely myself. I do not attach any importance to that point. But, at all events, the bank assented rather than see the company fail at the last moment —it assented to make further advances for the purpose of enabling the proprietors to take up these shares. What the manipulation of those shares was I know nothing at all about, but as to the floating of the company, the bank in London had nothing to do with it. The floating was effected by a limited circle with which the chairman had been intimately associated for very many years ; and the large commissions—very large commissions—which were paid, were paid to members of that circle. I only want to remove from the Bank of New Zealand the reflection which the remarks of the chairman conveyed. The President : I would ask Mr. Murdoch to explain a little further as to this limited circle referred to by him. I had nothing to do with the floating of that company, and I was very sorry to find out that the Bank of New Zealand had anything to do with it. Will Mr. Murdoch be kind enough to give the explanation ? Mr. Murdoch : I think my statement was quite distinct—that the floating of the company was effected by a limited circle with which you have been intimately associated. I have no hesitation in saying that
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The President: I wish you to explain. I think it is fair to me that you should explain fully. There can be no hesitation in giving the names in this instance. Mr. Murdoch : I think there would be. The President: You are not under any obligation of secrecy, I think, in the matter. I think, after what he has said, he is bound to give the information. Mr. Murdoch refers to the question of his cablegram, which was sent Home, and he says that the bank merely entered into it in order that the company should not be a failure. It appears to me, as far as lam able to judge in the matter, that perhaps it would have been much better if the company had never been floated. The President: Even at the time the bank stood to lose £70,000, and I think it would have been far better if the bank had kept their hands out of it altogether. Now, with respect to the limited circle which Mr. Murdoch refers to. I believe this company in the first instance was attempted to be floated by the Union Bank, and the only inference, so far as I am concerned in this matter, is that a member of a firm with which I was once connected had something to do with the floating of the company. He may have been paid—in fact, I hear he was paid—for allowing his name to appear in connection with it. I refer to Dalgety, of Dalgety and Company, but I have had no connection with him for years. If my memory serves me right, I believe I was in England at the time the company was floated, but I really took no interest in it. I was not aware that the Bank of New Zealand had anything to do with it. I have heard that these parties were paid by commission, and that the money came out of the Bank of New Zealand. I think the remarks Mr. Murdoch made with respect to my connection with this matter were uncalled for, since I have had no connection with the firm of Dalgety and Company for many years. Mr. John McLean was elected a director of the bank; and Messrs. J. L. Wilson and R. McDonald Scott were appointed auditors for the coming year. The meeting concluded with a vote of thanks to the staff of the bank.
1889. The half-yearly general meeting of shareholders in the Bank of New Zealand was held in Auckland on 29th April, when there was a large attendance. Mr. George Buckley, president of the bank, occupied the chair. The report and balance-sheet were as follows : — The result of the half-year's operations is as follows : Net profit for the half-year ended 30th March, 1889, after appropriation for bad and doubtful debts, £43,360 Is. lid. ; to which has to be added—premium on new shares allotted above par, less charges and costs, £11,121 ; balance from half-year ended 29th September, 1888, £33,968 10s. Bd. : making a total available of £88,449 12s. 7d., which it is proposed to appropriate as follows: To payment of dividend at the rate of 7 per cent, per annum, £33,063; balance carried forward, £55,386 12s. 7d. Aggregate Balance-sheet at 30th March, 1889. (Including London office at 31st January, 1889.) Dr. Liabilities. Capital paid up— £ s. d. 100,000 shares of £7 each .. .. .. .. .. .. 700,000 0 0 25,000 shares of £10 each—£lo paid up .. .. .. .. .. 250,000 0 0 25,000 shares of £10 each—£7 paid up .. .. .. £175,000 0 0 Less calls unpaid .. .. .. .. 176 0 0 174,824 0 0 1,124,824 0 0 Notes in circulation .. .. .. .. .. ..' .. 478,154 0 0 Bills payable in circulation .. .. .. .. .. .. 2,015,266 17 0 Deposits and other liabilities .. .. .. .. .. .. 10,088,293 10 1 Balance of profit and loss .. .. .. .. .. .. 88,449 12 7 £13,794,987 19 8 Assets. ' Coin and cash balances at bankers .. .. .. .. .. 2,287,367 17 11 Money on short call in London .. .. .. .. .. .. 164,952 4 1 Bullion on hand and in transit .. .. .. .. .. .. 198,043 6 6 Government securities .. .. .. .. .. .. 37,521 7 9 Bills receivable and securities in London .. .. .. .. .. 2,253,722 8 9 Bill discounted, and other debts due to the bank .. .. .. .. 8,480,768 6 3 Landed property, bank premises, &c. .. .. .. .. .. 372,612 8 5 £13,794,987 19 8 Profit and Loss Account. £ s. d. Dividend at rate of 7 per cent, per annum .. .. .. .. 33,063 0 0 Balance carried forward .. .. .. .. .. .. 55,386 12 7 £88,449 12 7 Balance from half-year ended 29th Sebtember, 1888 .. .. .. 33,968 10 8 Net profit for half-year ended 30th March, 1889 .. .. .. .. 43,360 111 Premium on new shares allotted above par, less charges and costs .. .. 11,121 0 0 £88,449 12 7 The Chairman said : In considering the balance-sheet laid before us to-day, embodying the result of the first half-year's working of the bank in its reconstituted shape, we must bear in mind that the conditions which adversely affected the previous half-year prevailed to some extent in the 3—l. 6.
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opening months of that now under review. Your directors still considered that prudence demanded making the maintenance of the bank's strength the paramount object. With this in view it is not a matter of surprise, nor need be of much regret, that the aggregate figures show some shrinkage, as compared with the corresponding period of 1888. On the other hand, we may congratulate ourselves upon the amount of net profit earned during that half-year; the increase of £10,000, as compared with the previous half-year, being, let us hope, an earnest of a gradual return to the figures of former days. It may strike you that the better result is due to the employment of the new capital paid up during the half-year, and this is true to some extent; but you will recognise that new money cannot, with a due regard to safety, be rapidly put to profitable use, and, as a matter of fact, the £424,824 of fresh capital only became available gradually as the half-year advanced. Its effects should be more fully apparent in the future. Turning now to the figures of the balance-sheet. Your attention will no doubt be first drawn to the increase, as compared with last balance-sheet, in the item " Capital," which now stands at £1,124,824. The 50,000 shares which your directors were empowered to offer for subscription have been taken up—25,000 in the colonies and 25,000 in London. As you are aware, £7 per share has been called up on the issue in the colonies, but on the London issue £10 has been paid, it having been found desirable to accept payment in full to insure subscription. The bank's subscribed capital now amounts to £1,200,000, with a reserve liability of £1,500,000. Bills payable show an increase of £752,000, but there is no significance in this, it being merely the result of ordinary business operations. Deposits show a decrease of some £600,000. This is accounted for by withdrawals, which have been made chiefly in London, and which were expected and provided for. They took place largely in the early part of the period, at a time when there was a feeling of uneasiness as to the condition of things in this colony generally. lam now glad to say that the bank's deposit business is an improving one. On the asset side I would point to the item " Coin and cash balances in London, £2,287,000," as evidence that the bank is determined to maintain a position of financial strength. In the items " Money on short call in London " and " Bullion on hand and in transit " there has been a decrease of £450,000, but this is merely owing to the fact that it has suited our arrangements to hold our assets in another form. I would, as against this, direct your attention to the item " Bills receivable and securities in London, £2,253,722 " ; an increase over the same item in the last balancesheet of £1,613,000 —a more than ample set-off. "Bills discounted and other debts due to the bank " are less by £580,000. Some considerable amounts have been received in redaction of advances which have become unwieldy. Other customers again have taken advantage of low rates offering for permanent investment to borrow on their properties outside their bankers. There is now a healthy demand for banking facilities, and the tendency is the other way. With the balance brought forward from last half-year, and the net premium (£11,121) received on the new issue of shares, we have a total available profit of £88,499. Out of this we have pleasure in recommending that a dividend at the rate of 7 per cent, per annum, absorbing £33,063, be paid, and the balance, £55,386, carried forward. To give effect to the promise made at a previous meeting to bring the deed of settlement in some respects into conformity with existing requirements and conditions, your directors have to propose certain amendments and alterations. These are now before you, and an expression of your opinion will be sought thereon. They have also had prepared an amendment to the Act, and due notice has been given of the bank's intention to bring forward such Bill during the next session of Parliament. Your directors promised to see how far profits could be increased by judicious retrenchment and centralisation. They are fulfilling their promise in this respect, and the result of their endeavours will, it is hoped, be apparent in increased profits in the future. It is gratifying to note that the signs of returning prosperity, to which I was able to refer at our last meeting, have since become more pronounced. A bountiful harvest, saved in excellent condition, is meeting remunerative prices at our own doors. The revival of the flax industry, the steady demand for our dairy produce, the improved tone of the wool market, and the development of the frozen-meat trade, are amongst the factors that are working towards a better state of things. Eenewed attention is being directed towards us from outside—from Australia, where our advantages of soil and climate have recently been brought into sharp contrast with the disastrous droughts that have again afflicted our sister colonies, as well as from London, where the marked rise in our Government securities speaks of growth in confidence and favour with the investing public. The settlement of our lands goes steadily on, increasing the number of producers and, in this way, the national wealth. The finances of the colony have been brought into equilibrium, if, indeed, there is not this year a surplus. There are, I think, plain indications that the habits of thrift engendered by past adversity are producing their natural fruits. Eeviewing these considerations, you will doubtless agree that lam justified in taking a confident view of the future. I do not look for a " boom " —we do not want " booms " —but for a steady growth in national prosperity in which we, as a bank as well as individually, must share. You will regret to learn that the health of Mr. John Murray, our general manager and inspector, has not permitted his resumption of active duty. The board, who are desirous to foster and strengthen by every means in their power the strong relationship formed in London, and the renewed confidence that is being manifested there, have taken advantage of his absence from head office and requested him to proceed to London, where, in concert with the London directors, he will doubtless be able to render valuable service in the interest of the bank. Mr. G. B. Tolhurst, our manager at Wellington, has been appointed to act as general manager and inspector during Mr. Murray's absence. Sir Frederick Whitaker having, during the period under review, resigned his seat, the board filled the vacancy by the appointment of Mr. Arthur Bull, who now ceases to be a member of the board. He has, however, given notice of his candidature for the vacant seat. Gentlemen, I now beg to move, " That the report and balance-sheet be adopted." Mr. W. Wilson seconded the adoption of the report and balance-sheet, and the motion was carried.
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Directors. —On the motion of Mr. James Russell, seconded by Mr. Allan Taylor, Mr. Arthur Bull was re-elected a director of the bank. Deed of Settlement. —The Chairman said that at the last meeting the question of alteration of the deed of settlement had been mentioned. The directors had considered the matter, and had brought forward the following suggested amendments for the consideration of the meeting. They were as follows: Clause 22, "The words three thousand to be substituted for two thousand wherever they occur in the clause." He explained that the alteration provided for extending the number of shares which may be held by one proprietor from 2,000 to 3,000 shares. The recent increase in the bank's capital from one million to one million and a half had evidently rendered this extension desirable. Mr. W. Wilson seconded the amendment, which was adopted. Clause 23, "That, instead of the first paragraph of clause 23, the following words be substituted: ' That no person or persons shall be deemed or taken to be a proprietor of, or to have any interest in, any share or shares of the said capital until he or she shall have signed, either in person or by attorney, a memorandum in writing—in such form as the board of directors may from time to time approve—agreeing to be bound by the deed of settlement of the company.'" He explained that the modification of this clause would dispense with the necessity for new shareholders signing the deed of settlement, which would, no doubt, be welcomed by investors in the bank's shares. Mr. Taylor seconded the motion, which was adopted. Clause 26 : The Chairman moved that clause 26 should be deleted, as it was unnecessary after the other alterations. This was seconded by Mr. W. Wilson and adopted. Clause 28 : The Chairman moved, "That the words ' execution of this deed or a duplicate thereof ' shall be deleted from clause 28, and in lieu thereof the following words shall be substituted—viz. : ' The signing of a memorandum agreeing to be bound by the deed of settlement as hereinbefore mentioned.' ' This was seconded by Mr. Wilson, and carried by those present. Clause 62: The Chairman moved, "That, between the words 'to' and 'such,' in the seventh line of clause 62, the following words shall be inserted: ' The company or.' " He explained that the amendment would have the effect of facilitating the bank's dealing with effects which had come into their possession. He might state that, as it stood at present, when property came into the hands of the bank it had to be conveyed in trust. The proposed alteration would give directors the option of either taking it in trust or conveying it to the bank. Mr. Wilson seconded the amendment, which was adopted. Clause 84: The chairman next moved, " That, instead of the words 'one thousand five hundred,' in the last paragraph of clause 84, the words ' three thousand ' shall be substituted, and, instead of the word ' fifty,' in the said last paragraph, the words ' one hundred ' shall be substituted." He explained that this was necessary in consequence of the increase of the number of proprietors holding shares. The effect at present was that 330 proprietors, holding 22,000 shares, in Auckland could vote, but under the amendment option would be given to the whole 150,000 shareholders to vote. At present to do that it would require that 150 proprietors should be present to carry it out. Mr. Wilson seconded the amendment. Clause 85: The Chairman moved, "That all the words after ' respectively,' in the 85th clause, shall be deleted, and in lieu thereof the following words shall be substituted : ' Together with the power of attorney, in the case of a proxy by agent, shall be left at the principal office of the company in Auckland at least twenty-four hours before the time fixed for the holding of the meeting at which such proxies are to be used.' " He explained that the suggestion was merely one dealing with the use of proxies. It was to provide that the proxies should be sent in twenty-four hours previous to the commencement of the meeting. Mr. F. G. Ewington asked if that meant that any person going away required to go to the expense of getting power of attorney; if it did he thought that the change would be unwise, Mr. C E. Button said that it only referred to cases where proxies were held by agents. The Chairman said that the shareholders in England would be asked to send proxies to the meetings without power of attorney. Mr. Wilson seconded the motion, which was adopted. Clause 95 : The Chairman next moved that clause 95 be amended. At present it read : " That the qualification for an auditor shall be the same in all respects as that hereinbefore prescribed in respect of directors of the company, and that he shall be also subject to the same disqualifications. And every auditor who shall act as such whilst unqualified or disqualified shall receive no remuneration for his services, and shall forfeit and pay to the company the penalty of one hundred pounds, to be appropriated to the use of the company and applied to the augmentation of the reserve fund." He proposed that it be amended to read :" No person shall be qualified to be an auditor unless he is the proprietor of at least fifty shares in the company, and in all other respects an auditor shall be subject to the same disqualifications as a director." He explained that the alteration was simply to reduce the qualification of an auditor from two hundred to fifty shares. Mr. Wilson seconded the amendment, which was carried. Clause 100 : The Chairman moved that clause 100 should be amended so as to read: "That, if it shall appear to such halfyearly general meeting desirable that the company's affairs should be more fully investigated, it shall be lawful for such general meeting either to direct the said auditors to inquire into and to report upon the affairs of the company generally or in their discretion to appoint any two or more proprietors as special auditors for that purpose, provided always that the proprietors so appointed shall be duly qualified to be elected directors as hereinbefore provided." He explained that this referred to special auditors. When required, special auditors must hold the same qualifications as directors. This was seconded by Mr. W. Wilson. A discussion ensued, but eventually the clause as amended was passed with two dissentient voices. The Chairman moved, and Mr. J. L. Wilson seconded, the following amendment to clause 105 : " That no dividend shall be paid in respect of any share upon which any instalment or instalments shall be in arrear until such instalment or instalments shall have been duly paid and satisfied. But it shall be lawful, &c." The Chairman explained that this was merely formal, and the clause was passed without dissent. In answer to Mr. Reader Wood, the Chairman stated that the deed of settlement would be reprinted with the alterations now made.
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Share Register. —Mr. G. P. Pierce said he understood that an alteration was to have been made in the deed of settlement in regard to the share register. He thought that the share register of the bank, like the share register of every joint-stock company, should be open to the inspection of every shareholder. It was highly necessary for shareholders to know who were their co-partners, and whether the directors had the requisite number of shares. The Chairman said that this question had not escaped the notice of the directors, but was brought before the shareholders in October, 1879, and a resolution was passed that the share-list should not be open for inspection. There was much to be said on both sides. The bank was in a different position to a public company; the names of shareholders were published every half-year, but the number of shares were not given. The resolution of the directors in 1879 was not questioned, and the present board saw no reason to alter it. Mr. Boardman spoke at length in support of Mr. Pierces contention, and it was then pointed out by Mr. Ewington that the third section of the deed of settlement precluded any one getting access to the share register. The Chairman said it would be necessary, in order that any alteration should be made, that notice of motion should be given, and it would come on at the next meeting. Amendments made to the deed of settlement would be submitted to outside shareholders, with a form of proxy attached, for confirmation, at the next half-yearly meeting. A special meeting would be called for confirmation of the resolutions, in order- that they might take effect at once. Thanks. —Mr. J. H. Upton moved a vote of thanks to the directors and officers of the company for their services during the past half-year. Mr. Ewington seconded the resolution, which was carried. The chairman, in acknowledging the vote on behalf of the board, said that he thought he might claim that the directors had used their best efforts in looking well after the affairs of the bank and the interests of shareholders. It would be gratifying for them to know that they had the confidence of the shareholders. He called the attention of shareholders to the valuable services rendered to the bank by Messrs. Johnson and Horton as a deputation to London, and added that their services would not be forgotten. Mr. Tolhurst returned thanks on behalf of the staff, and said that he would have great pleasure in informing Mr. Murray of the kind terms in which he had been spoken of here. The rough minutes were then read, and the meeting terminated.
The half-yearly general meeting of the proprietors of the Bank of New Zealand was held in the banking-house, Auckland, on 24th October, 1889. There was a very large attendance of shareholders, Captain Colbeck presiding. The acting general manager, Mr. G. E. Tolhurst, read the minutes of the last meeting, which were confirmed. The President next moved that the amendments to the deed of settlement, as proposed at the last ordinary meeting, be confirmed. This was carried unanimously. The following report and balance-sheet were then read : The result of the half-year's operations is as follows : Net profit for the half-year ended 30th September, 1889, after appropriation for bad and doubtful debts, with an exception explained in the president's speech, £40,96-1 4s. 9d., to which has to be added balance from half-year ended 30th March, 1889, £55,386 12s. 7d., making a total available of £96,347 17s. 4d., which it is proposed to appropriate as follows : To payment of dividend at the rate of 7 per cent, per annum, £39,375; balance carried forward, £56,972 17s. 4d.: total, £96,347 17s. 4d. The dividend will be payable at the head office, Auckland, to-morrow (Friday) the 25th instant, and at branches on receipt of advice. Aggregate Balance-sheet at 30th September, 1889. (Including London office at 31st July, 1889.) Db. Liabilities. Capital paid up— £ s. d. 100,000 shares of £7 each .. .. .. .. .. .. 700,000 0 0 25,000 shares of £10 each—£lo paid up .. .. .. .. .. 250,000 0 0 25,000 shares of £10 each—£7 paid up .. .. .. .. .. 175,000 0 0 1,125,000 0 0 Notes in circulation .. .. .. .. .. .. .. 451,636 0 0 Bills payable in circulation .. .. .. .. .. .. 1,585,319 11 5 Deposits and other liabilities .. .. .. .. .. .. 8,719,654 3 1 Balance of profit and loss .. .. .. .. .. .. .. 96,347 17 4 £11,977,937 11 10 Ce. Assets. Com and cash balances at banker's .. .. .. .. .. .. 2,056,690 2 0 Bullion on hand and in transitu .. .. .. .. .. .. 149,127 4 7 Bills receivable and securities in London .. .. .. .. .. 359,209 2 4 Bills discounted, and other debts due to the bank .. .. .. .. 9,040,611 3 3 Landed property, bank premises, &c. .. .. .. .. .. 372,290 19 8 £11,977,937 11 10 Profit and Loss Account. £ s. d. Dividend at the rate of 7 per cent, per annum .. .. .. .. 39,375 0 0 Balance carried forward .. .. .. .. .. .. .. 56,972 17 4 96,347 17 4 Balance from half-year ended 30th March, 1889 .. .. .. .. 55,386 12 7 Net profit for half-year ended 30th September, 1889 .. .. .. .. 40,961 4 9 £96,347 17 4
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The Chairman, in moving the adoption of the report, said: We welcome this opportunity of communicating with you, not only as to the affairs and progress of the bank, but also regarding matters of recent occurrence which have no doubt occasioned you some concern. I naturally first advert to the figures of the report and balance-sheet, which are before you, and which require elucidation. You will observe on the liabilities side a considerable diminution in the item deposits and other liabilities. As regards ordinary deposits, there is a decrease of £52,000 in the half-year, virtually all in London, which, upon a total of nearly eight millions, is trivial, and, under the circumstances, satisfactory. In the deposits of the three Colonial Governments, with which we have business relations, there is an aggregate decrease of £550,000, —a casual fluctuation. The balance of decrease under this general head is in other liabilities of a miscellaneous nature and of no significance. On the other or assets side of the balance-sheet there is necessarily a corresponding decrease, but not in the ordinary advance business of the bank, which, as indicated under the head of bills discounted and other debts due to the bank, shows an increase of £560,000. The decrease in the total assets is partly in coin and cash balances, which amount to £2,056,000, or a decrease of £230,000, and in bills receivable and securities in London, which are less by £1,900,000, largely due to the absence of wool bills and less active general exchange business in the September half-year; partly to a reduced holding of securities in London necessitated by the reduction of half a million in Government deposits to which I have already alluded ; and, in a minor degree, to the winding-up of certain weak accounts. I may summarise the position by saying that, as regards ordinary deposits there is no material alteration, while ordinary advances show a considerable increase. The decrease is in bills payable, Government deposits, and other liabilities, on the one side, balanced on the other by some decrease in cash balances, and a considerable decrease in bills receivable and securities in London. I may finally observe in this connection that the half-million increase in ordinary advances is in a specially liquid form, and can again be turned into cash without inconvenience, and on the shortest notice, should occasion arise. We could have wished that the important item of profit and loss had been larger. That it is not so is due to a variety of circumstances of more or less exceptional character. I have already reminded you that the September half-year is always the less active-and profitable. The charges account has been swollen by some special items, such as a vote to the late shareholders' committee, and some other exceptional expenses. Then, though the earning advances have been increased, this only took effect in a part of the half-year. And, finally, owing to an adverse legal decision, we suffered a considerable loss upon a dependency existing prior to October, 1888, but which we feel bound to provide for out of current profits, because it was not an account from which loss was at that time anticipated. Another loss, belonging to what I may call the anterior period, has become inevitable. In this case, also, loss was not anticipated, the firm's balance-sheets showing a large margin of capital; but the figures being unsatisfactory, the board pressed for their rectification, and discovered that the grossest misrepresentations had been made. The amount of loss by this account cannot yet be determined; it is not, therefore, dealt with in the balance-sheet, but there is ample provision in the amount carried forward for any deficiency that can arise from it. In this connection it may be well to remark that during the twelve months in which the new board have been in office the losses arising out of ordinary current business have been quite trivial, nor can we see reasonable ground for anticipating material loss by any other accounts now on the bank's books which were not embraced in the scope of the committee's report as likely to entail loss. The net profits amount to £40,960, inclusive of revenues arising from certain globo assets. But for the exceptional circumstances which I have partially explained, I may say that the amount would have been quite £15,000 more. With the sum brought forward this gives a total of £96,347, out of which we recommend a dividend at the rate of 7 per cent, per annum. We do not pretend that there is anything brilliant in this outcome of the half-year's operations, but in view of not a few difficulties we have had to contend with, and of the clearing up we have been effecting, we think it ought not to be regarded as unsatisfactory. Nor should it be overlooked that you receive your dividend free of property-tax, which the bank pays. And I would here remark, in passing, that in the last seven years the bank has paid to the Government in direct taxation no less a sum than £112,000, equal to nearly £150,000 if we were to reckon the interest the money would have earned had it been left in our possession. At the half-yearly meeting in April last reference was made to the opening of the share register, and the board has resolved, after considering the question, that the share register henceforward shall be open to inspection by proprietors free of charge, and by the public on payment of Is. for each inspection. Your directors were advised that it was competent for them to throw open the register in this manner without reference to shareholders, and resolved to do so accordingly, but they deemed it well not to give effect to their resolution until it had been made known to you, so that an expression of your opinion might be taken. If no adverse motion be passed at this meeting the register will be open to inspection, in the manner and on the terms indicated, from this day forward. In accordance with the resolution passed at the meeting of shareholders on 11th October last, the directors obtained from Parliament the statutory confirmation of the special resolutions passed at the meeting on 11th October. I now come to some more general matters having an important bearing on the future of the bank, and to which I invite your patient attention. In November last the health of our late general manager, Mr. Murray, broke down under the severe and long-continued mental strain to which he had been subjected, and he placed his resignation in our hands. We deferred acceptance of this, and asked Mr. Murray to take leave of absence instead, in the hope that rest would enable him to resume duty, and that we might not be finally deprived of his valued services. Shortly thereafter certain complications arose, and we asked Mr. Murray to undertake a mission to London to consult with the directors there, chiefly with a view to ascertain how far it might be of advantage to the bank were the directorate and principal office located in London, and, as it was thought it might become expedient to change the location, a clause was added
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to the Bill submitted to Parliament conferring upon shareholders the necessary powers should they consider such a change advisable. The nature of Mr. Murray's mission, and other circumstances, prevented his obtaining the needful rest; but he signified that, while he could not again undertake the onerous duties of general manager, he was prepared, if we wished it, to offer himself for election as a director. This obviated a difficulty which we did not otherwise well see our way through, and we no longer apprehended any occasion to propose to shareholders to remove the head office from the colony —a proposal which we ascertained was viewed with disfavour in many quarters ; but, almost immediately upon arriving at this conclusion, we were obliged to accept the resignation of the late president, Mr. Buckley. We had not been altogether unprepared for Mr. Buckley's resignation, but its occurrence at that particular juncture, and more especially circumstances attendant upon it, which are partly known to many of you, placed us in a serious difficulty. We do not enter upon any statement of these circumstances, because, in our capacity of directors, we deem it incumbent on us, in your interests, to avoid injurious discussion. We propose instead to meet the difficulty by retiring from the position of directors as soon as the needful arrangements have been made to relieve us, and by recommending to shareholders that the location of the directorate and principal office of the bank be removed to London. I hope I need hardly say that we should not allow ourselves to be forced to this conclusion by the mere opinions or views of any individual or individuals. We have arrived at it after the most careful consideration of the whole position and of the best interests of the shareholders at large. One of the points which has had much weight in our decision is the progress of the realisation of what we have called the "globo assets " — i.e., those landed properties and weak or irregular accounts which the shareholders' committee recommended should be placed to a separate account for gradual liquidation. It has, we believe, been suggested in some quarters that we were likely to be wanting in candour to you in dealing with this subject. Why we should be so it is difficult to understand, as we are in no way responsible for the existence of these irregular assets, but only for their administration and realisation to the best advantage. It was, we believe, contemplated by the shareholders' committee that some of these assets might turn out better, and others worse, than the estimates and valuations made of them, for which reason power was taken to treat them separately, so that fluctuations from time to time, in the result of realisations, might not dislocate current profits to the prejudice of the bank. The assets first to be dealt with were naturally certain large and weak commercial accounts which showed a tendency to drift, and which it was determined to wind up peremptorily, even at the sacrifice inevitably arising from sales of stock-in-trade and realisation of book debts at a specially unfavourable juncture. This has been almost completely accomplished. A large amount of bad business has been cleared from our books, and the result is a considerable deficiency in this part of the liquidation. But we have felt ourselves under no such pressure to realise the landed properties of various kinds which constitute the bulk of these globo assets, and from which much more satisfactory results may reasonably be anticipated. The returns from one set of properties alone have risen from £18,000 to £30,000 per annum. The best of our properties remain to be realised upon a market obviousl)' improving, and we have assets, from their nature not at present productive, which, when realised and the money employed m our business, will add largely to our profits. When I mention such circumstances you will understand that it is not any concern as to the ultimate outcome of the realisation of this globo account, nor any want of confidence in the future of the bank, that constrains us to the conclusion that, looking comprehensively at the situation, a London board can more effectively and speedily rehabilitate the bank than any board in Auckland can. It must be obvious to every judicious shareholder, holding shares enough to give him a genuine interest in the welfare of the bank, that a public meeting is not the place to discuss figures and details of the bank's business, nor to answer merely curious questions. Your directors cannot conduct your business satisfactorily unless they possess your entire confidence, and from that point of view we feel that Auckland, as the place for the head office of the bank, was discredited by the committee's report, and that our position has been weakened, and our power to serve you impaired, by circumstances to which I have already alluded. For these reasons, and not, I repeat, from any want of confidence in the future of the bank, or in our own capacity to manage its affairs, we think it due to you that we should recommend shareholders to authorise transfer of the control of the bank to a board in London against whom no damaging insinuations of want of capacity, want of honesty, or want of proper candour can be maintained, and who are more advantageously situated for securing the confidence |pf the bank's constituents in Great Britain than a colonial board can be. It is our intention during\the current half-year to submit this question to the consideration and decision of shareholders, and to take such other measures as will facilitate the step should the shareholders decide upon taking it. Major George seconded the adoption of the report without comment. Mr. Buckley said that before that resolution was put to the meeting he desired to make a few remarks. He said that in the first place he did not consider that the accounts for the half-year were at all satisfactory when proper provision had been made for bad debts. He took exception to the balance-sheet as a whole, as not affording a correct statement of the assets and liabilities of the bank, as from loss or deficiency of long standing, which were not provided for, and therefore affected the amount of the capital at stake. These, he estimated, would amount in the whole to at least £300,000, by which sum, in the meantime, the capital of the bank was reduced or lost. If the shareholders wished it he would go into details and explain as shortly as possible how such a sum as £300,000, in addition to the £700,000 or £800,000 which were provided by the shareholders' committee, was now required, or the accounts which proved this could be submitted to a small committee. (Cries of " Yes," and " No," and "Go on.") Seeing was believing, and the accounts in support of what he was about to say were in the safe. These accounts would establish what he said, and he was quite ready to go into details. The bank had over 100 branches and agencies connected with it; and, on the occasion of the appointment of the shareholders' committee, special instructions were issued by circular requesting the branches to prepare accounts showing the bank's
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assets on the 31st March, 1888. These returns were to be under three heads. No. 1 was to contain all the good accounts in the business, giving the names, amounts, and marks, &c, and there was to be a certificate attached to this signed by the manager, countersigned by the inspector, and the figures corrected by the accountant. There were then No. 2 and No. 3 of doubtful accounts, and No. 4 were accounts already in liquidation. The full details and estimates, and probable deficit or loss in each case, were given, with the following certificate : " I certify that the foregoing is a true and correct list of operative and doubtful accounts of this branch, and that the probable out-turn has been arrived at after careful examination, and is to the best of my knowledge and belief a fair and trustworthy estimate." This was also signed by every manager, countersigned by the inspector, and the figures were certified to by the accounts. Mr. Murray: If you please, Mr. Buckley, what inspector do you refer to ? I was inspector at that time. Mr. Buckley said he referred to the different inspectors. The total of deficits was something under £750,000. But although the committee knew well that anything in addition must come out of capital, they took a margin of £50,000, making a total of £800,000. The accounts turned out to be so unreliable and misleading, as well as the certificates being worthless to authenticate and support the several estimates, that the committee would need to have taken a margin of at least £250,000, or just one-third more than the bank accounts themselves show. The accounts in No. 1 were not altogether satisfactory, but of this, of course, the committee could only judge from personal knowledge of the parties. For instance, he noticed in one account that there was a considerable sum due by a well-known political leader who was not now in the colony, and that was stated to be perfectly good, sound, and so on. Of course, it was not so. The bank never recovered anything, and never would. He wanted to give that as an example of several accounts. The accounts, however, which he had to refer to were chiefly those connected with No. 2 and No. 3. The £300,000, those present would understand, referred more particularly to the liquidation of old accounts. Properties he left outside at present, as the value might increase in time; but he from the first thought, as did other members of the committee, that the Waikato properties in particular were most objectionable, as being absurd in value. Since he had become better acquainted with them he did not hesitate to say that they ought to be written down to one-third of their present value, and then things must improve very greatly to enable them to sell them at those reduced values. He would take some of the accounts he had referred to. About one of the first accounts—he must mention names—which was taken in hand here was the account of Owen and Graham. The estimate of loss was stated to be £20,000, and they had perhaps to be a little particular in that account, because it was first proposed, on account of Mr. Owen having been formerly a director, that the bank should pay the outside creditors the sum of £14,000 in full. He, for one, and other directors, objected to this strongly. An arrangement was subsequently made, by which the estate paid 15s. in the pound, and Mr. Owen's friends contributed ss. in the pound on all outside accounts, and that the whole thing should be made over to the bank. That was carried out on the part of Mr. Owen. That account was in liquidation. It had got up to £41,000, and in July last it got up to £57,000, and if they would allow him to give his own estimate of that, he would say he was sure the bank would not get out of this account without a loss of £62,000. However, he put it down as an excess of £40,000. Another- account was that of Henderson and Macfarlane. The estimate from it was £20,000, and he put down £20,000 more. The next one was A. Buckland, Auckland and Waikato. He put the deficiency in excess at £25,000. The next one he put down was Morrin and Co., Limited; and he might say that, in all his experience, he never came across a more disgraceful business in his life than that of Morrin and Co., Limited. That business was valued to them at the committee at £40,000. He would say that at the time it was not worth 405.; but the committee could not form an opinion until afterwards. The next item he came to was that of J. C. Firth. There was an excess there of £20,000, and he (Mr. Buckley) said it would be £25,000. The next he came to was J. Buchanan. The loss there was supposed to be £6,000. It would be £26,000. There would be an excess of £20,000. There was a mortgage which was valued to the committee at £20,000, but which was only worth £12,000. There were then two accounts against Mr. Thos. Russell. A deed connected with these did not come under the notice of the committee until some time after they made their report, or else he thought they would have been compelled to take notice of it. However, there was one item there of £20,000, in regard to which it was said there was little or no prospect of recovery; and he, knowing as he did that Mr. Russell was living at Home at the rate of some £6,000 or £7,000 a year, he (Mr. Buckley) certainly thought he should be made to pay this debt to the bank, and in December last he gave instructions to the Home office that they should ask for the payment of this debt. But no sooner were instructions given than this deed was discovered, and it debarred the bank from making any demand for the £20,000. An advance had been made in London, and secret from the board, and for no other purpose than to enable Mr. Russell to speculate on the Stock Exchange and get a living there. That is just about what it was. The terms upon which the advance was made were most extraordinary. It seemed that when the bank came to make the demand and to give Mr. Russell a month's notice, Mr. Russell had only to say that he had lost all the money or had only £5,000 left, and the bank would be bound to take that in full of all demands, However, he took it that they would lose upon that, first and last £20,000. There was another account, P. Comiskey, not provided for. There would be £10,000 lost there. There was an account in Canterbury, E. W. Turner, not provided for, and the loss would be, say £28,000. In Coster's account, in Canterbury, there would be a loss there in excess, £20,000. In Rich, Otago, there was an excess there of £10,000. In the Invercargill Paisley Company there was an excess of £12,000. Then, Larkworthy, there would be an excess there of £10,000. He had given merely some of the larger items, but he was quite sure he was not far out of the estimate when he put down New Zealand at £30,000, and Australia and Fiji at £30,000 more. That made £60,000. If they would add it all up they would find that it amounted to £354,000, so that he thought he made an under-estimate when he said that at the very least there
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was to be accounted for at the present moment some £300,000 on those accounts which in the meantime was so much capital lost. The amendment which he would propose was this : " That the consideration of the report and balance-sheet be adjourned, to give the board of directors an opportunity of making further provision for bad and doubtful debts, the provision, as per accounts now presented to the shareholders, being inadequate to meet the losses which have been sustained." Mr. Reader Wood seconded the amendment. He thought Mr. Buckley had made out a very clear case, to show at any rate that they required considerable time to take these matters into consideration. They had had a very long speech just put into their hands by the President, and they had had another very long speech made by Mr. Buckley, showing that the state of the bank's affairs was not exactly that which the shareholders had a reasonable right to suppose it was, and which they had a right to suppose it was fronr the statement of accounts placed before them. It was impossible on the spur of the moment to argue either on one side or the other. The proper course, he thought, would be to adjourn the consideration of the report for some few days at any rate, to give the shareholders an opportunity of reading the President's speech, and also the statement that had been made by Mr. Buckley. Major George said that while not objecting to the adjournment, still he would like to make a few remarks. It was easy for any one to make accusations. He would now like to make a few remarks upon the action of Mr. Buckley when a member of the board of directors. A great many of them had purchased new shares upon the strength of the report of that committee, of which Mr. Buckley was a member. That report said the shares would be a very good investment. Mr. Buckley here rose to a pomt of order. He considered that this was a subject for a separate resolution. The Chairman said he was instructed that Major George was in order. He thought that all ventilation should come at once, so Major George might as well go on. He might state that the directors admitted that there had been losses. There were two sides to everything. Major George said that when the report of the committee was submitted he believed it to be an honest opinion of the majority of that committee. He also believed that had the bank been allowed to go quietly on all would have been well. But it was discredited to such an extent that its very'existence had been imperilled—and by whom ? Why, Mr. Buckley and Mr. McLean, two of the gentlemen who signed that report. If those gentlemen had subsequently found that the affairs of the bank were not working as they had anticipated, and had called the shareholders together and explained matters to them, they would have had no cause for complaint. Their action, however, was quite different, for, while still remaining directors, they commenced selling out their shares as fast as possible, until they ceased to hold the necessary qualification for the office, or, in fact, any shares at all worth considering save some five or ten respectively. That might have been wise policy as far as money-getting was concerned, but he most confidently asserted it was most dishonourable to outside shareholders, whom they were supposed to represent. While on the question of dealing in shares he had some further remarks to make. It would be remembered that Mr. Buckley animadverted very strongly at previous meetings on the conduct of certain directors taking advantage of their position to transfer shares to the London register; yet when Mr. Buckley commenced selling his own and Mr. McLean's shares he moved at the board that a similar transfer to Sydney register should be authorised. At first the motion was carried, some members being strongly influenced in the interest of peace, but on time being given for reflection the motion was rescinded. It was necessary he should point out that the joint action of those two honourable gentlemen was not the result of any separate and independent judgment on the bank's affairs. Mr. McLean had not visited Auckland since the last half-yearly meeting, when he concurred in the report, and expressed himself pleased and satisfied with the state of affairs. Since then he had been urgently requested by members of the board to come to Auckland and judge for himself, but he preferred to be guided by Mr. Buckley. It was rather difficult to judge as to Mr. McLean's motives, for he believed Mr. McLean was a wealthy man. Mr. Buckley, however, appeared to have been actuated by spite as well as avarice. He thought he was safe in saying that there was evidence in that room to prove that Mr. Buckley had stated that he came out to this colony with the intention of breaking the bank. On several occasions he had heard him say that if he did not get well paid he would "smash the bank," or "the damned bank," as he more forcibly put it. These threats commenced in October last, so it was fair to assume that he kept this object in view. Mr. Buckley : It is false. Major George :It is true. On many occasions Mr. Buckley said so, and I will give the dates if the meeting desires. Voices : Let us have them all. Major George said they were as follows: " 11th October, at board meeting, threatened to resign and ruin bank if he did not get his demands on honorarium; 30th October, repeated same threat; 19th April, threatened board in similar manner, Captain Colbeck objecting to his again intimidating board, I supporting Colbeck ; 29th April, threatened me to leave and ruin the bank, and that he held McLean's resignation in his hands, and he would use it and his own for this purpose ; 14th May, at board, demanded £1,000 a year out of honorarium, or he would leave and break the bank ; 11th June, at board, stated that when he left he would break the bank." For the sake of peace, and in the shareholders' interest, that gentleman was permitted to grasp over two-fifths of the honorarium provided by the shareholders for the services of the whole seven directors, and he also, in a most unseemly manner, took possession of a furnished house, carriage, horse, &c, belonging to the bank, and which he now occupied and used. A Shareholder : For which he pays how much ? Major George : No amount. Mr. Buckley : I appeal to Mr. Murray whether I do not pay for the house £150 a year. Mr. Murray : I think, Mr. Buckley, the consideration you give for the house is the maintenance and keeping of the place.
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Mr. Buckley : The arrangement was that I should pay the wages of one or two persons employed at Mr. Mitchelson's, and I have paid them. (" Oh, oh I" and laughter.) Major George said Mr. Buckley also got his share, £400, of the amount for payment of committee. After grasping all he could and selling his shares, making himself safe, he went out into the streets and did a great deal to depreciate the value of the shareholders' property ; and his relative, Mr. McLean, was not much better. And these gentlemen wished to pose before the shareholders as their protectors and helpers. Well, he did not accept them in that position. They might be richer in pocket by their action, but in his opinion they had stripped themselves naked of all honour, and he would rather- be the poorest man in that room than either of them. Mr. John McLean asked Major George to state in what particular way he had attempted to to injure the bank. Major George : Yes, I can state that. It was by selling your shares when you were a member of this board. Mr. McLean asked if any man who sold his shares did so to injure the bank. From the foundation of the bank he had been one of the largest individual shareholders, and until some time ago he had never attempted to sell a share. A lot of what Major George had said was mere claptrap, and he believed that gentleman had made a lot of misstatements. Major George : I can prove them all. Mr. McLean said Mr. Buckley would never have been there but for him, and he (Mr. McLean) would never have been there but for Mr. Murray. He had lost more money by the bank than Major George had in it. There was not a shareholder who had tried to serve the bank more than he had. Mr. R. McDonald Scott: But you do not hold any interest in it. Mr. McLean: lam a shareholder. Mr. R. McDonald Scott: How many shares do you hold? Mr. McLean : I cannot tell how many. Major George : Ten, I think ; and you had 800 odd. Mr. McLean : I do not know exactly. Major George : I do. Mr. McLean : I have been one of the largest shareholders since the foundation of the bank. Mr. R. McDonald Scott: From 976 shares which he held during the time he and Mr. Buckley were directors he has only ten now. Mr. McLean : That is very likely. Mr. R. McDonald Scott: And you come here and insult people who hold an interest in it. Mr. Upton said every shareholder would have listened to the remarks of Mr. Buckley with great regret. That word was not severe enough to express the feelings which, perhaps, animated the mind of every person in that room. He was present at the meeting six months ago when Mr. Buckley occupied the position of president. No word of that was then uttered. No word of the statement which Mr. Buckley had now made was hinted at by him then. Every man who was acquainted with business matters must know that it was absolutely impossible that Mr. Buckley should not have known something of what he said he now knew. For his part, he would say frankly that he did not believe that Mr. Buckley's statement was correct. Mr. Buckley had the advantage of every shareholder present, because he had been within the inner circle, and could represent or misrepresent to his heart's content, and no one present could refute what he said. It was not desirable, so far as he could see, that the directors should refute what he said ; neither, he thought, was it desirable to discuss in detail at a meeting of shareholders the matters raised by Mr. Buckley. It was impossible, however, to have listened to him and refrain from comparing his present conduct with his past conduct and endeavour to find out the motive which actuated him. Major George had stated that Mr. Buckley had threatened to smash the bank. He (Mr. Upton) had heard it stated in the street that Mr. Buckley had threatened to smash the bank; that he came from England to smash the bank ; and Mr. McLean had told them that but for him Mr. Buckley would not have been there. Heavens ! Would to God he had never been there ! He (Mr. Upton) considered that Mr. Buckley's conduct had been diabolical. If all the persons in that room had been rich people, or if all the shareholders had been rich people, it would not in the least have mattered ; but Mr. Buckley had used his knowledge to divest himself of every responsibility, leaving poor shareholders—widows, and persons who had invested their all in the bank —face to face possibly with ruin. No one could tell what the effect of Mr. Buckley's words would be. The only hope was that it might be discounted by the effect of the chairman's address and the remarks made by Major George and other speakers. For his own part, he repudiated Mr. Buckley's words; he could not believe them. The meeting had the report of the committee of shareholders before them, and they were assured in that report by persons whom they had the fullest confidence that every consideration had been given to the liabilities due to the bank, and that ample provision had been made. Who were those persons ? The late Mr. Justice Gillies —was he a man unknown to them? Was he a careless man?— Did he or did he not look into things ? Was he not in the habit of looking into evidence ? And when the material for this report had been placed before the late Mr. Justice Gillies, was it likely that he would have been easily hoodwinked ? Mr. Buckley himself was a man of ability; they all recognised his ability, but deplored its application. Mr. Buckley when he last occupied the chair as president, had stated in the most emphatic maimer that the most absolute provision had been made for bad and doubtful debts. Now, however, he had stated that that was all a lie. The hope expressed in the report of the shareholders' committee as to the future of the bank would be amply justified by the revival in the condition of the colony. There was another side to the accounts : the question of the real property. They had been told in respect to the trade accounts that they had been completed, and they now commenced to deal with the land, which would be the real assets of the bank in the particular- globo account. The landed properties of the bank had greatly increased in value. They had been told that in one property the returns had risen from £18,000 to £30,000. If this were false, the president and his brother 4—l. 6.
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directors committed a crime the greatness of which he could hardly estimate. But he was willing to accept the truth of that statement. He did not think the shareholders present should adjourn the meeting. He would oppose strongly Mr. Buckley's wish in regard to adjourning the meeting. He (Mr. Upton) pointed out that it was the policy of the bank that the whole of the globo assets should be taken together—that was certainly the intention of the shareholders when the committee's report was laid before them, and that course had been authorised by Parliament. To quote figures on authority —he regarded Mr. Buckley's figures as of no authority whatever —at this early stage, when the worst assets only had been dealt with, might lead to misconstruction, and it might seriously prejudice their interests. It would be the more inexpedient to do that, inasmuch as it was proposed to place the matter in the hands of an able London board who, with precise figures and information, would be in a position to propose such arrangements as they might deem fit. He would like to suggest a motion, " That under all the circumstances the information given by the board be considered sufficiently full." The board had given ample information as to the current business of the bank, and the question of the globo account might fairly be left to the future. He would propose this motion when Mr. Buckley's had been dealt with, and, as he hoped it would be, lost. He could not sit down without once more expressing his opinion in reference to what had been said by Mr. Buckley. He regarded Mr. Buckley's conduct as thoroughly dishonest. Mr. Buckley had sat in the chair as their representative not so long ago, whilst the late manager, Mr. Murdoch, stood in the room something like a stag at bay; and Mr. Buckley had then sat there as the incarnation of honour, and it was he who had charged others with want of honour. And the way in which he had shown his honour was to sit there day after day, and on finding out that his policy, whatever it might be, was resisted by his brother directors, and actuated by what he would characterise small greed, from what Major George had said, to seize all he could of the honorarium, and then quietly, meanly, and cowardly to sell his shares. (Hear, hear.) No words that he (Mr. Upton) could say could adequately express his opinion of Mr. Buckley's conduct. Mr. Buckley said that very serious charges had been made against him, and he might say at once to the shareholders that he was quite prepared, in a quiet way, to meet the charges made against him by Major George or any other man. Mr. Scott: You only hold five shares. Mr. Buckley said that that did not matter. He had come there to make an explanation due to himself and due to the shareholders. If he had gone away and left the shareholders they might then have had something against him. He was prepared to meet the shareholders anywhere— (A voice : " After you've made yourself safe !") It was all very well to make charges in that way. In respect to the £30,000 Mr. J. B. Eussell rose to a point of order. Mr. Buckley had no right to reply now. The President ruled that Mr. Buckley must wait his turn. Mr. A. Boardman said he had not intended to intrude upon the meeting, but he felt exceedingly strongly that if there had been a mean action on the part of any person in authority, that mean action had been committed by Mr. Buckley. Mr. Boardman related a conversation which had taken place between himself and an old lady who was a shareholder of the bank, in reference to Messrs. Buckley's and McLean's action in selling their shares. This lady characterised their action as mean and dishonourable. He thought that lady expressed the general feeling in regard to the action of the persons he had referred to. He condemned the action of Messrs. Buckley and McLean in the strongest terms. A more characteristically mean act was never performed by any man who called himself a gentleman. A man who acted like Mr. Buckley damned himself for all time, and he was going to say for eternity too, but there was a chance for repentance even for men like him. (Cheers and laughter.) Mr. John Murray said he regretted extremely that Mr. Buckley had thought himself called on to make the statement that he had just read to them (hear, hear), because the position had not been essentially altered since April last, when he made the speech from that chair; and he (Mr. Murray) failed to see, if such an explanation was not required then, that it was called for at this particular moment. It seemed to him to be, if anything, less called for; because the directors, without casting any reflection on the shareholders' committee, had reported to the shareholders that there was a considerable deficiency in the earlier stages of the realisation, and had recommended that the control of the bank be transferred to London, where the whole matter would be gone into by a new and strong board, who would be in a position to take effective measures to meet the necessities of the case, whatever these might be found to be. He feared some shareholders would think that Mr. Buckley had not shown such consideration for their interests, and, indeed, for larger interests, that they were entitled to expect. (Hear, hear.) He regretted it also on personal grounds, because he was compelled, on behalf of the bank staff, of which he had been so lately a member, to traverse Mr. Buckley's contention, expressed or implied, that they were exclusively responsible if the estimates and expectations of the shareholders' committee had proved in a number of instances too sanguine. As Mr. Buckley had not thought fit to furnish them beforehand with a copy of the elaborate statement he had prepared at his leisure, it was obviously impossible that he (Mr. Murray) could go into its details on the spur of the moment; because communication with officials at a distance, and examination of books and documents, was necessary. He was, moreover, at special disadvantage, inasmuch as he had been absent from Auckland during the greater part of the last twelve months, taking no part in the ordinary administration of the affairs of the bank, and since his return a few days ago he had not time to go into accounts and details. But, upon the general question, he desired at that stage to say that as a preparation for the committee's work, and to facilitate it, lists of all the accounts and assets of the bank were prepared for them with the fullest explanation, and in the case of landed properties with valuations, by independent experts. That there was no reason to anticipate unduly favourable reports being made would be apparent when he mentioned that of the seven principal branches in the colonies, the managers of five had been changed within a period more or less recent. The
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gentlemen furnishing these returns had, therefore, no personal interest or bias leading them to hide anything, or make matters look better than they believed them to be. The danger was, perhaps, rather the other way. As to the other two branches,-the deficiencies which had arisen had not occurred at them. These returns, certified by the managers and countersigned by the inspectors of the several districts, we placed at the committee's disposal. Mr. Buckley was a member of that committee —the most prominent and active memher of it; he also became president of the bank, and in both capacities had every opportunity of becoming familiar with its affairs. He, in fact, occupied that room, spending virtually every day in it. He had every official, every book, every record of the bank at his command. The officers would bear him (Mr. Murray) out in saying that his instructions were to afford Mr. Buckley the fullest and most unreserved information. After six months of such work and such opportunities, he was a principal party, occupying the position of president of the bank as well as member of the committee, to the issue of a report which, among other things, says : " The data supplied to us are of a clear and exhaustive character, amply authenticated ; and after a minute and careful examination of the various accounts and assets, we are satisfied that, under good management and judicious realisation of securities, the amount named should cover all losses." Having in the meantime signed a memorandum containing the following extract: " The committee are guided in making this estimate, not only from accounts and valuations submitted to them, but also from their own personal knowledge of the general condition and prospects of the various parts of the colony in which the bank holds these assets." Then, after another six months' experience, when nearly all the deficiencies to which he now referred had developed themselves, he delivered the speech from the chair at the last April meeting, in the responsible position of president, saying nothing about what now so much exercised his mind. Under these circumstances, he respectfully submitted that Mr. Buckley was not borne out in his contention. But, after all, was he not making too much out of the present deficiencies ? Were they to look for nothing from the future ? Were they to suppose that this will never be a prosperous colony ? It is only some three or four years ago since the net profits of the bank considerably exceeded £200,000 per annum, and if reasonable time were given to work out these globo accounts he did not hesitate to express the opinion that they would work themselves out. And he must again express his regret, in the interests of the shareholders, that what seemed to him an unnecessary and injurious discussion had been raised. Mr. Cherry said he came there to find out the reason why shares were continually going down. He thanked Mr. Buckley for giving them the information. They had a right to know that one million had been lost, and they had a right to know who had got it. He would just as soon take Mr. Buckley's estimate as against any other person's. There could be little doubt but that for years the balance-sheets had been wrong. Then they found that one million had to be struck off, and now Mr. Buckley told them that another £300,000 required to be struck off. Mr. J. B. Russell said there was one matter which he would refer to before the resolution was put: that was with reference to the action of the late chairman of directors in depreciating the assets of the bank. It was by Mr. Buckley's own action, and on the faith of his representations, that he had been induced to buy as many shares in the bank as the bank would allot to him. He was one of the first shareholders on the first day that the bank opened its register. When the last discussion on the bank's affairs took place Mr. Buckley occupied the position of chairman, and assumed the role of the virtuous, commercially honest, and moral man —he used Mr. Buckley's own words to himself. On the faith of Mr. Buckley's statements in the chair, and on the faith of the report, he applied for every share that he could possibly get from the bank. He (Mr. Russell) had been personally concerned in the case of one who owed the bank a large sum of money, and whose friends were very desirous to save him from bankruptcy, and they arranged to subscribe £1,000 to meet the bank's claim. He (the speaker) met Mr. Buckley in that room and told him that £1,000 would be found if they granted the man his discharge and save him from the Bankruptcy Court; but the reply was that the community of Auckland had no idea of what honour or commercial morality was. The gentleman who then told him what his idea of commercial morality was was the gentleman who had induced him (Mr. Russell) to take shares upon his representations, and yet Mr. Cherry told them that they again ought to intrust the bank's affairs to him, and have the same farce played over again. They had as sound men and as honourable men on their board of directors as Mr. Buckley, and he had the utmost confidence in them. Mr. Buckley had said to him, " You gentlemen in Auckland imagine that the bank belongs to you ; but I am here. I am here as the representative of seven-eighths of your bank, and we cannot allow it." And this was the gentleman who asked them to allow him or some others to get another £1,000 or £2,000 for an investigation. Mr. F. G. Ewington said he had a question to ask. It was this : Mr. Buckley having stated that further losses, amountrng to over £300,000, were made by the bank on certain estates named, he would ask —Have all the assets of those estates been realised ? (The Chairman : No.) If that were the case, Mr. Buckley was speaking without the book, because on realising those estates the assets might be more than was estimated, especially as they consisted partly of real estate. But as showing that Mr. Buckley might not be adequately informed, he would remind them that on the 27th April, 1888, the circular bearing Mr. Buckley's signature said, " We think it well to state, without delay, that carefully-compiled and certified returns prepared by the bank staff, supported where necessary by independent valuations, and which we have examined, satisfy us as to the soundness and stability of the bank." Mr. Ewington also read from the circular dated the 3rd October, 1888, bearing Mr. Buckley's signature, as follows : "Finally, as regards the bank, it should be borne in mind that the ordeal of such an investigation, at a time of depression so extreme, is one which would be trying to any institution. Other banks, now strong and prosperous, have had trying episodes in their history, and the trenchant character of our report may be taken as evidence that we have determined to face and disclose all the facts. The good-will of the bank's business is of great value. It has in the past divided among shareholders, over and above
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10 per cent, dividends, sums which aggregate nearly double the amount of the capital we now find to be lost; and, while desiring to guard against the creation of unduly inflated expectations, we are in a position to say, from the figures of the half-year just closed, that even now the bank's legitimate business is capable of yielding good dividends, notwithstanding the serious drawbacks under which it has of late been working. When time has been given to enable the directors to get rid of unproductive assets, and to develop the bank's legitimate operations, still better results may be confidently expected. On its merits, therefore, the investment is one which, it appears to us, may be expected to yield satisfactory returns, and within a short period to command a considerable premium." Mr. Ewington added that in his speech from the chair on the 22nd October, 1888, Mr. Buckley added : " The position is strong, and therefore satisfactory, .... and, in view of the circumstances in which the bank has been placed, such a result is, I venture to say, gratifying, and even surprising." Now, Mr. John Murray—who knew more of this bank's affairs than any other man —said the position has not changed materially; therefore, he maintained that Mr. Buckley's figures might be unreliable. He would like to add what was likely to be forgotten at a time like that, when personal feeling ran high, that the prospects of the country were good at present, and if the Bank of New Zealand was left alone to quietly carry out the policy laid down by the directors, she would soon right herself. Just look at the outlook in this country as regarded the land revenue. During the last half-year there had been over 1,000 selectors of land. In the village settlements there had been no less than 145 settlers gone to take up at least 420 perpetual-leases,-and a sum of £171,000 has been paid. Our railways had during the last half-year yielded £25,000 in excess of estimates ; the flax industry was prospering; our mining interests were favourably developing; the labour market was improved ; crops looked well; population was increasing; and the future of New Zealand was pregnant with hope. Mr. Joseph Newman said he was one of the oldest men in the room, and had been connected with commerce all his life. He had never met with such conduct as they had had exhibited to them by Mr. Buckley. In all the commercial transactions he had seen he had never witnessed anything so gross or degrading to the individual, and if Mr. Buckley had any sense of propriety or honour he must feel humbled. He (Mr. Newman) thought the shareholders could not do better than pass unanimously the report and balance-sheet as proposed by the president. Such conduct as Mr. Buckley had manifested deserved the strongest possible censure. Mr. Arthur Bull said he would be glad to be allowed to make a few remarks. He was one of those who, having no interest in the bank at the time of the issue of the committee's report, was induced by that report to take up shares. He presumed it might be taken for granted that but for the liberal response made by the public in subscribing for these new shares, the value of the old shares would have been small. Then they had this pleasant state of things : That the members of that committee recommended these new shares to the public, with the result that the value of their own shares was rehabilitated, and then within a short period the Hon. Mr. Buckley, president of the bank, and the Hon. John McLean, of Redcastle, Oarnaru, two prominent members signing the report of the committee and recommending those shares to the public, sold out their holding (except a paltry five or ten shares), retaining their seats on the -board until disqualified by so doing. He did not envy those honourable gentlemen. The Hon. George Buckley was reported to be wealthy ; the Hon. John McLean was stated to be worth £30,000 or £40,000 a year, all made in this our adopted country, the welfare of which was largely bound up with that institution, and he said that both these men had been guilty of conduct unutterably mean, cowardly, and avaricious. Mr. McLean said the value of what a man said depended upon the truth of it. Mr. Bull had just stated that he (Mr. McLean) sold out while he was a director. He was only a director a few months. He sent in his resignation last April. Mr. Bull: You left it in the hands of Mr. Buckley to use as he thought fit. Mr. McLean: I left it in the hands of the bank. He said Mr. Bull's statement in regard to him was incorrect. Mr. Bull contended that he was quite correct. Mr. McLean's resignation was withheld until Mr. Buckley got rid of his shares. He could prove it. Mr. Buckley flourished Mr. McLean's resignation in the face of the other members of the board of directors to compel them to do what he wanted, and after he had sold out he put in Mr. McLean's resignation after Mr. McLean had become disqualified. The Rev. R. Sommerville thought that no good, but much harm, would result to the bank from this discussion. The question resolved itself into this : Had they confidence in the directors or not ? For- his part he had the most implicit confidence in them, and none whatever in Mr. Buckley. Mr. Buckley said he had asked the shareholders if they would appoint a small committee to look over the accounts, and they had said " No." As to Mr. McLean's resignation, Mr. McLean had placed his resignation in his (Mr. Buckley's) hands; but the board had no one to put in his place at the time, and the resignation was therefore kept back for the convenience of the bank, to a great extent. And what was done at the meeting Mr. Scott: You have only five shares ; you have no right to open your mouth. Mr. W. Aitken said that at the last meeting Mr. Buckley, who was then president, stated that the bank was in a certain position. When Mr. Buckley sold out his shares, was it before or after he found that the bank was not in that position ? It was that gentleman's duty to have called the shareholders together and showed them the position in which they stood. Mr. Buckley did not acknowledge the right of any one to say that a director had not the right to sell his shares at any time he thought proper*. He did not sell his shares until his resignation was accepted. Mr. W. Aitken repeated bis question as to why Mr. Buckley did not call a meeting of the shareholders when he found that the state of affairs was not what he had previously represented. Mr. Buckley hoped the shareholders would not give ther opinion that day. It was only fair play he wanted (" Oh " !), and he was prepared to stay there for a week. If there had been a full
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disclosure to the shareholders' committee before they made that report their estimate of losses would have been double, treble, and perhaps four or five times more. He had proofs of this —almost equal to an affirmation or oath. (Cries of " Question.") The amendment was then put to the meeting, and was lost by a very large majority, only about four hands being held up. Mr. Buckley, who had been in conversation with Mr. Aitken, appeared to have been taken by surprise, and claimed the right to reply. Some objection was taken, but the president eventually invited Mr. Buckley to proceed. Mr. Buckley said he would be able to review the discussion only very shortly. The personal matter had been introduced very much against his wish, and came from Major George and Mr. Bull. The whole question of the shareholders' committee was out of place there; it had been fought out amongst the board some months ago. In regard to a remark by Mr. Upton, that he did not believe about the £300,000, did not he (Mr. Buckley) say that this account should be submitted to a committee ? The question was : Were the shareholders prepared to have dust thrown in their eyes ? He maintained that this had been done year after year. He contended that the deficiency existed, and would have to be provided for—if not now, some other- year. He appealed to the members of the board —they knew very well that this was one reason why he had sent in his resignation, because they wanted to cover this up, and he would not be a party to it. Major George : That is absolutely untrue. Mr. Bull: There is not one word of truth in it. Mr. Wilson : It is absolutely incorrect. Mr. Buckley said that the very last time he attended a board meeting Major George —he took his words down—said, " These deficiencies will not be known, nor any notice taken of them, if you do not raise the question yourself." Major George: That is absolutely untrue, as most of your statements are. Mr. Buckley: lam quite prepared to make an affidavit. Major George : After your conduct, I will no more believe you on your oath than I believe you now. Mr. Buckley said he did not ask Major George to believe him, but he was quite prepared to make an affidavit, because he took notice of it at the time. He had suggested that the accounts should be left to a committee, but the shareholders had declined. Mr. McLean's resignation had been kept back, not on his account, but on account of the bank; and with respect to the selling of shares, there was no secrecy whatever about it—he told the board that the shares were in his hands and would have to be sold. With respect to the transfer of shares to Australia, Mr. Johnson, one of the committee, said that he wished to sell his shares, and he made a remark to the effect that rather than bring the shares down it would be better to put them on the Australian register, and he (Mr. Buckley) also said at the same time that he would put some of Mr. McLean's shares upon the Australian market. There was no secrecy whatever about it. Just immediately after Mr. Johnson's shares went on the market, and they were known to be his, the price went down from £8 15s. to £7 10s. Mr. Scott: Barefaced roguery ! (Laughter.) Mr. Buckley said that no one had felt more strongly the position of the shareholders' committee —the position that they were placed in by being misled by false certificates. They had spoken about his remaining on the directorate, but he had been wanting to leave the directorate every day. He challenged Mr. Murray to deny that before he went to London he insisted upon his (Mr. Buckley's) promising that he would remain on the board. And then, after Mr. Murray had left for London he (the speaker) wrote to him, and pointed out that a large sum was wanting for the globo account, and urging that if anything could be done to save the bank, or do anything for it, he would at least save the goodwill of it. He would not have referred to this had he not been attacked. On the 20th May he wrote to Mr. Murray again, and told him that Mr. McLean and he (Mr. Buckley) had gone into the accounts carefully, they had made up their minds to sever their connection with the bank, and wished to do so by the end of July. He had felt bitterly the false position in which the shareholders' committee had been placed owing to the position of the bank not having been disclosed before they made their report. On the 17th June he wrote again, saying that he did not consider himself justified in remaining on the board, and he again wrote on the 24th June that the bank was bleeding to death and drifting to the inevitable ; that the shareholders were being deceived, and that every day now they were getting more reconciled to the position. He kept warning Mr. Murray of the position of the bank, and warning the directors here, too. Mention had been made as to the late Mr. Justice Gillies. He could only say that he had met him several times. He (Mr. Justice Gillies) did not say anything to him or mention the subject in respect to these deficiencies coming on. The position, however, was considered so serious that he (Mr. Buckley) considered it his duty to let him know of it. He met him by appointment, and he came to the banking-house, and they went over all these accounts just a fortnight or three weeks before Mr. Gillies's death. He was the originator of the committee, and the chairman ; and he had said : " No imputation as to the honesty and integrity of the committee in making the report of the 3rd October can be allowed to rest upon them, or blamed to them hereafter. Explanation must be made to the shareholders on behalf of the committee at some convenient time, and when, to be decided upon shortly. The papers are in your custody for the committee; take care of them. When pressure of business at Court is over I will meet you again, and in the meantime I will think it all over." Before they met again Mr. Justice Gillies was dead. Mr. Gillies said that the committee had acted most honourably. When they were officially appointed they had between them 1,500 shares, and though the shares had gone down in value they had never sold out; consequently, they lost something like £7,000. The shareholders seem to have forgotten that. He had lost money; and it had been a sacrifice which no man should be expected to make that he should remain as a director. He knew that there was a very wrong impression about that he had been handsomely paid, but he could not acknowledge that he had been paid for anything he had done.
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He had claimed that his expenses whilst he was in Auckland in connection with the bank should be paid. He had to keep up a house in England, and remaining here was a loss to him. When he left Auckland, after paying his expenses, he would be very considerably out of pocket through his connection with the bank. Mr. Buckley then proceeded to read a letter dated the 9th March, 1889. The President interrupted, and protested against the letter being read, saying that Mr. Buckley as an honourable man was pledged not to read it. Mr. Buckley continued to read the letter. It was signed by Mr. G. Tolhurst and. two otherofficers of the bank, and drew attention to the continuous heavy withdrawal of foreign deposits, but stated that they were prepared to carry on the business of the hank until the directors could communicate with the shareholders and the London board. That was the predicament the board was placed in, and why they did not say anything before. Why did Mr. Murray go home ? To see if any arrangement could be made to strengthen the bank. Why was he (Mr. Buckley) asked to stay in Auckland till Mr. Murray came back, but for the same reason ? The shareholders had been misled, and he blamed some of the head officers. He denied that he had used any threats about his resignation. He said he would remain on the directorate till the end of August, and he kept his promise. He did not flourish Mr. McLean's resignation in the face of the other directors. He said they could have it at any time to suit their convenience. He was quite prepared to meet, not only the Auckland shareholders, but also the shareholders in other places, and give a full explanation of affairs. It was himself who had insisted that these explanations should be made, but the reports as given did not disclose everything. There was another matter. He had in his possession all the papers relating to the investigation of the shareholders' commission. What he wished to ask the shareholders was that he should be authorised to retain possession of these papers until they had been carefully considered by a committee of shareholders, after- which the papers might be sealed up and handed over to the bank. He thought that request was but fair in the interests of the committee. (Cries of " Oh.") Mr. Murray said that, although it was somewhat irregular, he wished to be allowed to make a few remarks. Mr. Buckley had said he wrote to himself of the necessity for making arrangements in London. He (Mr. Murray) did make arrrangements, and his complaint against Mr. Buckley was that not only did he not remain here in Auckland to assist in carrying out this arrangement, but that he had thrown most serious difficulties in their way. He now wished to explain what was the real question before the meeting just now. Mr. Buckley had urged them to appoint a committee to make another investigation. Mr. Buckley: The committee asked for would only take two days. Mr. Murray proceeded to say that the directors had informed them that the globo account showed a considerable deficiency. They did not think it a judicious thing in the interests of shareholders to refer to that more precisely, but they told the shareholders at the same time that the control of this bank should be remitted to an entirely new set of people in London, who would be in a position to deal with these matters. Were these gentlemen to be accused beforehand that they would probably deceive the shareholders and not tell them how their affairs stood ? What probability was there of that ? There was this advantage, that these gentlemen in London were in a position, of strength, and were all strong financial men. The board recommended the shareholders, before going into these details, to put the bank into the hands of men who would carry it through. He had pointed out to Mr. Buckley a quarter of an hour before the meeting commenced that such a discussion would be injurious to the bank. At the same time, although he was bound in honour not to divulge the contents of the president's speech, he told Mr. Buckley what they were going to do, and informed him that if he would only give the directors time—if he did not come forward and raise this most injurious discussion—they would have the bank transferred to the London board. He also asked Mr. Buckley to give it the necessary support in the interests of the shareholders. The London board were very strong men, and from the assurances he had received they were prepared to take the bank up, and notwithstanding what had happened, he was not the least afraid of the bank, although the discussion which had taken place that day was no doubt injurious. The question was, did they want any more talk about the bank, or were they prepared to remit the management to a new set of gentlemen who would go into the whole question, and, who being themselves large shareholders, could be expected to act for the best in the interests of shareholders ? (Applause.) The Chairman said that a good deal of Mr. Buckley's talk was really " bunkum." The bank, he maintained, was as safe as the Bank of England. He did not say there had not been losses, but the globo account would come out all right if nursed for a time. The question was then put to the meeting, when the adoption of the report and balance-sheet was carried by a large majority. Confidence in the Directors. Mr. Upton then moved : -'That this meeting is of opinion that, under all circumstances, the information given by the board of directors is considered sufficiently full." This was seconded by Mr. Finn, and adopted without discussion. Election of Directors. The Chairman said the next business was the election of two directors. Mr. Upton nominated Mr. John Murray and Mr. Thomas Peacock, M.H.R. This was seconded by the Rev. Shirley Baker. Mr. Henry Green was nominated by Mr. Reader Wood. Mr. Green asked the name of the director who had retired and was not eligible for re-election. The Chairman asked Mr. Tolhurst to explain. Mr. Tolhurst explained that on the last occasion three gentlemen were elected as directors — Captain Colbeck, Mr. Buckley, and Major George. There were three vacancies, two caused by the
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death of Mr. J. Williamson and Mr. Browning, and the other by the retirement of Mr. Clark. As the three gentlemen were elected together, it was hard to say whose place each filled. Ultimately, it was understood that the candidates should arrange the matter themselves. Therefore, Major George and Captain Colbeck reported that they would take the places of Mr. Williamson and Mr. Browning; that left Mr. Buckley to fill Mr. Clark's place. Now, however, Mr. Buckley and Mr. McLean had resigned, but Messrs. McLean and Buckley were not ineligible for re-election had they chosen to stand. Mr. Buckley said that was practically disqualifying him for the next seven years from sitting as a director. When he was elected he noticed that clause 43 of the deed of settlement had not been complied with. He wrote to the solicitor of the bank, who suggested that the-directors should cast lots to see which position they should fill. Afterwards they agreed that Captain Colbeck should fill the position of Mr. Clark, so that he would retire in 1889. The Chairman explained that he was always willing to retire, but Mr. Buckley retired, and he was asked to remain. Mr. Button said that the deed of settlement, which was old-fashioned, anticipated that there would always be a poll. As there had not been, he would still hold to the opinion that the gentlemen should agree upon the matter or else cast lots. That, in his opinion, would be the method of which the Court would order if it became necessary to appeal to that body. If Mr. Buckley desired, he might have stood that day. Mr. Buckley seconded Mr. Green's nomination. The election was then proceeded with, and resulted as follows : John Murray, 63; Thomas Peacock, 58 ; Henry Green, 3. The two former were declared duly elected. Mr. J. B. Russell said as it would be better not to have any mistake he would move, " That in the opinion of this meeting two directors only are required, and that they are appointed in the persons of Mr. John Murray and Mr. Thomas Peacock." This was seconded by Mr. Davis and adopted. Auditors. Messrs. A. Boardman and McDonald Scott were elected as auditors unopposed. Mr. Green was nominated, but declined to stand. Thanks. The Rev. Shirley Baker- moved a warm vote of thanks to the chairman, directors, and officers for past services. This was seconded by Mr. Nathan, and adopted, after which the meeting ended.
Mr. George Buckley issued a circular dated Auckland, Ist November, to the shareholders of the Bank of New Zealand as a rejoiner to the "remarks, statements, &c," made at the half-yearly meeting on 24th October. In this circular he recapitulated the reasons which impelled him to the course he has taken. Upon the accounts of the bank he writes as follows : — " The properties accounts, I have always held, and still hold, may be left to work out themselves ; but meantime it is quite certain that any surplus on the best of them will be fully required to meet deficit on others ; and on the whole, even with a very considerable improvement in demand and values, there is nothing to justify any estimate that there will finally be a surplus from the properties accounts towards meeting any deficits in the liquidation accounts. " The deficits on liquidation accounts are proving to be double, treble, and even four and five times more than in the estimates of the managers. This has entirely altered the basis on which the committee made their report of the bank's position, and the excess has only come to my knowledge through my remaining connected with the bank and taking an active part in its management; and as to any sacrifice being made in clearing these old accounts, I can safely assert that many should have been closed long since, and were continually drifting to such an extent that it was imperative they should be finally closed, in order to avoid a heavier loss. " Within the year that has elapsed since the committee's report was made, the position has been reversed by the outcome of these liquidation accounts alone, and the position to face now is— That only by the most careful and judicious management can any dividend be paid after providing for current losses; and every farthing of surplus profits for many years to come will be required to supplement the globo assets account as a whole, if in the future it is expected to be squared off clear of any possible deficit. Of course the bank has a valuable business, and the surplus profits may be expected to increase every year." To Mr. Buckley's circular the board, by its president, Mr. W. H. Colbeck, has issued a reply containing—lst, a vindication of the staff of the bank; and, 2nd, a stricture on the course of action taken by Mr. Buckley. As to the second portion, it appears to us that it is most undesirable that personal recriminations should be indulged in by either side. The question at issue should be, how is the bank to be safely piloted through difficulties which have been intensified by the recent utterances. The first part of the circular of the board is as follows : — " Mr. George Buckley having publicly cast injurious aspersions upon the bank staff, the board have been requested by the staff to examine evidence rebutting these charges, and to permit the publication thereof. " The directors have accordingly gone most fully and carefully into the matters and find ; — " 1. That Mr. Buckley's charges are substantially that, while pretending to disclose the true position of the bank, the staff withheld important information, and that the information they gave was misleading and unreliable. In support of these accusations, he refers by name to certain
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accounts, the loss on which has been determined, and is greater than was anticipated ; and to certain others, the loss on which has not been determined, but will, in his opinion, be in excess of estimates. " 2. That of these accounts the number determined is only seven, which out of some thousands leported on is not a ratio of error inconsistent with bona fides or sound judgment; and that Mr. Buckley materially exaggerates the loss even by them. "3. That in regard to those not determined, his statements are mere matters of his individual opinion; and that while in some cases he may be right, in others he is almost certainly wrong. " 4. That in every case the fullest and most detailed information known to or procurable by the bank staff was placed at his disposal. That in estimating probable outturn of accounts which have realised badly, liberal allowance was made for depreciation —a rate of allowance accepted by Mr. Buckley as sufficient. That the character and magnitude of the accounts he refers to necessarily brought them under his particular- notice ; the more that so many of them being Auckland accounts, he could, and did, go into details of them with the local manager, Mr. Buckley himself making calculations as to bow they might be expected to turn out. That in one of the chief instances the estimates were framed upon expert valuation of land in Canterbury, to which valuation he took no exception, though presumably qualified to do so. In this case the board abandoned the equities rather than pay off the first charges. In another case the board ordered sale of the property by auction, without reserve. These were circumstances not contemplated by the valuators. " Upon this finding the board had no hesitation in arriving at and passing the following resolution : ' The board, having before them Mr. Buckley's charges against the bank staff, of withholding information, and giving misleading reports ; and having inquired very fully into the circumstances, and examined bank records, hereby declare Mr. Buckley's aspersions to be entirely unfounded, and they expressly exonerate the staff from them.' "
1890, The following is a copy of the circular addressed by the Bank of New Zealand to the shareholders in London:— " To the shareholders of the Bank of New Zealand." " Dear Sirs, — " Bank of New Zealand, London, 12th December, 1889. "It has for some time been under consideration of the directors of the bank whether it might not be to its advantage were the chief direction and control removed to London, and the necessary powers were sought and obtained from the New Zealand Legislature to make this change should shareholders deem it expedient. Several circumstances have finally determined the present chief board in the colony to recommend to shareholders that the alteration in question be carried out as speedily as may be ; and, on behalf of the London board, I have to request that you will intrust them with your proxy for the necessary special general meeting of the shareholders shortly to be held at Auckland to consider and decide the question, and that you will signify whether you desire your votes to be used for or against the change. A form of proxy in duplicate, with a letter authorising the blank in the proxy to be filled in at Auckland with the name of any duly-qualified shareholder or shareholders, is enclosed herewith, and I shall be obliged by your completing and returning them to me as early as possible. The proxy, you will see, requires to be signed in the presence of a witness. In anticipation of shareholders' sanction to the removal of control to London, the London board have decided to appoint a gentleman in their confidence to proceed to the colonies to examine into the affairs of the bank, so that they may be in a position to act effectively in the interests of shareholders with the least possible delay. A report of the proceedings at the recent half-yearly meeting in Auckland is sent to you herewith; In regard to this, I may say that the conduct of Mr. Buckley has been condemned, not only by the entire Press of the colony, but by leading colonists unconnected with the bank, and, under ordinary circumstances, not its supporters. His charges against the bank staff are universally discredited. The staff have been expressly exonerated from them after a careful examination into the facts by the colonial board, a majority of whom are new directors, entirely unconnected with, and in no way responsible for, the losses and complications of the past. lam directed to send you extracts from the New Zealand Press showing its views as to Mr. Buckley's action, and also copy of a letter from the president of the bank in Auckland to the London board, dated 9th September, 1889, on the occasion of the retirement of Messrs. Buckley and McLean. The London board is of opinion that the views expressed in this letter are entitled to the fullest weight and confidence. " I am, yours faithfully, " T. M. Stewart, Manager." Together with the above circular, a letter from Mr. Colbeck, the President of the Bank of New Zealand, dated 9th September, addressed to the London board of directors, was issued, from which the following is taken : — " Some time after the issue of the report of the shareholders' committee, it became apparent that some assets were not realising the values set upon them, and Mr. Buckley now asserts there is a deficiency on the in globo account, and seeks to shirk responsibility by asserting there was negligence and default on the part of those who furnished the valuations. The committee's report has, however, in no way been challenged, and while there are ascertained deficiencies, Mr. Buckley ignores the fact that there have also been surpluses; that the circumstances of the colony itself have materially changed since the early part of the year; that the bank's earning-power is increasing; that the return from the in globo assets is improving and will still further improve ; that the best part of the assets still remain to be disposed of, and the probability is will in course of time realise prices which will more than cover what deficit there may so far have been. The board express this view after having given the most careful consideration to the question in
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consultation with the writer, who, together with Mr. Buckley, formed the working part of the shareholders' committee. Mr. Buckley has further stated that the losses the bank will sustain on the account of Lightband, Allan and Co., who have recently been declared insolvent, will preclude the bank from paying a dividend this half-year. The board are, however, satisfied that in the amount brought forward from last half-year there is more than enough in hand to cover whateverloss it is possible to sustain on this account or any other account among the bank's current business. No doubt the half-year now drawing to a close has been a trying one from a profit-earning point of view. At the commencement of it we were accumulating funds in London to meet expected withdrawals of deposits, the drain of which had been more severe and more continued than we had anticipated. These withdrawals to a great extent ceased, so that for some months our funds neither helped to swell profits nor to diminish interest charges. Nevertheless, the board are confident that the result of the half-year's working, when ascertained, will furnish a refutation to Mr. Buckley's assertions. The foregoing are understood to be what Mr. Buckley now alleges are the causes which have led to his resignation and that of his brother-in-law, Mr. McLean. The board have thought it well to advise you of these alleged causes, for the purpose of removing any apprehension which might be felt, or which may yet he occasioned by any action Mr. Buckley may take." The following letter from Mr. Buckley's London solicitor appeared in The Times of the 14th December:— " Referring to your observations in The Times to-day, with regard to the Bank of New Zealand, we have to inform you that Mr. Buckley is in communication with us upon the matter, it being his intention as soon as possible to lay before the shareholders and the public the proof of his allegations."
A special meeting o£ the proprietors of the Bank of New Zealand was held in Auckland on 14th February to consider the question of removing the head office and general management of the bank to London. Captain Colbeck, president of the board of directors, occupied the chair. The minutes of the previous meeting having been confirmed, The President said the directors met the shareholders that day for the purpose of submitting for their consideration the detailed amendments to the deed of settlement, which their legal adviser had intimated were necessary, and had framed, and which it was necessary should be passed at that meeting and confirmed at a subsequent meeting, before the removal of the head office and general management of the bank to London could be effected. It was first necessary, however, that the resolution passed at the last meeting of the shareholders should be duly confirmed, in terms of the 82nd clause of the bank's deed of settlement. A sufficient number of shareholders was present by proxy and in person to make this legal. He moved, " That the resolution passed at the special general meeting of shareholders, held on the 9th day of January, 1890—namely, ' That the head office and general management of the bank be removed to London, and that the directors take such steps as they may think fit to remove the same accordingly,' be, and is, hereby confirmed." Major George seconded the motion. Mr. F. G. Ewington said that, before this motion was put, he would like to ask a question. He would like to ask whether the liability of New Zealand shareholders would be increased by this removal, or whether it would be necessary to take any steps to have the matter brought under the Limited Liability Companies Act in England ? The President replied that the legal adviser of the bank had stated that there would be no necessity for that step. The motion was unanimously passed. The President said he would now proceed to move seriatim the resolutions, copies of which were in the shareholders' hands. The first resolution would effect the necessary change in clause 6 of the deed of settlement to place the head office of the bank in London. It called for no comment. He moved, " That the words ' Auckland, in the colony of New Zealand,' in the 6th clause of the deed of settlement be deleted, and the words ' London, in England,' be inserted instead." Major George seconded the motion, which was agreed to. The President, continuing, said the second resolution was similar in effect to the one they had just passed ; it was to substitute " London " for "Auckland " throughout the deed wherever necessary, so that matters now done in Auckland, by virtue of its being the head office of the bank, might in future be done in London. He moved, "That the word ' Auckland,' in clauses 44, 71, 75, 77, 78, 85, and 91 of the deed of settlement, shall be deleted, and the word ' London ' inserted in lieu thereof, and the words ' the colony,' in clauses 80 and 85, shall be deleted, and the word ' London' be inserted instead." This motion was seconded by Major George, and passed. The President, in submitting the third resolution, said it introduced a new clause in the deed of settlement, enabling the board-in-chief in London, if it thought fit, to appoint a local board or boards in New Zealand or elsewhere to supervise the business of the bank. This was a permissive power which the London board, upon its election, might or might not wish to exercise. It was thought desirable, however, that every provision should be made, so that the new board might be free to make whatever arrangement they pleased upon their assuming the control. He moved, " That the following clause be added to, and inserted in, the deed of settlement, between clauses 57 and 58—namely, ' 57a.' The board of directors may establish a local board or local boards of directors at such place or places in New Zealand and elsewhere as they may think fit, the members of which, being proprietors, shall be appointed by the board of directors, and the board of directors may depute to such local directors such powers as they may think expedient." A long discussion took place upon this motion, and Mr. Reader Wood moved as an amendment, " That the word ' directors ' (as applied to the local boards) be struck out, and the word ' advice ' inserted." This amendment was seconded by Mr. A. Boardman, but, on a vote, it was lost by 34 to 14, and the original motion was carried. s—l. 6.
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The President then submitted the fourth resolution, which, he pointed out, provided for the appointment of attorneys. This power was essential, because, in the first place, when the directors here resigned their positions in order that the new board in London might be elected, it would be necessary that they appoint attorneys, in order that the business of the bank might be carried on. He moved, " That the following clause shall also be added and inserted in the deed of settlement between clauses 57 and 58 —namely, ' 57b. The board of directors may, by instrument in writing under the seal of the bank, empower any person or persons, either generally or in respect of any specified matters, as the attorney or attorneys of the bank, to execute deeds on its behalf in any place whatsoever, and to do, perform, and execute any matter or thing or matters or things whatsoever in relation to the business of the bank which the board of directors is itself capable of doing. And the board of directors may, if they think fit, make it a condition that any deed to be executed by any such attorney or attorneys shall be first approved by such of the local boards of directors as may be specified in the instrument creating the power. And, in the event of any such condition being made, if a memorandum is written upon any such deed to the following effect—namely : " Approved by the local board of directors established at ," and signed by some person purporting to sign as the chairman of such last-mentioned board, any person or persons, body or bodies corporate, excepting any deed or deeds executed by such attorney or attorneys, shall not be bound to inquire whether or not such deed or deeds had been approved by the colonial board of directors, or whether the person so signing as chairman was in fact the chairman thereof. Every deed signed by such attorney or attorneys as aforesaid (and purporting to be approved as aforesaid in any case where such approval is necessary) shall be binding on the bank, and have the same effect as if such deed or deeds were under the common seal of the bank.' " Major George seconded the motion. At the suggestion of Mr. Wood, the word "colonial" in the phrase "colonial board of directors" in the clause, was altered to "local" (it having been explained that "colonial" had been left in through an oversight), and the motion was then passed. The President said that the next resolution provided for the calling of a special meeting. As they were no doubt aware, special general meetings of proprietors were, under the 77th clause of the deed of settlement, held at such times and places that the board might determine, and the notices convening them had to be published by the board. As it would be essential that the board here resigned, so that the new board might he elected in London, it became necessary to make provision for calling a special general meeting for the election of new directors after this board had ceased to exist. This resolution placed that power in the hands of the chief officer of the bank, or the manager of the bank in London. He moved, " That the following clause shall be added to and inserted in the deed of settlement between clauses 43 and 44—namely, " 43a. That, if in order to facilitate the removal of the head office and general management of the bank, the members of the board of directors for the time being shall deem it expedient to resign, in order that a new board may be elected, or in case, from any cause whatever, the number of directors shall be reduced to less than three, the chief officer of the bank or the manager of the bank in London, shall call a special general meeting of the proprietors to elect so many directors as may be necessary to make a full board, and such meeting shall be held at the place where the head office and general management of the bank are located.' " [In the event of an election of directors under this clause, one of the directors so elected shall go out of office by lot at each half-yearly general meeting held in the month of October, or such other month as may be substituted by the board of directors therefor, until the whole of the directors so elected shall have gone out of office; and the length of notice required to be given by a candidate for election under this clause shail be ten days, instead of thirty, as provided for in clause 44.] Mr. T. Peacock seconded the motion. Major George moved an amendment, " That the notice required from candidates to the directorship be twelve, instead of ten days." He pointed out that with only ten days' notice, the publicity required could not be given. Mr. W. S. Wilson seconded the amendment, which was agreed to, and the motion, as thus altered, was then passed. The President said, with regard to the sixth resolution, that they had been in some difficulty concerning the adjustment of accounts as between London and the colonies at the next half-yearly balance, and as to the date upon which the half-yearly meeting should be held. As the head office was to be in London, and the accounts were to go there, delay in holding the half-yearly meeting was inevitable. He moved, " That the following proviso shall be inserted after the first sentence in clause 75 of the deed of settlement, that is to say : ' Provided that the board of directors may from time to time, as they think fit, substitute any other month not later than August for the month of April, and any other month not later than February for the month of October. In the event of any such substitution, the provisions of the deed of settlement having reference to the said months of April and October shall apply to the month substituted for the same respectively as the case may require.' " Major George seconded the motion. After a little discussion the motion was agreed to. The President said there remained only the seventh resolution, the object of which was to suspend the operations of resolutions 1, 2, and 3, until such time as all necessary arrangements had been made for transferring the control to London. He moved, " That the preceding resolutions, Nos. 4, 5, and 6, shall take effect immediately the same shall be confirmed, as provided for by clause 82 of the deed of settlement, but none of the other resolutions, although confirmed as aforesaid, shall take effect until the board of directors under- the present regime shall have inserted a notice in some newspaper published in Auckland to the effect that all arrangements for the removal of the head office and general management of the bank to London have been completed." Mr. Wilson seconded the motion.
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At the suggestion of Major George the motion was amended by the addition of the words " or the chief officer of the bank in New Zealand," after the word "regime," and was then agreed to. The special business being concluded, Major George made some remarks upon the affairs of the bank. He said that the directors had continuously, and recently, most carefully reviewed the position of the so-called globo assets, and he did not hesitate to say that he regarded these assets most hopefully, and had the directors been permitted to go on quietly, they could have carried on the bank successfully, and worked out those assets to the interest of all concerned, for it was not to be forgotten that though some of the accounts under this head had realised badly, most of the land they still had. He had visited some of these properties which had been looked upon as amongst the worst of the bank's dependencies, and he felt very hopeful of their future. He would also like them to bear in mind that from the interest-returning properties there was an increase of £18,000 last year over the previous one, and they had reason to believe that there would be a further increase this year. This being the case, surely they could take credit for a large increase in the value of the properties which yield these increased returns. He would ask them to give all the more weight to his opinions, because, as they knew, he was in no way connected with the past management of the bank, and consequently was not called upon to defend or excuse their actions. He had put his good money into it on the strength of the committee's report, and it remained in it still, and, what is more, he intended that it should remain in it, for he was convinced the bank was sound, notwithstanding what may have been said—or worse, insinuated— to the contrary. He did not think it wise to attempt to hide from them the unfortunate circumstance of a large robbery in Sydney, which, besides the loss, had come at a very inopportune time. The directors had not lost grasp of the position, nor were they in any sense abandoning interest in the institution. On the contrary, they were keeping the whole position in view, and would, until relieved, take such decisive steps from time to time as they considered necessary to conserve the interests of the shareholders. In conclusion, he might say that he was one of those who had always considered it a mistake to take the management away from its birthplace, but it having been considered advantageous that this should be done, he would support it being handed over to others who, under the crrcumstances, might be able to manage it more advantageously for the shareholders, though he claimed that they would not find a body of men who would show more zeal than their present board. The scroll minutes were read, and the meeting terminated.
The following report was issued by the London directors of the Bank of New Zealand on 19th May:— A private meeting, which the larger shareholders of the Bank of New Zealand had been requested to attend, was held at the offices of the bank, 1, Queen Victoria Street, on Saturday, 17th May. The summary of the report of the special commissioner and other recent information were discussed. The views of the gentlemen present were that the extensive business and the important position of the bank rendered it extremely desirable that steps should immediatily be taken to give effect to the resolution of the shareholders to transfer the head office to London; that additional strong names should be added to the London board; that the capital should be written-down by the amount of ascertained deficiency; that the surplus value of the sites and premises in the colonies should be placed to reserve fund; and that the dividend should be confined to a moderate amount until a strong reserve fund has been accumulated. The directors will accordingly issue the statutory notices calling a meeting in London of the shareholders to elect the new board and to receive and consider the report of the special commissioner upon his arrival.
The following circular by Mr. George Buckley was intended for circulation in London and New Zealand on about 9th instant. Two paragraphs are omitted at the places marked *:— The report of Mr. Hean, as representing the London board, now published, is so far satisfactory in corroborating my statement of the bank's affairs at the meeting in October last that I will only briefly review it, as the figures are cleverly put to mislead. My remarks at the meeting were made as a member of the shareholders' committee, appointed at Auckland in April, 1888, and then referred only to the affairs of the bank as affecting the committee's report of 3rd October, 1888. The inference, of course, was that the accounts submitted to them were false and inaccurate to such an extent that otherwise this report would never have been made. . . ,* The globo assets account should be treated separately, and cannot be mixed up with current business in terms of the last Bank Act. Mr. Hean states the additional loss on the globo assets account to December last as £349,000; the total of the details given by me was £354,000. Against this is placed surplus of the bank's premises, £150,000, which means, I suppose, difference in estimated valuation and the amount they stand at in bank's books. This item was, however, fully considered and allowed for by the committee when estimating £800,000, as required to cover all losses, and should not be dragged in now to be made use of a second time. Undivided profit to 31st March last ... ... ... ... £100,000 Sundry suspense accounts... ... ... ... ... 16,000 Less— £116,000 Losses in current business to 24th February last ... £54,000 Sydney defalcations ... ... ... ... 28,000 82,000 Balance ... ~. ... ~. ... ~„, ... £34,000
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As this balance is taken credit for, it is assumed no dividend will be declared for last halfyear, but the amount transferred as a first instalment to supplement the globo assets account. The net deficiency on the globo assets account should therefore be correctly stated as £315,000, in place of £165,000. The committee wrote off the capital, October, 1888, £300,000 ; additional loss on globo account, per Mr. Hean's report, £349,000: total, £649,000. This, then, proved beyond question that at the time the committee commenced their inquiry into the bank's affairs, more than half the paid-up capital (£1,000,000) had been lost, and, therefore, the bank should have been wound up under the 118 th clause of the deed of settlement. Mr. Hean, in his report, is silent as to the probable outcome of the numerous " white elephant" accounts in the hands of the bank still to be liquidated and closed, on which loss, more or less, cannot be evaded, and altogether will amount to a large sum. Some of these I note : — Auckland: Flour-mills, Fibre Company, Morrin's business, Onehunga ironworks, tramways, Williamson's estate (Surrey Hills), Frozen Meat Company, East Coast Land Company, Stud Company, Auckland Agricultural Company, preference shares, £100,000, and current advances, Thames Valley Land Company, Maratai Land Company, &c, Ac, with similar dependencies in other parts of New Zealand. Australia and Fiji: Coal-mines, Rosehill railway, sugar plantations, north Australian stations, timber yards, &c. No proposal is made as to how the certain losses under these heads are to be provided for. As to the properties, fresh valuations were hardly necessary; the original valuations should be carefully revised hy reliable and competent men to fix the selling value of these properties. To ascertain the bank's real position it is misleading to claim credit for fictitious values which may never be realised, and the best test at present is perhaps the fact that these properties have been advertised and offered to the public, both privately and by auction, for the last eighteen months, with the result that very few have been sold, and then mostly at a reduction on the valuations submitted to the committee. Whether sold or realised through an assets company, there is every prospect of a considerable deficiency or further loss, but no proposal is made as to how this is to be met in the future. Mr. Hean's report states that the amounts quoted represent to the best of his belief " the true and actual position of the bank as far as it is possible to ascertain it." From my knowledge of the bank's affairs, extending over a period of some sixteen months, I must beg to differ from Mr. Hean in his opinion entirely, and if the shareholders wish to ascertain the real position of the bank for themselves, and will nominate two impartial and competent persons to go through and examine the assets with me, I undertake to prove to them that it is a question at the present moment whether half the paid-up capital is represented by anything more valuable than waste paper. The board of directors at the last October meeting would not accept any amendment to adjourn the adoption of the report, to allow of further consideration of the bank's position as to deficit in the globo assets account, taking up all the time abusing and maligning myself and Mr. McLean. Had they done so, the whole question might have been arranged and settled in a fortnight by the shareholders on the spot, in place of over eight months' suspense, every day's delay under the circumstances being most injurious to the bank. . . . Geo. Buckley. June, 1890.
The following are : (1) Report to the shareholders of the Bank of New Zealand ; (2) statements of accounts for the half-year to 31st March, 1890, as received from Auckland; (3) report of accountants, Messrs. Price, Waterhouse, and Company, to the London board of the bank ; (4) a report of the proceedings at the meeting of shareholders held in London on the 28th August. 1, Queen Victoria Street, E.C., London, 22nd August, 1890. To the Shareholders of the Bank of New Zealand. In presenting the accounts for the six months ending 31st March, 1890, as received from Auckland, the London board desire to lay before the shareholders the proposals which will be submitted to the general meeting to be held on the 28th instant, and to acquaint them with the circumstances which have led up to those proposals. It has for some time past been apparent to those to whom the management of the bank has been entrusted, that two changes of great importance were required in the administration of its affairs. First, to relieve it from the management and realisation of very large properties in the colonies originally taken as security for advances, but which—in consequence chiefly of the depression in the value of land—the bank had been obliged to take over ; and secondly, the transfer to London of the chief control of the bank. Powers were accordingly obtained by special Act of the New Zealand Legislature, passed in August last, for making over to a separate company the properties above-mentioned and referred to in the Act as the " Globo assets," and for the transfer of the head office from Auckland to London ; and the necessary resolutions to carry out these powers were duly passed at two meetings of the shareholders, held in Auckland in January and February last. For the satisfaction of the London board, before assuming the administration of the bank, and in view of the proposed sale of the globo assets to a new company, it was thought desirable, with the object of ascertaining as far as it was possible to do so, their actual value, to send out an expert to the colony to examine and report upon them, and upon the affairs of the bank generally ; and Mr. David Hean, a gentleman of large banking experience in the colony, was chosen for that purpose. Shortly after Mr. Hean's return to this country, an Estate Company was formed with a capital of £2,000,000, the amount being based upon Mr. Hean's valuation of the properties, which is admittedly of a very conservative character, and the estates have been sold to such company, the bank receiving a portion of the purchase-money, representing the proceeds of the debenture issue after providing for expenses of issue, in cash, and having also as the holders of the issue entire stock of the company, the reversion to the properties after- redemption of the debenture issue. It is satisfactory to know that sales to an. amount approaching £100,000 of portions of the properties
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affected since Mr. Hean's report was made, have resulted in prices being obtained aggregating considerably in excess of his valuation. The business of the bank will now, therefore, be unfettered by the management and realisation of these estates, while any surplus above Mr. Hean's valuation will ultimately accrue to the bank; and it may without undue confidence be hoped that the ultimate result will be to show a considerable advance upon the price at which, in the shape of stock of that company, they now stand in the books of the bank. In order to facilitate the transfer of the control to London, the board of directors at Auckland have resigned office, and a new board, consisting of seven qualified shareholders, has now to be constituted in London to take over the chief management of the bank. The meeting for the election of the new board wiil be held on the 26th instant, and the following seven gentlemen have given notice in the manner required by the deed of settlement of their intention to offer themselves as candidates: Colonel Baring, J. A. Ewen, Esq., the Right Honourable Sir James Fergusson, Bart., M.P., E. Herbert Fison, Esq., R. H. Glyn, Esq., the Right Honourable A. J. Mundella, M.P., and T. M. Stewart, Esq. There is at present, therefore, no board by whom a formal report can be presented, but the following proposals which have been prepared with the sanction of the constituent members of the new board will be adopted by them on their election as their report to the general meeting to be held on the 28th instant. The proposed directors, being convinced that the true policy at the present time is to write off, once and for all, every bad and doubtful asset of the bank, have adopted Mr. Hean's valuation, and have submitted the accounts to Messrs. Price, Waterhouse, and Company, chartered accountants—a print of whose report is enclosed—and upon the adoption of whose recommendations they have insisted as a condition of their taking office. It is in contemplation to call up the remaining £3 per share in respect of the 25,000 shares of the new issue held in the colony. The future administration of the bank will be controlled by the board in London, assisted, if it be thought desirable, by one or more advisory boards in the colonies. In conclusion, it may be stated that if these proposals are adopted there are strong grounds for believing that the bank will be put once more upon a sound footing, and that with management based upon a thoroughly prudent banking policy, the shareholders may look forward to a renewal of that prosperity which its leading position in the colony, and its' splendid and still unimpaired connection, should command. By order of the London Board. T. M. Stewart, Manager.
Aggbegate Balance-sheet at 31st March, 1890. (Including London Office at 31st January, 1890). Capital— Liabilities. £ £ s. d. 100,000 shares of £7 each .. .. .. .. .. 700,000 25,000 „ £10 „ £10 paid up .. .. .. .. 250,000 25,000 „ £10 „ £7 paid up .. .. .. .. 175,000 1,125,000 0 0 Notes in circulation .. .. .. .. .. .. .. 453,295 0 0 Bills payable in circulation .. .. .. .. .. .. 1,707,441 3 1 Deposits and other liabilities .. .. .. .. .. .. 8,090,653 4 6 Balance of profit and loss .. .. .. .. .. .. .. 99,783 11 5 £11,476,172 19 0 Assets. £ s. d. Coin and cash balances at banker's .. .. .. .. .. 1,469,642 13 2 Bullion on hand and in transit .. .. .. .. .. .. 102,664 12 8 Bills receivable and securities in London .. .. .. .. .. 1,437,666 18 0 Bills discounted and other debts due to the bank .. .. .. .. 8,092,757 19 8 Landed property, bank premises, &c. .. .. .. .. .. 373,441 3 6 £11,476,172 19 0 Pbopit and Loss Account. £ s. d. Balance from last half-year .. .. .. .. .. .. 56,972 17 4 Profit from this half-year without appropriation for bad and doubtful debts .. 42,810 14 1 Balance forward .. .. .. .. .. .. .. £99,783 11 5 44, Gresham Street, London, E.C., 16th August, 1890.
To the London Board of Directors of the Bank of New Zealand. We have considered the balance-sheet of the Bank of New Zealand for the 31st March, 1890, as prepared at Auckland for issue with the fifty-seventh report of the directors—in connection with the report of Mr. David Hean on the assets of the bank, dated 22nd July. If the valuations of Mr. Hean are adopted, the balance-sheet for the 31st March, as received from Auckland, requires amendment by writing down the globo assets by the sum of £349,000; thus bringing these assets to a figure corresponding with Mr. Hean's valuation of £3,107,993 for the 30th December, 1889 ; by writing off the loss on current business, £54,000; and the amount of the Sydney defalcations, with the costs relating to the same, £34,000 —a total of £437,000. Against this total may be set off the present balance of profit and loss, £99,783 lis. sd. ; and sundry reserves and suspense accounts now standing on the books, £16,000 —£115,783 lis. 5d., leaving a net deficiency of £321,216 Bs. 7d. There is, in Mr. Hean's opinion, a surplus value in the bank's business premises of £150,000 over the amount at which they now stand, the original cost of these having been written down in the past, at the expense of dividend, by more than that amount. It would be justifiable, in our opmrou, under the circumstances, to set off this surplus against the above balance of deficiency, but having regard to the large sum at which the premises would then stand, necessitating reduction at the cost of revenue in the future, we should not advise this course. By the arrangements for the sale of the globo assets, the amount to be received by the bank on the transfer, including the £1,850,000
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preference and ordinary shares in the new Estates Company, will be £3,162,500. As Mr. Hean's valuation of the assets sold is £3,107,993, a surplus of £54,507 arises on the sale, subject to the realisation of the shares at par. We could suggest that the necessary readjustment of the figures of the balance-sheet might be carried out by reducing the capital account by £300,000 (being £1 15s. per share on the £7 shares, and £2 10s. on the £10 shares), and writing off the balance of deficiency from the above surplus. This would leave a reserve of £33,290 lis. sd. to be carried forward. If it be determined to make up the London accounts in the future to the same date as those in the colonies, two months' interest on deposits and London office expenses will fall on the next halfyearly account, in addition to the half-year's own charges. The two months'interest and expenses, amounting approximately to £19,000, together with the rebate on current bills, which has not been allowed for in the past, and is estimated at £10,000, might be properly charged against this balance. Should our suggestions be adopted, the subscribed capital would then stand at £900,000, with a reserve liability of £1,500,000, making £2,400,000 ; while the surplus value of the bank premises would give an unseen reserve of £150,000. We are, &c, Price, Waterhouse, and Co. At the meeting, the Chairman, Sir James Fergusson, stated that, although he occupied the chair on that occasion, it was not intended that he should do so at the board, because his other duties would not permit him to do so. He was glad to say that the post of chairman in the future would be filled by Mr. Richard Glyn. The affairs concerned were so large and the interest felt in them was so deep that he was bound to deal with all the prominent points connected with the bank. He desired to state at the outset that the London advisory board had no knowledge of the details of administration at the head office at Auckland, and their duties were confined to the ordinary banking business in London. Virtually no losses were made in London, and large profits, of £40,000 and upwards, were undoubtedly made in the metropolis. Therefore, the management of the bank in London left the proprietors no cause for complaint. Without going at length into ancient history, he would say that finally the great question came before those in London whether they would assume the responsibilities of the head office. Before they replied, they required the fullest information, and the 'services of a most competent gentleman were obtained, who proceeded to New Zealand and thoroughly investigated the affairs of the bank and its securities. The report had been published, and the public now really understood the losses of the bank. To remedy those losses the directors proposed a severe course of treatment, which they hoped the proprietors would approve, and suggested that instead of diminishing the assets of the bank by the amount which it was thought the proprietors ought to take off their capital, that sum should be carried to reserve which, if unseen, was none the less real and substantial. The attacks which had been made on the bank and the losses which it had sustained had undoubtedly damaged its credit. There had been a fallingoff in the fixed deposits both in this country and in the colony, and the earning-power of the bank had consequently been considerably diminished, but as a matter of fact in the colony there had been far less damage done to the bank than was the case in England, and there was a surprising maintenance of confidence in the bank. Nothwithstanding that, they had to pay over the large sums which the bank had kept in hand in coin and cash balances for some years past. In the face of this, a final proposal was made from a friendly source, by means of which unconvertible assets were transferred to the company, and a very large sum had been rendered available for the bank. The proceeds of a million and a half had been made immediately available for the purposes of the bank, and this was sufficient to meet all the demands which could be made upon them, and would set free the very large balances which would be appropriated to the ordinary business of the bank. The immediate result was to set free the balances, but the ultimate results would be very important. The whole of the shares of the Assets Company remained the property of the bank, and, therefore, all the improvements in that property would ultimately come to the bank, and would be the property of the shareholders. It was not too much to expect that from these sources the sacrifices the shareholders were now called upon to make would be recouped. The most important thing was that the bank was relieved of the necessity of forcing securities upon an overcharged market, and being compelled to part with them at a diminished value. There were two very satisfactory features in connection with the bank. One was the extent to which public confidence in the colony as to the soundness of the institution had been maintained, and the second and most important feature was the general revival of prosperity in New Zealand, the increased amount of trade, and the increased demand for property. The first evidence of this was in the enormously-increased export of the staple products of the colony, and the second was the great amount of the holding in the Government Savings-bank. Notwithstanding the attacks made on the institution, it would not only hold its own, but he firmly believed would get a fair share of the improvement justly arising from the prosperity of the colony. He believed that good would come out of evil, but they must have strong management at New Zealand and the strongest officer at the head of the bank's affairs. The losses had been great, there had been rash lending and overtrading, but in years of great prosperity there was overconfidence in the value of land in New Zealand. The bank was only in the position of many others who were disappointed in the value of land. The lesson had been a severe one, and, he hoped, would not be forgotten. The frugality which had been introduced, he was glad to say, in the government of New Zealand itself would be copied by that and similar institutions, and having now a solid substructure on which to build, they might go forward with more confidence, though with less rashness, than in times past. He would ask them that, as the directors had not been responsible for the losses in the past, the shareholders would support them in the future in that bold, severe, but just policy of recognising their responsibilities, of meeting their losses, and of so looking forward with greater confidence to the future. He moved, That the proposals of the directors should be adopted. Mr. Mundella, M.P., seconded the motion. Mr. Snow moved as an amendment, That the deficiency of £321,216 be at once written off by reducing the capital by £175,000, being £1 on the old £7 shares and £1 10s, on the new £10 shares, and that the £150,000 increased value of
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bank premises be used as a set-off against the deficiency, to which should be added £54,507 arising from the sale of the globo assets, thus leaving a surplus reserve of £58,290. Mr. Dibley, Mr. Drysdale, and the Rev. J. B. Smyth appealed to Mr. Snow to withdraw this, and he did so amidst cheers. Mr. C. R. Carter expressed the greatest confidence in the future prospects of the colony. The proposals of the directors were unanimously approved, and were agreed to in the following series of resolutions, which were moved by Sir Thomas Paine : — "1. That £1 15s. per share of the existing shares in the capital of the bank numbered 1 to 100,000 inclusive, and £2 10s. per share of the shares in the same capital numbered 100,001 to 150,000 inclusive, be and the same amounts respectively are hereby cancelled, such capital having been lost or being unrepresented by available assets, and that henceforth dividends shall be paid on the first-mentioned shares as representing £5 ss. each instead of £7 each, and on the secondlymentioned shares as representing £7 10s. each instead of £10 each. But such reduction shall not interfere with, or in any way alter, the liability of shareholders to contribute a further sum of £10, as provided by the bank's Acts and deed of settlement, in the event of the assets of the corporation being insufficient to meet its engagements. 2. That the directors be and are hereby empowered, at their option, to receive from such holders of the shares in the capital of the bank numbered 1 to 100,000 inclusive as may be willing to pay the same £1 15s. per share to reinstate their shares to £7, and to receive from such holders of the shares in the same capital numbered 100,001 to 150,000 inclusive as may be willing to pay the same £2 10s. per share to reinstate their shares to £10, and on all shares so reinstated to pay dividends on the reinstated amount, provided always that no such payment and reinstatement shall render any shareholder liable to pay any further or larger amount than he would have been liable for if such payment and reinstatement had not been made. 3. That the directors be hereby requested and empowered to apply, at a convenient opportunity, at their discretion, to the Parliament of the Colony of New Zealand for statutory confirmation of the resolutions passed at this meeting." Mr. Mundella, M.P., in seconding the motion, congratulated the meeting upon the sensible unanimity which seemed to prevail. They were all sufferers, and were all determined to put the institution on a sound basis, and he rejoiced to find that his colleagues and fellow-shareholders were all of one mind, determined to face the worst and to place the institution on a bed-rock, courageously meeting all the liabilities and all the competition they might have in the future. He believed they were doing the right thing, and doing that which would be serviceable not only to the shareholders but to the Colony of New Zealand. The motion was carried unanimously, and a cordial vote of thanks to the chairman brought the proceedings to a close.
1891. The statutory meeting of this company was held on 20th November, when the chairman, Mr. R. J. Jeffray, stated that the meeting was simply held to comply with the statute, and there was no business to place before those interested. The recent issue of £1,500,000 debentures had been fully allotted, and instalments amounting to £545,000 had been received to date. A Stock Exchange quotation had been granted for the debentures. The assets agreed to be taken over had all been vested in the company, and Major F. Nelson George, one of the directors, was now in New Zealand for the purpose of organising the company's business. The directors had every confidence in the future of the company. Already several bids had been received for their properties, exceeding the valuation at which they were taken over by the company, but the directors had declined them in the hope of doing better.
The half-yearly general meeting of the proprietors of this bank was held in London on 25th February, under the presidency of Mr. Richard H. Glyn. The following circular had been sent to shareholders : "I beg to hand you herewith notice of the half-yearly general meeting, to be held on the 25th instant. It has hitherto been the custom to present the accounts of the bank to the shareholders half-yearly, but the globo assets having, as you are aware, been handed over in August last to the Bank of New Zealand Estates Company, which only makes up its accounts yearly on the 31st March, it is not possible to continue this practice, and in future the bank's accounts will be presented at the August meeting only. In the alterations recently made in the deed of settlement provision for this was introduced. The profits of the bank for the half-year ending the 30th September last, after making provision for bad debts, would have admitted of the payment of an interim dividend, but having regard to the short time which the present board had been in office at that date (about four weeks) the directors have decided to carry forward the balance to the present half-year. The directors are glad to be able to state that the position and business of the bank show distinct signs of improvement." The Secretary (Mr. C. G. Tegetmeier) having read the notice convening the meeting, The Chairman, who was received with applause, said: Gentlemen, —As you are aware from the short circular which has recently been issued hy the board, we do not present any accounts to you at this meeting. It is intended, in future, to present the accounts yearly, made up to the 31st March, and an alteration to that effect was duly made in the deed of settlement, and approved by two meetings of shareholders. The reason why we are compelled to depart from the custom of our predecessors, who, I believe, issued their accounts twice a year, is the transfer of the globo assets to the Bank of New Zealand Estates Company, a matter which was very fully explained to you by Sir James Fergusson at the meeting in August of last year. The effect of this transfer has been this : That the bank has lost the direct control of the property, and holds in its stead the entire share capital of the Estates Company. This amounts to a very large sum—very nearly
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£2,000,000 — and on these shares we anticipate we shall receive substantial and gradually increasing dividends. But from the nature of the business of the Estates Company they can only make up their accounts once a year—that is to say, up to the 31st of March of each year. Consequently, we shall only receive our dividend once in a year ; and although in the half-year which ends on the 30th September we shall have earned a certain proportion of the profits, we cannot get them into the bank's accounts, because we shall not have received them in the shape of a dividend from the Estates Company. It is therefore impracticable to present to you a correct account of the position of the bank but once a year. We shall have two meetings in the year, one in this month and one in the month of August. We shall submit the accounts in August, and we have taken powers to pay interim dividends. Now, when we consider the position of this bank in the half-year under review—that is to say, from March to September last—the uncertainty as to whether the globo assets could be put into a liquid condition, the general distrust in which the bank was held, which compelled the great contraction of loans in order to provide a large reserve for eventualities, we could not have expected but that the earning power of the bank should be exceedingly crippled, and no doubt it was so; but it is not unsatisfactory to know that the accounts, which have been duly audited by Messrs. Price, Waterhouse and Co., show, subject to adjustment with the Estates Company, and after providing for bad debts, which I am very glad to tell you were very moderate, an amount of profit sufficient to pay a dividend, speaking roughly —I cannot give you the exact figures—at the rate of 6 per cent, per annum. We felt, however, that it would not be prudent at this early stage to commence paying dividends, although we should have liked to have done it, because we are very well aware that the shareholders have been a very long time without any. We concluded that the most prudent plan, both in the interests of the bank and the shareholders, was to carry forward the balance, and we shall deal with it when the accounts are made up on the 31st proximo. The first duty that devolved upon the board when it took office was avery important one—namely, the selecting of a suitable gentleman for the office of general manager. We should have been exceedingly glad if we could have taken some officer from the bank for this post, because it is the wish of the board that the prizes in the bank should go to those who have served us long and with ability, but we felt that there were exceptional circumstances in this case. We felt that it was exceedingly desirable that new blood should be introduced into the bank. Of course there was this very obvious advantage in taking a man from this side—that we are enabled to make his personal acquaintance, to judge of his ability, and in concert with him to lay down the lines of policy which we intend should be carried out in this bank, which we could not have done in anything like so convenient a way by correspondence with anybody in the colony, however able he might have been. At the same time, I wish it to be understood that there are certainly in this bank several gentlemen who would have filled this office creditably if it had been thought desirable to appoint them. We found this a much more difficult business than we at first anticipated, and it involved considerable delay, but that was better than sending out to such an important position any one of whose ability we were not absolutely assured. We eventually selected Mr. William Turton Holmes. This gentleman was at the time manager in Colombo in a branch of the Madras Bank, a gentleman well and favourably known. He was recommended to us by a personal friend as a gentleman of great ability, of great strength of character, and very well suited for the position that was vacant. We had some conversation with him. He was at Home, I think, for a month before he started for the colony, and the board are glad to be able to say that the opinion they formed of him bore out the views which were expressed to us by the gentleman who recommended him. Mr. Holmes is in the colony, and he either has or is on the point of taking up his position. He will, of course, supersede the gentleman who has been been acting manager for some time, Mr. John M. Butt. Now, I think the bank is under great obligations to Mr. Butt, and lam glad to have an opportunity of expressing them, for the zeal and fidelity he has shown in the interests of the bank during what must have been most arduous and trying times. He has the interests of the bank most thoroughly at heart, and I trust that as second to Mr. Holmes we shall for a long time have the benefit of his large colonial experience. Our best thanks are also due to those gentlemen who have acted as the local board in the colony as representatives of the London board during the interregum which was caused between the dissolution of the Auckland board and the arrival of the new general manager. They stepped into that position at a critical period, and we are exceedingly indebted to them for their services. And here I may refer to a matter which has been frequently mentioned by individual shareholders —that is, the question of the appointment of a permanent local board. There is a great deal to be said both for and against a local board, but we have come to the conclusion for the present, at any rate, not to appoint one, and we have been very much influenced in our decision by the advice of some of the most tried and trusted friends of the bank in the colony— gentlemen whose co-operation we should feel entitled to obtain as local directors had it been decided to appoint a local board. The conclusion we came to was that a local board was rather apt to weaken a strong general manager, and we think Mr. Holmes will turn out a strong general manager, and that he will be able to do without that assistance, particularly as he will have the experience of Mr. Butt at his back, and there are many friends of the bank in the colony who will afford Mr. Holmes every assistance and advice he may require. Now, I come to an important point rather, and that is the change which has come over the bank during the few months that this board has been in office, and it is very gratifying to be able to say there are most distinct signs of a renewal of confidence in this institution. Perhaps the best evidence of this is the steady and gradual progress of the deposits in the colony in spite of the reduction in the rate of interest to 4-J- per cent., which I believe does not usually attract much money to a colonial bank. As regards the London deposits, they show a marked sign of improvement. Moreover, the large amount of money which we have received from the sale of debentures of the Estates Company will add to the earning power of the bank, and has enabled us to take up as much business of a desirable character as is offered, which, of course, was impracticable during the period between March and September last year. We
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think, also, we shall be able to save something in the working expenses of the bank by reorganising the staff, without, I think, impairing its efficiency. That has been begun, but it is necessarily a matter which can be so much better attended to in the colony, and that had better stand over until Mr. Holmes arrives there. Now, as regards the Estates Company, in which we have a very large interest, their matters have been taken up most energetically by their board here and their reprepresentative in the colony, and the sales of properties, so far as they have gone, have been satisfacfactory. I may tell you that even within the last few days a telegram has been received from Auckland stating that a large asset of the Estates Company, which at one time looked as if it might give rise to trouble or delay, has been satisfactorily arranged. Now, gentlemen, I hope you will not in the least infer from what I have said that the board underestimates the difficult position of the task they have taken up. On the contrary, we know perfectly well that no change of head office from the colony to London, or change of your board, or change of management, is going to raise this bank, or any bank, to a position of high credit from the condition into which it has been allowed to drift. On the contrary, it is a question of time, and there must be considerable labour and considerable skill employed by every one connected with the management, from the highest to the lowest, until this bank can be put in the position of high credit it formerly occupied ; but I think this much we can say, because it is proved, that the bank has turned the corner, and that it shows most distinct signs of progress in the right direction. Although the head office of the bank has been removed to London, we have not by that means been turned into a London bank. We were instituted, as I understand it, for the promotion of the welfare of the colony of New Zealand, and that will be the policy of the board in the future. I fancy that it is not improbable that some of our competitors there may make capital by saying that we are a foreign institution, and that the sympathies of the bank will not be with the colony so much as they were in former days. This is not the fact. It is our intention to continue the bank as a New Zealand bank, and in the interests of New Zealand and the New Zealand colony. Our property is so much bound up with that of the colony that it is encouraging to have advices on all sides of the progress that trade is making there. You have all seen, no doubt, the official statement that the surplus revenue expected is something like £158,000. W& have received a telegram from Auckland this morning which is of a very encouraging nature. The telegram is as follows : " Land settlement making rapid progress. Very satisfactory expansion of trade ; exports for 1890 nearly £10,000,000, being £3,500,000 in excess of imports." You might perhaps say that that is more or less prejudiced evidence, but, through the kindness of Sir James Fergusson, I have an independent report, made by the United States Consul at Auckland for his Government at Washington, and you will hear what he says about it. This report, which was made by Mr. Conolly is as follows : " Outlook in New Zealand continues bright and hopeful. The prospects of increasing and continued prosperity are more encouraging than for a number of years past. The colony has settled down to a slow but certain pace in the race for population and wealth. Its resources are being developed upon a more permanent and substanial basis, as may be seen from a glance at the large increase of exports over imports during the last year." He then says her position as the most productive colony in Australia is firmly established, as a comparison with the table shows. After giving the table, which I need not trouble you with, he concludes as follows: "It will be seen from the above table that New Zealand, in proportion to population, is the greatest wealth-producing colony in the Australasian group. There is not the slightest doubt as to the great future before New Zealand, provided ordinary caution is observed in the management of her affairs." Perhaps it might not be unfair to substitute for the name of the colony the name of the bank. In the case of this prosperity we may be sure that the bank will have fair share, and you may relay on the best efforts being given to promote the success of the. bank. I hope that on your part, gentlemen, you will give us your confidence in a business which cannot fail to be more or less a difficult one, and I am afraid we shall also have to ask you to excercise your patience a little longer, for it is very evident for some little while to come we shall have to be content with moderate dividends, and to devote a large proportion of our profits to the establishment, as quickly as possible, of a good and substantial reserve fund, if we wish to be able to compete on an equal basis with the other banks in the colony. Now, I know from experience that there are a good many persons who take a great personal interest in the welfare of the bank, and, in conclusion, I should like to tell you how I think you can help the bank very much. You can use your personal influence with your friends to keep their accounts with us, and to deposit their money with us; and you can do this with advantage to the bank, and without the least risk to your friends. A good deal has been said recently about the cash reserves of banks. By the latest advices we have, the proportion of our reserves to our liabilities was nearly 14 per cent., which is a most respectable showing. Then our capital has been written down low ; in fact, some people think to low. The large asset of the Estate Company is showing by actual results that it has been conservatively valued, and behind that there still remains the reserve liability of the shareholders, which amounts to no less than £1,500,000. I think that is all I have to say to you to-day, and I have no resolution to propose, nor is there any business before us. At the same time, if any shareholder has any questions to ask I shall be happy to answer to the best of my ability. Votes of thanks were passed to the directors and officers of the bank.
The ordinary general meeting of the proprietors was held in London on sth August, 1891, the President, Mr. R. H. Glyn, in the chair. The following report was presented : — The Directors beg to submit the following statement of accounts for the year ended 31st March last. The net profits, after making provision for bad and doubtful debts, amount to £59,522 Is. 3d., out of which the directors have placed £20,000 to a reserve fund, and have invested the same in Consols. They recommend that the balance, £39,522 Is. 3d., should be appropriated as follows : To payment of a dividend at the rate of 5 per cent, per annum for the half-year ended 31st March, 6—l. 6.
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£21,250; to be carried forward to profit and loss, new account, £18,272 Is. 3d.: total, £39,522 Is. 3d. Mr. Holmes, the new general manager, took up his post at Auckland in March last, and his appointment has been well received throughout the colonies. He has been engaged in visiting and inspecting various branches of the bank, and his reports, as far as they have been received, are encouraging. In accordance with the provisions of the deed of settlement, two of the directors, Colonel Baring and J. A. Ewen, Esq., retire by rotation, and, being eligible, offer themselves for re-election. The shareholders will also have to elect auditors for the ensuing year. The present auditors, Messrs. Edwin Waterhouse and George Sneath (Messrs. Price, Waterhouse, and Co.), are eligible, and offer themselves for re-election. Subject to confirmation by the meeting, the dividend will be paid in London on the 7th August, and at the branches on receipt of advice. Balance-sheet, 31st Maech, 1891. Db. Liabilities. Capital,— £ s. d. 100,000 shares of £5 ss. each .. .. .. .. .. .. 525,000 0 0 50,000 shares of £710s. each .. .. .. .. 375,000 0 0 Less calls in arrear .. .. .. .. .. 2,167 0 0 372,833 0 0 Notes in circulation .. .. .. .. .. .. .. 483,064 0 0 Bills payable in circulation .. .. .. .. .. .. 1,083,486 13 0 Deposits and other liabilities .. .. .. .. .. .. 7,436,776 11 7 Balance of profit and loss .. .. .. .. .. .. .. 59,522 1 3 £9,960,682 5 10 Cb. Assets. Coin, cash balances with bankers, and money at call at short notice .. .. 1,503,493 6 4 Bullion on hand and in transit .. .. .. .. .. .. 138,530 19 11 Bills receivable .. .. .. .. .. .. .. .. 1,672,840 17 7 Bill discounted .. .. .. .. .. .. .. 630,377 2 1 Advances and other debts due to the bank .. .. .. .. 3,791,276 17 9 ■Bank of New Zealand Estates Company (Limited) shares (par value) .. .. 1,850,000 0 0 Landed property, bank premises, &c. .. .. .. .. .. 374,163 2 2 £9,960,682 5 10 Peofit and Loss Account. £ s. d. Amount carried to reserve fund .. .. .. .. .. .. 20,000 0 0 Dividend at rate of 5 per cent, per annum for half-year ended 31st March, 1891 21,250 0 0 Balance carried forward .. .. .. .. .. .. .. 18,272 1 3 £59,522 1 3 Net profit for year ended 31st March, 1891 .. .. .. .. .. 59,522 1 3 Besebve Fund. £ s . d. Transfer from profit and loss .. .. .. .. .. .. 20,000 0 0 The Chairman said : Gentlemen —This is the first balance-sheet which the new board have had the pleasure of submitting to you, and as it shows some large alterations in the figures compared with the balance-sheet that was issued up to the 31st March, 1890, it will be convenient, perhaps, if I go briefly through it and give you a few explanations as to how these alterations have occurred. In the first place, the capital of the bank is now £900,000, as against £1,125,000 formerly, and I think you are all very well aware how this is arrived at. No doubt most of you were present at the meeting in August, when the proper resolutions were passed. It was by writing off £300,000 and by calling up £3 a share upon £25,000 shares of £10 each upon which only £7 was paid. You will notice that there is still a small portion of this call unpaid, amounting to £2,167. This is in process of collection, and no doubt will entirely disappear from the next balance-sheet. We duly applied to the Legislature of New Zealand for statutory confirmation of the resolutions reducing the capital, and I am glad to tell you that we have recently received a telegram stating that the Bill for that purpose has passed the Lower House, and only awaits the third reading in the Upper House, so that I make no doubt it will in a short time become law. The reserve liability of the shareholders remains as it always was, at £1,500,000. Take the next item in the balance-sheet—notes in circulation, £483,000. That shows an increase of £30,000 —not a very great matter in itself, but still it is satisfactory as showing that the notes of the bank still command the confidence of the New Zealand public. The next item to which I must draw your attention is deposits and other liabilities, £7,436,776. This compares with £8,090,000 in the last balance-sheet, showing a loss of over £600,000 ; and I think it shows us what a severe strain was placed upon this bank during part of last year. It is curious to note that the strain was almost entirely in this country, and not in the colony, where the bank, of course, is so very well known. Turning to the other side, you will see that the coin, cash balances with bankers, and money at call and short notice amounts to £1,503,493. That is a little over 16 per cent, of our immediate liabilities to the public, so that we are in a strong financial position. The bills receivable call for no particular remark. In the last balance-sheet there was one item of £8,092,000, under the heading of " Advances and other Debts due to the Bank." That, of course, included the globo assets, which at that time had not been transferred. They have since been transferred, and now we have the Bank of New Zealand Estate Company's shares, and the amount has been divided into three items to make the balance-sheet as intelligible as possible. The difference between this and the £8,000,000 which I have referred to is accounted for roughly by the amount of cash received from the Estates Company for the sale of their debentures, and the writing off of bad debts with which you are all familiar. The landed
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property and bank premises stand at £374,163. This is very nearly what it was the last time, and you will probably know that these premises are stated here at £150,000 less than they are valued at. I now come to the balance of profit and loss with which we have to deal to-day, £59,522 ; and here I may say that proper provision has been made for rebate on bills discounted, amounting to a little over £8,000, but of this £59,500 the directors, as you have been informed, have taken £20,000 and invested it in Consols to form the nucleus of a reserve fund, and of the prudence of that action I take it there can be no two opinions. As regards the balance of £39,522, I am aware that the shareholders are not entirely unanimous. Some shareholders have expressed the opinion that at this early stage it is very important to make the bank as strong as possible, and that it would have been more prudent to have carried the whole amount of £39,500 forward, and not paid any dividend at the present time. That, no doubt, would be a very conservative course. The views of the shareholders have been very carefully considered by the board, but we had to take into consideration the fact that it is a long time since the shareholders of this bank received any dividend, and as there are amongst us a good many to whom some return upon their capital is of considerable importance, especially in these evil days, and looking at the fact that there seems every hope that we may now be able to commence paying regular dividends —although perhaps of a moderate amount —we feel ourselves justified in recommending you to make the small distribution which is mentioned in the report, and that, I hope, will meet with the approval of the shareholders. If you approve of that distribution it will leave us £18,272 to carry forward. Now, I can quite imagine that some people may think that that is a large proportion of the net earnings of the bank for the past year, and perhaps it is, but I do not think it is quite our province at the present moment to make things very pleasant all round, but rather to make the bank as strong as we possibly can, to increase the confidence of the public and of the depositors, and to regain some of the credit which was unfortunately lost in years gone by. There are many reasons why we should carry forward a large sum of money. It is very handy to have a fund that may be utilised for equalising dividends. You must remember that the earning-power of this bank at the present moment is very moderate, and consequently when losses occur—and you cannot run a bank without some current losses—they fall more heavily proportionately upon a bank which is making small profits than they do on an institution which is making large profits. Then, again, we do not quite know what the ultimate result will be of the financial proposals of the New Zealand Government, and we cannot tell what effect they may have upon the business of the bank or upon the business of the Estates Company. That remains to be seen, and I think in' carrying forward this amount we are only acting in a prudent manner, because we want to restore the credit of the bank and make it as strong as we possibly can. As regards the Estates Company, we have every reason to believe that this is a satisfactory asset. The sales of the property, as far as they have gone, have come out well above the valuation of the late Mr. Hean, and they have consisted almost entirely —I may say entirely—■ of properties which return the very smallest revenue. The return was something under 2 per cent., and we have not yet begun to touch the properties which are returning us a reasonable rate of interest. The revenue of the Estates Company for the past year was not quite up to our expectations, but this, you can easily understand, was owing to the very bad season through which the country passed. The prospects for the present year are, we are advised, excellent. Therefore, on the whole, I think it is fair to say that we believe that the shares which we hold in this company are steadily enhancing in value, for we are advised that quite a demand has sprung up for station property, and generally the tone of things is very much better in the colonies; and I think that asset may be looked upon as worth a great deal more in the future than it is worth to-day. It may interest you to hear that Mr. Jeffray, the chairman of the Estates Company, and a gentleman with considerable colonial experience, is at present in Australia on business of his own, and will take the opportunity of visiting New Zealand and conferring with the manager and officials of the Estates Company there; and I think we may expect considerable advantage to the company from his presence there. Now, gentlemen, I hope that our first balance-sheet will be considered by you as at any rate fairly satisfactory. Of course, it is not starthngly good, but you can hardly expect anything very remarkable at this very early stage. It certainly shows some progress in the right direction. I may tell you that the.advances of the bank at the end of April—which, as you know, is a month later than the date of this report—were about £400,000 more than at the time when the head office of the bank was transferred from Auckland to London. This is, perhaps, not a very large increase, but money has been exceptionally cheap in the colony, owing, it is said, to the check given to enterprise by labour troubles, and, again, I do not think it is our policy to force business or to expand it too rapidly. The one thing it is important to do is to avoid losses, and our managers have to be very careful only to take very exceptionally good business, and, consequently, no doubt a certain amount of good business goes past us. I may tell you that recently—within the last day or two —we have had a telegram from the colony stating that there is a better demand for money, and that they have been able to place out £200,000 more, so that practically our advances at the present time are £600,000 in excess of what they were when the head office was removed. One satisfactory feature—a very satisfactory feature —about this new business that we have got is that it has very largely come from old customers who have come back to us—clients who in the days when the bank was exceedingly impecunious were unable to get from us such reasonable facilities as they were entitled to. They have not only come themselves, but have introduced their friends as depositors and customers, and this is most gratifying evidence of returning confidence in the bank in the colony. Business in the colony does not appear to be very brisk, although I do not know that New Zealand is any exception in that respect at the present time. The outlook is certainly good, our prospects are encouraging, and our position is improving steadily. The losses which the colony suffered from bad harvests have been more than made up by returns from wool and frozen mutton, and it is anticipated that there will be an exceptionally large increase this year from both of these sources. Then, the land settlement has apparently come on very favourably. I
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am told that the individual holdings in New Zealand amount to about £38,000, and this, in proportion to the population, is larger than any other Australian colony can boast of. Then, again, bankruptcies are fewer and smaller, and money comes in better. The savings of the people have increased. I believe the deposits in savings and other banks on the 31st of March were something like £750,000 in excess of what they were in March of the previous year. Ido not know whether this means that we shall have to take lower rates for money, but if it does it will cut both ways, because we shall have more solvent customers to deal with, and shall run less risk of making bad debts. The general manager was very well received in the colony, and he tells us that he found on every side most friendly feelings towards the bank, and a general desire that it might recover its old position. He has been making a very extended tour, making the acquaintance of the managers and the customers, and he tells us he has gained very considerable experience thereby. We have had from him most copious reports from all centres, but of course one cannot go into these to-day. The gist of them is that he is fairly well satisfied with the business of the bank, as far as he has seen it ; he expresses a wish that there was rather more of it, but that, I hope, will come. He says that in old days we lost a good many valuable accounts, but that we still have a splendid connection, one capable of being extended largely on sound lines; and he sees no reason to doubt that if we can only get peace and quiet, and can escape making any serious losses, we shall find that in a few years the hank will be in as strong and safe position as its best friends could desire. I think, practically, the result of the last half-year, which has been an uneventful one, may be summed up by saying we have certainly gained an increase of business and an increase of credit. With these few remarks I have to move this formal resolution —namely, " That the report and balance-sheet, as presented to the meeting, be received and adopted, and that a dividend be declared at the rate of 5 per cent, per annum for the half-year ended 31st March, 1891." The Right Hon. Sir James Ferguson, Bart., M.P., seconded the resolution, which was put by the chairman and carried unanimously. The Chairman proposed the re-election of the retiring directors, Colonel Baring and Mr. J. A. Ewan, which was agreed to. On the motion of Mr. Brewster, seconded by Mr. J. A. Ewan, Messrs. Edwin Waterhouse and George Sneath (Price, Waterhouse, and Co.) were reappointed auditors. Mr. Collins proposed a very hearty vote of thanks to the chairman and directors. Sir Edward Stafford supported the resolution. The motion having been carried, — The Chairman, in reply, said he was exceedingly obliged for the vote. The directors would always do their best to strengthen the bank, and to try to get it back to the grand position which it formerly held. The proceedings then terminated.
1892. The half-yearly general meeting was held in London on the 10th February, 1892. Mr. R. H. Glyn, President, in the chair. The Secretary (Mr. C. G. Tegetmeier) having read the notice convening the meeting, The Chairman said, —Gentlemen, nothing of any great importance has happened in the business of the bank since we met last August, and I am afraid that I have really very little to say to you to-day that will interest you, but I am glad to be able to report that the bank continues to make steady and satisfactory progress. We have been quite easy in our finances during the past six months, and have been able not only to afford our customers every reasonable facility that they required, but also to take up sundry and satisfactory accounts which have been offered to us. The credit of the bank in the colony is undoubtedly improving, and the best evidence of that is that the deposits there continue to increase steadily. The business of the bank is also progressing. It is not possible to compare accurately the accounts on the 30th September with those on the 31st March, because of the difference in the condition of business in the colony on those dates, but the extension has amounted to, in round figures, a little over £200,000; but I take it that the best proof of it all that the bank is improving is the fact that we have found ourselves able to declare an interim dividend, which was a thing we were absolutely unable to see our way to do at this time last year. I have before explained from this chair that the Estates Company, in which we have a very large interest, is only able, from the nature of its business, to make up its accounts once in the year— that is, on the 31st March. Therefore, if anything is taken from the Estates Company in September to make up an interim dividend, it can only be done by an estimate of what profits the company has made during the six months. We have money, and to spare, sufficient to pay our present interim dividend, without considering the amount to be received from the Estates Company, and whatever comes to us on the 31st March from the company will be the year's dividend, and will be dealt with when the accounts of the bank for the whole year are made up, which will leave us, I hope, a margin to add something to our reserve fund. It is satisfactory to be able to tell you that the bank has not been involved in any way, or lost any money, in the numerous failures which have occurred in Melbourne, and other parts of Australia, of building societies and so-called banks. This, I think, you will agree speaks well for the management of the bank abroad. We have been for some time reducing our advances in Australia, feeling that they involved rather more risk than we cared about, and looking at the level of prices in New Zealand, it is a far safer colony to lend money in at the present time than is Australia. We have made some pretty considerable changes in the management of our branches in Australia. Mr. Wilson, who for some time very satisfactorily managed the Melbourne branch, has been transferred to Sydney, where he has taken charge. Mr. Andrews, one of our assistant-inspectors, has taken charge at Melbourne, and, as Inspector, he will exercise a general supervision over the Australian business. Both these gentlemen are men of considerable
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experience and ability, and I think we may feel quite assured that the business of the bank there will be conducted with the prudence and caution which is very necessary in these critical times. The subject which is, of course, uppermost in all our minds, is the new* Land-tax Bill. Now, this has been so fully discussed and criticized, both in the press and at public meetings, that I do not propose to offer any opinion of my own on the subject, and especially for this reason, that I do not think it would be quite becoming for any one who has the honour of holding the position of President of the Bank of New Zealand to criticize a measure which has been passed by a majority of the legislature of that colony. We are the Government bank, we keep the Government account, and as such it is our duty to serve to the best of our ability any Government that may be in power, whatever complexion its politics may be, and this we shall endeavour to do. Of course, this new Bill is an experiment, and it is one which we shall all of us watch with very great interest, but it is surely fair to say that should it bring with it even a modicum of the evils which have been predicted in England for it, that the good sense of the colonists will induce them to modify it or alter it in some way. As regards the manner in which it affects the bank itself, and our own interests, I can tell you very shortly. As regards the banking part of our business, that is to say, Quite apart from our assets in the Estates Company, it does not add in any way to our taxation. I believe, in fact, it somewhat reduces it, but it does hit us through the Estates Company, and in rather a peculiar way. The globo assets, which were the assets transferred to the Estates Company, were formerly held by the bank itself, and had they been so held now, they would not have been subject to any taxation under the new Act. It would have been covered, in fact, by our yearly payment; but you know they had to be transferred to the company for the purposes of issuing the debentures, and that fact has altered the situation very much, because, having the new company, we shall be subject to taxation, and it will make a considerable hole, I am afraid, in some of the dividends we shall receive from that company —up to the 31st March this year there will be no tax payable under it —but possibly next year. Well, now, the amount of tax we shall have to pay of course depends entirely upon the amount of property we retain, and, probably, by the time the Bill gets into working order, we shall have considerably less than we have now. It has always been our policy not to refuse satisfactory offers, because we do not wish to hold these properties in perpetuity •; we simply got them as a legacy. It has been argued that we have been very slow in the realisations, but I think people rather forget what a mass of properties we had to deal with, and what an immense amount of labour, and what a long time it has taken to get them into ship-shape, so that we could deal properly with them. The realisations from the 31st March to the 31st September amounted roundly to about £84,000, which is not a very large amount, but we have, or rather shall have, in the course of a couple of months, a very large public sale of property in the South Island, partly pastoral and partly agricultural, something like 340,000 acres. Very great pains are being taken to make this sale a success. The properties will be offered in suitable lots. Terms of payment will be easy, and, looking at the prosperity of the colony, and seeing how well the farmers are doing, and the enormous clip of wool they will have, I think we shall have a good attendance and fair and satisfactory prices. The result of this sale will be an excessively interesting thing, not only from the pounds, shillings, and pence point of view, but because it will be a fair test of what the colonists of New Zealand think themselves of the future of land in the colony under the new regime. Of course, in the meantime, until they are sold, we shall have the profits which the properties make, and up to the present time all the reports are satisfactory. The latest news from New Zealand is contained in a telegram which we received yesterday, which is, of course, short, but which, I think, gives you a good deal of information. It is as follows : " Deposits are increasing. Very good harvest prospects. Bountiful yield expected. Trade continues to improve. Colonial revenue coming in satisfactorily. Land settlement active." lam afraid as regards the harvest prospects in the South Island they are somewhat modified by a later telegram. I notice in the papers this morning a statement that the floods are subsiding, and I hope no very great damage has been done. There is just one other matter. It has been brought recently rather prominently into notice that in the case of limited liability banks that issue notes the liability of the shareholders is unlimited as regards the notes, and several shareholders have written to us some time ago to inquire what the position was in this matter. Are we in this respect unlimited? We know what our liability is generally. Are we unlimited as regards the note issue ? Now, we are not an English bank in any shape or way. We are not registered under any English Act. We work under a New Zealand charter, and the board had no doubt in their own minds that that particular Act of 1879 could not in any way apply to us; but, as it was a very important matter, we wrote out to Auckland and desired the general manager to take the opinion of the solicitors of the bank there, and I am glad to say that their reply is in every way satisfactory. We have received it by cable, and it is as follows : " Liability for note issue. Our solicitors are of opinion that the point raised does not affect in any way the liability of our shareholders " —which I take to mean that we are not in any way unlimited with regard to our note issue, which is, I think, very satisfactory. I have no resolutions to propose, gentlemen, but I shall be very happy to answer questions that any shareholder may put. The Chairman : Gentlemen, it is exceedingly gratifying to my colleagues and myself to find that we have your approval. It is very obvious that we could not conduct the bank to that pitch of prosperity which we hope we shall get it to without having your support, and I hope we shall always continue to have it as long as we act straight and square.
At the ordinary general meeting of the proprietors held in London on 10th August, 1892, the president, Eichard H. Glyn, Esq., in the chair, the following report was presented : — The directors have to submit to the proprietors the annexed balance-sheet of the bank for the year ended 31st March last, showing a net profit after making provision for bad and doubtful debts
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of £60,058 17s. 2d., to which has been added £18,272 Is. 3d. brought forward from last year, making a total of £78,330 18s. sd. available for division. The directors have appropriated £15,000 to the reserve fund, bringing the amount up to £35,000. Followiug the course adopted last year this addition to the reserve fund has been invested in consols. An interim dividend at the rate of 5 per cent, per annum for the first six months of the year was paid in February last, amounting to £22,500, and the directors now recommend a further distribution at the same rate for the remainder of the year, leaving the sum of £18,330 18s. sd. to be carried forward to profit and loss new account. In accordance with the provisions of the deed of settlement, two of the directors—the Right Hon. Sir James Fergusson and E. Herbert Fison, Esq. —retire by rotation, and, being eligible, offer themselves for re-election. The shareholders will also have to elect auditors for the ensuing year. The present auditors, Messrs. Edwin Waterhouse and George Sneath (Messrs. Price, Waterhouse, and Co., are eligible, and offer themselves for re-election. Subject to confirmation by the meeting, the dividend will be paid in London on the 12th August, and at the branches on receipt of advice. Balance-sheet, 31st Maech, 1892. Liabilities. £ s. d. Capital—loo,ooo shares of £5 ss. each .. .. .. .. .. 525,000 0 0 50,000 shares of £7 10s. each ... .. .. .. .. 375,000 0 0 Reserve fund (invested in Consols) .. .. .. .. .. 20,000 0 0 Notes in circulation .. .. .. .. .. .. .. 479,260 0 0 Bills payable in circulation .. .. .. .. .. .. 1,314,251 14 5 Deposits and other liabilities .. .. .. .. .. .. 7,363,045 5 8 Profit and loss .. .. .. .. .. .. £78,330 18 5 Less interim dividend forhalf-vear ended 30th September, 1891 .. .. .". .. .. .. 22,500 0 0 55,830 18 5 £10,132,387 18 6 Assets. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. 1,288,947 2 1 Bullion on hand and in transit .. .. .. .. .. .. 90,617 15 0 Bills receivable and bills discounted .. .. .. .. .. 2,397,002 5 8 Advances and other debts due to the bank .. .. .. .. .. 4,092,730 1 11 Investments in Government and other stocks .. .. .. .. 36,287 3 11 Bank of New Zealand Estates Company (Limited) shares, (par value) .. 1,850,000 0 0 Landed property, bank premises, &c. .. .. .. .. .. 376,803 9 11 £10,132,387 18 6 Pbofit and Loss Account. £ s. d. Interim dividend at rate of 5 per cent, per annum for half-year ended 30th September, 1891 .. .. .. .. .. .. .. 22,500 0 0 Amount carried to reserve fund .. .. .. .. .. .. 15,000 0 0 Dividend at rate of 5 per cent, per annum for half-year ended 31st March, 1892 20,500 0 0 Balance carried forward .. .. .. .. .. .. .. 18,330 18 5 £78,330 18 5 Balance from last year .. .. .. .. .. .. .. 18,272 1 3 Net profit for year ended 31st March, 1892 .. .. .. .. .. 60,058 17 2 £78,330 18 5 Besebve Fund. £ s. d. Balance (invested in Consols) .. .. .. .. .. .. 35,000 0 0 The Chairman said: When I had the pleasure of presiding at the interim meeting in February last I was able to express to you the opinion of the board that the bank, though progressing perhaps somewhat slowly, was progressing satisfactorily, and I am glad to be able to commence my remarks to-day by stating that no hitch has occurred, and that we see no reason why we should alter the opinion I then expressed ; but if you will be kind enough to follow me for a minute or two through the balance-sheet, so that I can compare the items with those of last year, you can then form your own opinion, and probably with more satisfaction than taking my word for it. Take, first, the liabilities side of the account. The capital is put down at £900,000, which is some £2,000 in excess of that at which it stood last year, when there were certain outstanding calls to be collected, and which, as I said at the time, were in process of collection. They are now all paid up, and the capital stands at its proper figure. The next item—"Notes in circulation" —shows a small falling-off of some £4,000. This figure includes the circulation of the bank both in New Zealand and in Australia. In Australia, where the falling-off occurred, it is naturally owing to the condition of affairs in that direction, because there has been a general contraction of the currency, and I believe I am not incorrect in stating that even the large Australian banks have had some contraction in their issue. But as far as our issue is concerned in New T Zealand, we have every reason to be satisfied. It has not been so large since 1888. The total average increase for the year in the circulation of all the banks trading in New Zealand has been £45,000, and of that increase this bank has taken £35,000, so Ido not think we have very much to grumble at. The next item is bills payable in circulation, which shows a fair increase; and that is in its way satisfactory, because it shows that the credit of the bank has been improved, and that there is more demand for its bills than there used to be. I may say we have been more careful in this direction, and have never in any way pressed onr bills on the market, so whatever increase in our bills appears in this account is owing not to our having pressed our bills, but because there has been more demand for our paper than before. The next figure is deposits and other liabilities, £7,363,045, and this requires a little explanation. It is
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less by £73,000 than it was last year. It includes Government deposits, current accounts, and fixed deposits with the public, and, as I have said, it is less by £73,000 than it was last year. It so happened that at the date of the balance-sheet in 1891 we had a very large amount of Government money on hand for no particular purpose or special reason that I am aware of, but it so happened that there was that amount, otherwise that item would have shown a very considerable increase, for I am very glad to be able to say the fixed deposits of this bank during the past year have increased. You know there has been a great deal of anxiety here among depositors owing to the numerous failures of the banks in which they put their money, and the lock-up must have been very inconvenient to many, and with a possibility of loss. We, too, have lost deposits here, partly owing to the death of old depositors and partly owing to the general distrust which appears to have prevailed amongst everybody. But in New Zealand, where they know, if any one does, about us, the increase in deposits has a good deal more than compensated for the loss that we have made in this country. That is, I think, about as satisfactory a statement as I shall be able to make to you today. The result of this, of course, has been that to a certain extent we have been transferring our deposit liabilities from England, where, perhaps, they are not an unmixed blessing to New Zealand; that is, we have been taking our liabilities to where our assets necessarily must be, and so far that is very good for us. Now, if you will please turn to the assetson the other side of the account, you will observe the coin, cash, and money at call, and so on, is less by some £200,000, but, of course, since this statement was made up, we may have more or less money in hand. The amount is ample, and our general manager is constantly advising us that all care is taken to keep the bank financially strong. The next item in the account is bills receivable and bills discounted. These are lumped together on this occasion, and they show about £94,000 increase, which is so much more new business. But the next item is one which gives you the best idea of what the bank has been doing— advances and other debts due to the bank—which stands at £4,092,730. That shows an increase of £300,000, all, or practically all, of which is in New Zealand, where, as I have said before, it is considerably safer at present to lend money than in any other of the colonies. The only other item is the landed property of the bank, bank bremises, &c, which shows an increase of £2,700, and arises from the necessary improvements and alterations of the bank's premises, and is not of much consequence, seeing the figure as it stands is put down in our balance-sheet at £150,000 under which they were valued at when the change in the management of the bank took place. The net result of the year's working is a profit of £60,058, and to that we have to add what we carried forward from last year, £18,272, leaving us £78,330 to deal with. Out of this we have taken £15,000, and carried it to the reserve fund, and invested it in consols. That is one of the things we are allowed to do under the deed of settlement without consulting the shareholders, but I have no doubt, from the remarks we have heard at these meetings, that the shareholders will heartily approve at any rate of that part of the business. We paid an interim dividend which absorbed £22,500, and we propose to ask your sanction to distribute a similar amount this time—that will make 5 per cent, for the year. You will notice last year we put £20,000 to reserve, but that year we only paid one half-yearly dividend instead of two. That leaves £18,000 odd to carry forward. Ido not know that lean give you any particular reason why we carry forward so much as 2 per cent, on the capital of the bank, but I am sure the shareholders would not approve of our paying a higher dividend than 5 per cent. It is a good thing to have money in hand, and it is best to carry it forward and then decide what to do with it later on. Now I think that, although this balance-sheet is not very brilliant, perhaps you will not consider it—considering the state of things—as altogether unsatisfactory. Of course, the natural criticism which arises is this : Why, having done more business, do you not show a corresponding amount of more profit ? Has it arisen from increasing expenses, or what does it come from ? As regards the matter of expenses, which is one of very great importance to any bank, particularly to a bank with so many branches and agencies as we have, we have gone into the matter very carefully, and compared our expenses as well as we could with other institutions which have a similar large number of branches, and I am bound to say, on the whole, our expenses prove to be exceedingly moderate. The reason why we do not show a large amount of profit is practically this : The policy the bank has had to adopt has been a very conservative one ; you may call it over-conserva-tive if you like. What we have had to aim at is not to make profits, but to avoid making losses, and this means taking and selecting your business and getting a less margin between what you are paying for your money and what you get for it than if you were less circumspect in the business you took. Ido not think we ought to be disappointed or led away by the idea that the great thing to see in this bank's balance-sheet is a large profit. Ido not think that that is the case. Large profits very often mean considerable risks. I think our object here is to go along slowly without aiming at large profits, but aiming at having a regular and steady business ; then, if we can keep clear of losses and not have more than other people—we cannot keep altogether clear of losses—the profits will take care of themselves. Of course this result, whatever you may think of it, has not been arrived at without a considerable amount of work and anxiety on the part of the staff in the colony, and I am very glad to be able to give expression to the board's appreciation of the services of the general manager, Mr. Holmes, who was appointed two years ago. I think the conservative way in which he has conducted our business is admirable; and I should also like to bear witness to my appreciation of the zeal and fidelity with which all the officers of the bank, from the highest to the lowest, have worked for our interest during the past year. Now, the next thing I have to come to is the Estates Company. This is the first time we have had a complete year's balance-sheet from the Estates Company, and it is, on the whole, fairly satisfactory. The result shows an improvement on the estimates formed by Mr. Hean when the properties were handed over to the limited company. Some of you may remember that I told you in February it was intended to hold a very large sale of properties in the South Island. This sale did not in its entirety come off. There were very serious floods, as you are probably aware, and that so crippled some of the small farmers, to whom we looked to be bidders at these sales, that the local board, exercising a very wise judgment, determined to very much curtail the auction, and the result was that only two properties were put up
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for sale. Of these, one met with considerable competition and sold very well. It fetched prices which were considerably in excess of what the company had taken it over at. The other met with little or no competition. Some of it has been sold privately since, and I understand there will not be any difficulty in completing the sale by private purchase. The purchasers of the property that did sell were mostly people who had property bordering on the neighbourhood. The sales did not at all attract buyers from a distance. As far as the sale went it was good enough. It was, how ever, a very small affair compared with what was originally cantemplated. One thing that rather appears to have affected the sale was that a great quantity of unimproved Crown lands were being offered at that time under the perpetual-lease system, and that seems to have met what demand there was for land. The total sales of the properties of the Estates Company up to date amount to something over £550,000. This, of course, is not by any means all cash, but it at least fixes the value of the property. No policy has yet been adopted by the Estates Company's board as to redeeming the debentures, but, of course, the one thing which weighs on the Estates Company is the high rate of interest, 5-J- per cent., which it is paying on its debentures. Well, there is no doubt that at the time the bank wanted the money, and were very glad to get it, even though the debentures bore that rate of interest, and that it was under obligations to those gentlemen who took the trouble to place the bonds; but now that the income has been proved to be a great deal more than sufficient to pay the interest, and we have ascertained more or less what is the value of the properties by absolute sales of them, we feel the matter a little onerous. Ido not know that anything can be done at the present moment, but I do hope that when we get a little more firmly established we shall be able to make some sort of arrangement to pay off the existing debentures and partly to replace them by others bearing a lower rate of interest. The only other thing which occurs to me in reference to the Estates Company is this : Recent experiments seem to have proved that the company has got a very valuable mineral property, which was taken over at a merely nominal figure. Of course, as the ore is at present underground, it is a little premature to say anything about it, but we learn there are great possibilities and, may be, probabilities in it. Ido not propose to take up your time with any general statement about the position of New Zealand. In the first place, the daily press keeps us so well posted as to what goes on abroad that anything I say will be very stale ; and, in the second place, you yourselves can read all about it, for New Zealand literature, both pro and cow, is very extensive in these days. But I may say generally that from our advices we learn that the commercial outlook is sound and improving. There are just one or two figures I should like to give you. For instance, there is the land settlement. In 1892, 1,728,983 acres were taken up by 3,779 settlers; and in 1891, 2,107,735 acres were taken up by 2,066 settlers. So that, although the acreage was something like 25 per cent, less than that taken up, the number of settlers who took up that acreage in 1891 was 75 per cent. more. This is a satisfactory feature. The exports for 1892 showed a falling-off compared with 1891, owing to there having been in that year a large amount of gold, some £240,000, included in the exports, and the corrected figures for the three years may be interesting to you, because a moral may be drawn from them. In 1890 the exports were £9,407,700; in 1891, £9,428,900; and in 1892, £9,576,300, so that the ratio of increase from 1891 to 1892 is a great deal larger than from 1890 to 1891. Almost all the staple exports seem to have been increased excepting wheat, and that no doubt was owing to the harvests and the inevitable floods which seem always to occur when any good harvest is expected. You all know about the enormous increase in the frozen mutton trade, but I do not think you are all equally aware how New Zealand has extended its dairy products. The value of the dairy products in the year ending 31st March, 1892, was £1,440,000, and largely exceeded the value of the output of gold. I think that is rather an interesting piece of information. On the whole, I can only repeat what I said just now- —that as far as we are able to gather, there is of course no boom in the country, nor do I think there is any chance of it, but the country seems to be satisfactorily going along, and there is no sign of the extravagance of former years. I think the prospects of the hank, provided we go along steadily are good. I think this is all I have to say, except to refer to a matter which is rather more personal than otherwise. I have never been in New Zealand, and I, of course, have a great desire to make the acquaintance of the officers of the bank and to find out for myself how the business is conducted, and generally to obtain a great deal of information. Matters in the bank have now got into such a good shape that I can be easily spared. As far as the work is concerned, it will go on quite as well without me, and my colleagues have been good enough to give me leave of absence. I therefore intend to spend portion of the winter in the colony, and I shall probably not have the pleasure of presiding at the interim meeting in February, but I hope, when I comeback to meet you next August, to give you generally my views of the position of things out there, for what they are worth. I will now formally move the resolution—" That the report and balance-sheet as presented to the meeting be received and adopted, and that a dividend be declared at the rate of 5 per cent. per annum for the half year ending 31st March last, making, with the interim dividend paid in February, 5 per cent, for the year." The Right Hon. Sir James Fergusson, Bart., M.P., seconded the motion. There bemg no discussion, the resolution was formally put to the meeting, and carried unanimously. Sir James Fergusson and Mr. E. Herbert Fison having been re-elected directors, and the auditors having been reappointed, a hearty vote of thanks to the officers of the bank concluded the meeting.
1893, The half-yearly general meeting of the proprietors of the Bank of New Zealand was held in London on the Ist February, the Right Hon. Sir James Fergusson, Bart., M.P., presiding.
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The Secretary (Mr. C. G. Tegetmeier) having read the notice convening the meeting, The Chairman said, —Gentlemen, my colleagues have asked me to take the chair- on this occasion because our President is absent on a visit to the Australasian Colonies entirely on the business of the bank; and I may say that he undertook that journey at the desire of his colleagues, and with the utmost confidence entertained by them that it would be greatly for the benefit of the bank. Mr. Glyn, since he has been our President, has fully justified the confidence we placed in him when we elected him to that position, and I can say with the utmost confidence that you have derived great advantage from his excellent business habits, his untiring assiduity, and his fertility in resource. I think we cannot but gain great benefit from his personal observations of the situation of the bank in the colonies, and the manner in which the business is conducted at the various branches. Well, gentlemen, we have in the last half-year had two vacancies at the board, caused by the retirement of two of our colleagues—the Right Hon. A. J. Mundella and Mr. Stewart. Mr. Mundella was the oldest director surviving at the board, and was a very good friend to the bank; but his accession to the Cabinet has caused his retirement from the board, and I now say that his colleagues feel great regret at that event. Mr. Stewart was no longer able to serve with us, first, because his health would not allow him to remain in this country, and also because he was about to return to Australia. In the early days, however, of our administration here at the head office we derived great advantage from his long experience in the service of the bank. It is not intended, at present at any rate, to fill up those vacancies. We have a small board ; but a small board, the members of which are very punctual and regular in their attendance, is sometimes more efficient than a large one ; and I certainly think that it would be almost impossible to find directors with a more complete devotion to the duties intrusted to them. You are aware that this halfyearly meeting was determined to be held at this season at the request of the shareholders present at the first meeting after this became the head-quarters of the bank, and, I think, although that arrangement was made with some reluctance by the directors, it has already tended to advantage by keeping the board in touch with the shareholders, and in enabling us to make public, at shorter intervals than the annual meeting, the progress and position of the bank. But, by reason of the circumstances of the case, we have no accounts to present, either of our regular banking business or of the Estates Company, whose accounts are not made out for the year until the 31st March. I am able, however, to say that the directors are perfectly satisfied that we are well able, out of the banking resources, to pay the interim dividend, and, perhaps, it is not the less encouraging to hear of the hank's position that we have little specially to report to you. Our half-year has been one of quiet work, marked by no remarkable features; but it has also been attended by considerable increase in our regular banking business, and, in fact, by general steady progress. Our finances have been easy, and our credit has been improving. We have not been involved in any way in the recent failures in Australia, nor have we had any considerable loss of our own to record. It is true that, owing to the state of commerce and finance in Australia, we have been obliged during the half-year, as a matter of prudence, to retain in hand a larger amount in coin, money at call, and at short notice than would have otherwise been necessary, in order that we might be prepared for any emergency, the amount at the close of the half-year- reaching the large sum of nearly a million and a half. That, of course, caused some diminution of the money which might have been otherwise more profitably employed; but the necessity for retaining such large balances seems no longer to exist, and therefore I hope the present half-year will be even more productive than the last. I should notice, as a further feature which induces our increased confidence, that our deposits are steadily increasing. For a long time they fell off largely at this end, but now they have been for a number of weeks steadily increasing; and I think I may say—and my colleagues will agree with me —that I do not think the high rate of interest we have been giving for deposits for long periods can be continued. It would be unnecessary, and it is undesirable; but this is also, I think, a gratifying and satisfactory feature : that in the places where the bank is most known the deposits fell off the least, and have increased more rapidly. In New Zealand, confidence in the bank was little, if at all, withdrawn, and the deposits there have gone on increasing in a larger ratio. Even in the far north of Scotland, where men are more cautious —(I see a friend who shakes his head, and who, I suppose, thinks they are liable to plunge now and then; but, at all events, when once they are frightened, it is difficult to obtain their support again)—but even they are thawing, and the amount of the deposits from Scotland is satisfactory. But, after all, the prosperity and progress of the bank largely depends on the position of the colony with which we are chiefly connected, and I am sure that those who are even better acquainted with New Zealand, than I am will confirm my statement that the present position of the colony is most encouraging. It has not shared in the severe droughts or in the commercial depression of Australia, and, if in times past its administration was liberal and, perhaps, lavish, I think it has learned prudence by experience, and its administration is now conducted by men who have raised the credit of New Zealand very high; in fact, friends of mine, intimately acquainted with affairs in that colony, tell me they never had so prosperous a year as that which has just expired. We hear of population now increasing rapidly. Late accounts speak of 1,000 persons having arrived over those who left the colony in three days, and we hear, what is still better, that many of these people eventually come to remain, as land is being freely taken up, and homesteads being erected in some of the fertile parts of the colony hitherto unoccupied. Our last telegram from our general manager in the colony, dated the 25th January, says : " Advances and deposits are increasing; harvest and pastoral prospects fair ; trade healthy ; revenue coming in well; population flowing in ; land settlement active." Well, gentlemen, we may hope and trust that the colony will continue to be administered with prudence and economy. I hope that the public men will be so self-restrained that they will be able to stem what may be rash currents of public opinion, so that they will not alarm capital from still resorting to the colony. In times past it has gone there largely, and its advent has been attended with admirable results for all classes, and especially the working-classes. Anything which would 7—l. 6.
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deter further influx of capital would be disastrous, and measures that we should think in this country empirical and hasty would have a bad effect. Considering the position of the colony and its advantages, I think we may look forward to its acheiving a great position, and to the prosperity of institutions which are bound up in its welfare. Our bank has passed through a period of great depression. At one time, from the confidence of having large resources, and adopting too widely the system of what is called banking in Australia, it advanced too freely on real property, and when times of depression came these properties fell into our hands. Ido believe there was no need for the bank to be put in a corner, as it were, and that even the large lock-up of its finances would not have brought about a result, which was nearly disastrous, had it not been for the unfortunate bickerings and jealousies which beset what was then the head-quarters of the bank. There would have been then no occasion to have incurred the great expense of setting up the Bank of New Zealand Estates Company, and the considerable diminution of the realisable profits which that has entailed upon you. We now know that these estates are coming out well, that the liberal expenditure and prudent management which have been exercised are leading to larger profits, while the less desirable properties are being got rid of. Therefore, we may say with confidence that the bank has now emerged from its difficulties, and that we can look forward to a future of steady and substantial progress. Mr. Snow : Might I ask a question with regard to the amount of the shares ? I think at the meeting you have spoken of, when we reduced the shares to £5 ss. and £7 10s., it was stated that provision would be made, so that, if the shareholders wished, they could increase the amount by paying the difference between £5 ss. and £10. If we are now going on with prosperity, it would be to our advantage to do that, because our liability as shareholders is as great on the £5 ss. as it would be if they were £10 shares. The Chairman : The liability is what it was before the capital was written down. It is hardly desirable, however, at present to increase the amount of the shares, because it would increase the capital on which we should have to pay dividend. I should like to see the reserve fund built up a little before we do that. Then, again, we do not want the money; we get as much money as we want, and, in fact, I think I may say that we are going to turn the screw a little bit, so that it may not come in upon us too fast. The board have not considered the matter, but Ido not think they would be prepared to propose any increase in the amount of the shares at present. A vote of thanks to the Chairman brought the proceedings to a close.
The ordinary general meeting of the proprietors of this bank was held at the Cannon Street Hotel, London, on 2nd August, under the presidency of Mr. Richard H. Glyn. Mr. C. G. Tegetmeier, the secretary, having read the notice convening the meeting, the report and accounts were taken as read. They are as follows : — Report of the directors presented at the ordinary general meeting of the proprietors, held on Wednesday, 2nd August, 1893 : — The directors have to submit to the proprietors the annexed balance-sheet of the bank for the year ended 31st March last. The net profits, after making provision for bad and doubtful debts, amount to £55,830 Is. 7d., to which has to be added £18,330 18s. sd. brought forward from last year, making a total of £74,161 available for division. The directors have appropriated £10,000 to the reserve fund, bringing the amount up to £45,000. In accordance with the policy of the board, this addition to the reserve fund has been invested in Consols. An interim dividend at the rate of 5 per cent, per annum for the first six months of the year was paid in February last, amounting to £22,500, and the directors now recommend a further distribution at the same rate for the remainder of the year, leaving the sum of £19,161 to be carried forward to profit and loss new account. In accordance with the provisions of the deed of settlement, two of the directors, Richard H. Glyn, Esq., and Colonel Robert Baring, retire by rotation, and, being eligible, offer themselves for re-election. The auditors, Edwin Waterhouse, Esq., and George Smeath, Esq. (Messrs. Price, Waterhouse, and Co.), also retire and offer themselves for re-election. Subject to confirmation by the meeting, the dividend will be paid in London on the 4th August, and at the branches on receipt of advice. Balance-sheet, 31st Mabch, 1893. Dr. Liabilities. £ s. d. £ s. d. Capital—loo,ooo shares at £5 ss. each .. .. .. 525,000 0 0 50,000 shares at £7 10s. each .. .. .. 375,000 0 0 900,000 0 0 Reserve fund (invested in Consols) .. .. .. .. .. 35,000 0 0 Notes in circulation .. .. .. .. .. .. .. 520,323 0 0 Bills payable .. .. .. .. .. .. .. .. 1,343,699 0 2 Deposits and other liabilities .. .. .. .. .. .. 8,071,783 6 8 Profit and loss .. .. .. .. .. .. 74,161 0 0 Less interim dividend at 5 per cent, per annum for half-year ended 30th September, 1892 .. .. .. 22,500 0 0 51,661 0 0 £10,922,466 6 10 Ce. . Assets. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. 1,366,919 16 0 Bullion on hand and in transit .. .. .. .. .. .. 117,536 15 5 Bills receivable and bills discounted .. .. .. .. .. 2,301,824 8 7 ".■ .' Advances and other debts due to the bank.. .. .. .. .. 4,825,830 12 10 • Investments in Government and other stocks .. .. .. .. 50,840 17 11 Bank of New Zealand Estates Company (Limited) shares (par value).. .. 1,850,000 0 0 Landed property, bank premises, &c. .. .. .. .. .. 409,513 16 1 £10,922,466 6 10
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Profit and Loss Account. £ s. d. Interim dividend at rate of 5 per cent, per annum for half-year ended September, 1892 .. .. .. .. ... ' .. .. .. 22,500 0 0 Amount carried to reserve fund .. .. .. .. £10,000 0 0 Dividend at the rate of 5 per cent, per annum for half-year ended 31st March, 1893 .. .. .. .. 22,500 0 0 Balance carried forward .. .. .. ~ .. 19,161 0 0 —- 51,661 0 0 £74,161 0 0 Balance from last year .. .. .. .. .. .. .. 18,330 18 5 Netprofit for year ended 31st March, 1893.. .. .. .. .. 55,830 1 7 £74,161 0 0 Resebve Fund. £ s. d. Balance from last year . .. .. .. .. .. .. 35,000 0 0 Transferred from profit and loss .. .. .. .. .. .. 10,000 0 0 £45,000 0 0 The Chairman, in moving the adoption of the report, said : Although the profits of the bank for the past year are somewhat less than they were in the previous year, I think it must be admitted that the balance-sheet is, on the whole, a satisfactory one, showing, as it does, considerable expansion in the business of the bank, a steady progress in that direction, and a great increase in the confidence of the public, as is evidenced by the large augmentation in the deposits. That is a somewhat remarkable thing, considering the time of distress and the general discredit we have been passing through during the last two years. One of the difficulties in making one's self intelligible from the chair is the long time which elapses from the date when we close our financial year and the date of this meeting. We close our financial year on 31st March, and this is 2nd August. I shall try and speak to you first of all on matters which occurred up to 31st March, and then say a few words about the things which occurred since that date. In the first place, there have been some alterations in the accounts which I think you would like me to make some remark upon. If you take the liability side of the accounts you will see that the notes in circulation have increased by £40,000, and the deposits by £700,000. On the other side you will see "Coin, cash balances with bankers, and money at call or short notice" have increased by £100,000, and that it now amounts to the very respectable figure of nearly £1,500,000. Circumstances have, of course, caused us to keep this very large amount on account of the reserves. One of the difficulties of colonial banking, as is well recognised, is that you are unable to lend money on short notice in a liquid state. You can do it in a few of the big centres, like London, Paris, and New York, but in our case we have to keep our reserves in sovereigns, upon which, of course, you are losing interest. The only item of the accounts which shows a decrease is the "Bills receivable and bills discounted," which shows a falling-off of £96,000, which is entirely in bills discounted, and it is owing to business contraction in Australia, which, as it turns out, is a very wise contraction. Then I come to the "Landed property, bank premises," &c.; and lam sorry that more explanation has not been given of that in the report, for it shows an increase of £33,000; and, perhaps, on the face of it you would suppose that we had been spending money on bricks and mortar, and incurring an expenditure in increasing our premises. But that is not the case. The fact is, this is a transfer from a current account of the cost of some properties in Sydney, Adelaide, and Auckland, which were purchased some time ago— long before our time probably—for the purpose of using them for business premises ; and I suppose the past troubles of the bank have prevented this being done. They have now been transferred into the proper account. Ido not know what we shall do with them ; probably we shall sell them when there is an opportunity of realising property in that part of the world at a satisfactory figure. But that does not alter the fact that there is in the properties of the bank, as I have previously mentioned, a very large margin. The properties are returning some income in the meanwhile. Now, as regards the appropriation of the available balance, we have done as usual —we have taken £10,000 out and placed, it in the reserve fund, and invested it in consols. That is a policy which you have always approved. That brings our reserve up to £45,000, and it is gradually creeping up to a very respectable figure. An interim dividend at the rate of 5 per cent, has been paid, which absorbed £22,500, and we propose to pay another 5-per-cent. dividend, which will, of course, absorb a similar amount, and to carry forward the balance of £19,000 odd. Now, I have spoken about the large increase in the amount of the deposits, and, no doubt, it is exceedingly gratifying in these times to find people who have such confidence in us that they largely increase their deposits. But this time it was rather embarrassing to us, because the money came in too fast to enable us to profitably employ it. And, then, the outlook was so bad that we were obliged to keep a very large cash reserve ; and it would not have been prudent at that time to have extended our business in Australia. Again, in New Zealand trade was dull, and it was impossible to get the money out on good accounts except at low rates. And the fact was a large portion of it was not got out until after the date of these accounts. When I was out there the rate of interest was reduced from 5 per cent, to 44 per cent. ; but still it made no difference, for the money kept coming in. However, we shall feel the advantage of the reduction in the rate of interest in the present year's accounts. As regards the Estates Company, this year's returns, owing partly to the bad weather and partly to the low prices of grain and wool, have not been so good as they were last year. The realisations to date are about £750,000 —a large proportion of which remains on mortgage, but it is satisfactory to find that the realisations are steadily going on. Some alterations have been made in the management of the Estates Company's business in the colonies. I was glad when I was out there to be able to induce Mr. John Murray, a man of great ability, to take the chairmanship of this company, and to give more time to it than he would have been able to do as an ordinary director. And I
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think this will be the means of greatly benefiting the company. We have to regret the resignation from the board of our friend, Mr. Horton, who was a staunch friend of the bank, but who was obliged to go Home on account of ill-health. He has, however, promised to give us the benefit of his assistance whenever we ask him in the shape of advice or in any other way he can. As I told you last August, I paid a visit to the colony last winter, and spent about three months there. I took the opportunity of visiting all the big branches, as well as a great number of the smaller ones, and had the opportunity of making the acquaintance of the officers and also of some of the customers of the bank, and communicated on many important matters with the general manager. I found the officers of the bank an exceedingly intelligent body of gentlemen, who are very zealous in the interests of the bank, and who are much respected in their various districts. One, I might almost say the most important, duty when I was there, was to attend to the revision of the Government account, which had been entered into so many years ago that a great many of its provisions were obsolete. lam glad to tell you that the Cabinet met the general manager and myself in the most friendly spirit, and an agreement was entered into which was fair, both to the colony and to the bank. Ido not know whether that has yet been laid on the table of the House; but if not, no doubt it will be in due course, and I suppose nobody will take any objection to it. In the course of these negotiations I naturally came very much into contact with the Premier of the colony, the late Mr. John Ballance. No one could be in his company for any time without very soon recognising his remarkable ability as well as his intense affection for the colony of which he was the head. It was with the greatest regret that I heard when on my way home of his death. I feel certain that men of all shades of politics will long reverence the name of the late Mr. Ballance, not only for his strict integrity but for his great patriotism ; for, however much men might differ from him, they could not but recognise those two great qualities which were so prominent in Mr. Ballance's character. I do not think the impressions of anybody who has only spent three months in any new colony are worth very much, although many who go out to the colonies and spend there only a very short time write books about them. But that I do not propose to do. However, I should like to take this opportunity of thanking all those friends in New Zealand whose kindness and attention to me during my stay were so agreeable. The country itself is perfectly charming, and Ido not know of any better place for Englishmen to emigrate to. What it wants is population; that is to say, population of the right sort —farmers who have experience in farming, who have families, the larger the better —and who have some little capital, so that they can buy land on fairly easy terms of so much cash down and the remainder extended over a period at a reasonable interest. Those sort of people are sure to succeed. We Britishers are generally credited with taking with us, wherever we go, our fads and fancies. If that is so the people should go to New Zealand, for a more British place I was never in in my life. With the view of carrying out what I have said —that is, the emigration of the proper class to New Zealand—some of the friends of the bank have recently started a Colonisation Company. It is not a philanthropic enterprise, nor do we ask the public for any money, but we think we can show the class I have spoken about that their interests lie in going to that country. We shall thus benefit not only New Zealand, but also ourselves, for we propose to place them on the Estates Company's property, some of which will be kept especially for the purpose. We shall be practically helping to carry out the present policy of the Government—viz., that of putting small settlers on the land—a policy which will have to be carried out by any Government which comes into power in New Zealand. I have mentioned this subject of the Colonisation Company to you for this reason, because of some of you may live in the country or have friends there ; and if you took the trouble of bringing the matter before likely people who would be suitable for the purpose it might help us and New Zealand as well. Two or three things struck me very much in New Zealand, and one was the immense amount of work done by such a small number of people. The roads there are so good and the cities are kept in such good order. I found the cities would put to shame many American towns with four or five times the number of inhabitants and wealth. Then I notice the economical and steady habits of the people. You see nothing of the splashy style and the great expense incurred which you see in other colonies. Then, again, they have no very large cities, like some of the other colonies, which are practically a burden upon the rest of the community. All the cities of New Zealand serve their respective districts. The trade of the colony, I believe, is quite sound. Of course competition there is just as severe as it is anywhere else, and the low price of wool and grain has been against us during the past year. As an evidence of how much work has to be done now-a-days for a very little money, I got out the particulars of the exports of wool in 1882 and in 1892, and I find that in 1882 they exported over 65,000,0001b5. weight, and in 1892 111,190,0001b5. weight. The smaller quantity was valued at £3,118,500, and the larger at £4,229,600, and you can calculate for yourselves what a reduction in the price of wool there has been in the past ten years. Then the harvest this year was a poor one. It was good in quality but threshed out badly, and the prices of wheat are perfectly ruinous. However, at this moment New Zealand has not to depend entirely upon the wool and grain trade, for the frozen-meat industry is really the backbone of the country, and then there is the dairy business, which is being developed to an extent we perhaps do not dream of. The home industries of the colonies are also becoming large; and, apart from the other works, there are woollen manufactories at different places near Dunedin and Kaiapoi, all of which are doing a sound business. As you know, New Zealand is, perhaps, about the only colony south of the Equator which at the present moment has a surplus of revenue. It had a surplus upon 31st March of £283,000 after making provision for £200,000 for public works, and the estimated surplus for the current year is £164,000, after making provision for £250,000 for public works. Our last telegram from the colony states that our trade is improving, and the settlement of the lands is going on vigorously. And now I think I have stated all I have to say up to 31st March, and will go to what has happened since. You will be glad to hear that we were not hit in any way through the panic in Australia. We lost no money by it, nor did we even hold any bills of the banks which were affected. This, I think, reflects great credit upon the management in the colony. lam sure that we all of us sympathize very much with the troubles
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in which our Australian friends have got, and hope that they will get through them quickly. I know that some people here predict a long time of trouble and bad business in Australia, but perhaps they do not take sufficiently into account the great recuperative power of these colonies. I think it is not at all impossible that we shall see an improvement in these quarters earlier than many people expect—at least, I hope so. Now, first of all, let me tell you, although it is not very pleasant to benefit by the mrsfortune of other people, that there is no question that the panic of Australia gave the bank a tremendous lift up both in credit and in profit; in fact, since the present board has been formed, three years ago, the bank has never been making so much money as during the last three months. We occupied a rather curious position there. Being a New Zealand bank, and having but small liabilities in Australia, and very large cash assets, we were out of the swim of the panic, and we were able to be of great assistance to some of the people in good positions there, who were unable to sell their bills at the moment. That has helped them, and was profitable to us. So little notice was taken of us during the panic, that I believe £100 would cover the withdrawals of our depositors during that time. Now, we were able to obtain some very good first-class accounts, and we could have taken more, but, unfortunately, our capital is small, and would not admit of our doing so, and, of course, we had to cut our coat according to our cloth. The only question which gave us anxiety—and, of course, it was a question which gave us a good deal of anxiety—was the panic going to extend to New Zealand ? It did not. It speaks well for the New Zealand people that they kept their heads cool on that occasion ; but whether or not people will be hit there, is a very hard question to answer. We have seen no signs at present, nor do we anticipate any trouble; but in these days, when nations are bound together by the telegraph, it will be very strange if some individuals in the colony are not affected by it. There has been no excitement of any description so far as lam aware of. The case of the New Zealand Loan and Mercantile Company is the only failure in connection with the colony. For some time the relations between that company and the bank were very intimate, but since the advent of the present board they have been simply those of banker and valued client, and for every penny they owe us we are amply secured. I understand a scheme of reconstruction of that company is being vigorously pushed forward, and I wish it success, for it will be a benefit to every one that a proper scheme of that sort should be pushed through. The shareholders will be sorry to hear that we are about to lose the services of Mr. Macnab, the London manager of the bank. Mr. Macnab finds his health is not so good as it was formerly, and he desires to obtain rest. He therefore intends to resign. Of course, there is nothing to be said against the plea of ill-health. He will be very much regretted personally by all the directors, and by the whole of the staff, and I think I am correct in saying that all of you who know him in the business will equally regret it. The chairman concluded by moving the adoption of the report. Sir James Fergusson, Bart., M.P., seconded the motion, and remarked that he wished to say on behalf of himself and the other directors, that they appreciated very highly the value of Mr. Glyn's work on behalf of the bank, and they felt greatly indebted to him for the trouble he had taken in the matter by visiting the colony. Mr. Glass said there were one or two items in the accounts he wished to criticize, but in no unfriendly spirit. He referred to the lessened profit for the year compared with last year, and thought that they ought to have done better. He would have preferred a larger transfer to the reserve fund, even at the expense of a smaller dividend. (No, no.) Mr. Fennings remarked that they had only the net profits of the bank given them in the accounts, but he thought many shareholders would like to have the gross profits on the one side, together with the expenditure on the other. The Chairman, in reply, said that of course it was impossible for them to act on Mr. Fennings's suggestion this year, but the directors would take the matter into consideration. With regard to the observations of Mr. Glass, he thought that practically he had already answered them in his opening speech. (Hear, hear.) If they had got to keep large reserves it was manifest that they could not make the same profits as if they kept small balances, and their reserves for the last six months had been kept much above their normal figure. Mr. Glass was in error in thinking that the item for premises, &c, had-anything to do with the Estates Company—they belonged to the bank. He quite agreed as to the desirability of building up a good reserve, but he did not think the bulk of the shareholders would approve of lowering the dividend below 5 per cent, for that purpose. The report was then unanimously carried. Mr. Nathan, in proposing the re-election of the two retiring directors —Mr. R. H. Glyn and Col. Robert Barmg —remarked that those two gentlemen were so well known to the shareholders that he need say nothing in favour of them. Dr. Stewart seconded the motion, which was agreed to. Mr. Horace Snow moved the re-election of the auditors—Mr. E. Waterhouse and Mr. George Sneath (Messrs. Price, Waterhouse, and Co.). Mr. John Rounds seconded, and the motion was carried. Mr. H. Snow said he had great pleasure in proposing a hearty vote of thanks to the directors and the officers of the bank for their services during the past year. Such a vote was, he said, more than an ordinary compliment, for they could not forget all the difficulties the directors and staff must have had to encounter during the past year. The conservative policy that they had maintained reflected not only great credit upon them, but it also meant a great deal of profit for the shareholders ; and although one gentleman had objected to the small difference in the profits last year as compared with one or two years ago, he (Mr. Snow) thought it would be very unjust and ungenerous to carp at the profits of the bank last year. He was very pleased that Mr. Glyn had accepted renomination as president of the bank, for from the very first he had always been a very energetic and painstaking worker, and his going to New Zealand, and the excellent speech he made thereon, must be very pleasing to shareholders. Considering the Australian bank failures, he thought their bank
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had gone through the year very satisfactorily indeed, and they could leave that room feeling sure that their affairs were in the hands of thoroughly good men. He was very sorry to hear of the resignation of Mr. Macnab, for he was a man who was always ready to afford information, and he had had the pleasure of many conversations with him, and had always received the very greatest courtesy from him. It was very creditable to the people of New Zealand that only £100 of deposits was withdrawn from their bank during the Australian crisis, and that fact would do them an immense amount of good when it was spread abroad. He was very pleased to know that the New Zealand Loan and Mercantile Agency had not landed them in any loss, and that, in fact, they were doubly secured there. Mr. Gibson seconded the motion, which was carried unanimously. The Chairman, in reply, said he was exceedingly obliged to the meeting for the way in which it had received the kind remarks made by Mr. Snow. It was very satisfactory to find that during a time when there was a large amount of worry and anxiety upon the directors and officers of the bank that their services were so cheerfully recognised, and it would be a source of solace to their colonial staff to know that their work was so well appreciated. He was very pleased to hear Mr. Snow re-echo the sentiments which the board felt at the retirement of Mr. Macnab. It would be a source of satisfaction to the shareholders to know that he would be succeeded as manager by Mr. Tegetmeier, the present secretary, who was well known to many of the shareholders. The proceedings then terminated.
The ordinary general meeting of the shareholders was held on 27th August at the Cannon Street Hotel, London. Mr. Richard H. Glyn (chairman) presided, and there was a large attendance of shareholders. The Secretary (Mr. A. Kay) read the notice convening the meeting, and the report and balance-sheet, as submitted, were taken as read, being as follow : — The directors have to submit to the shareholders the annexed balance-sheet of the bank for the year ended 31st March last. The net profits, after making provision for bad and doubtful debts, amount to £41,078 17s. Id., to which has to be added £19,161 brought forward from last year. The shareholders have already been informed that under the powers vested in them by the deed of settlement the directors have considered it in the interests of the bank to apply for and obtain an Act of the General Assembly of New Zealand authorising the issue of £2,000,000 preference capital guaranteed by the Government of the colony, which has been duly made. To comply with the conditions imposed by the said Act the head office of the bank has to be transferred to New Zealand, and in order to give effect to such conditions the necessary special general meetings of the shareholders will be held in the colony. An interim dividend at the rate of 5 per cent, per annum for the first six months of the year was paid in February last, absorbing £22,500, and the directors now recommend that the balance, amounting to £37,739 17s. Id., he carried forward to profit and loss new account. There are certain accounts in the bank's books for which, in the opinion of the board, it is probable provision may later on have to be made. The directors, however, consider that under existing circumstances the matter is one that it is desirable to leave to the discretion of the new board. Balance-sheet, 31st March, 1894. Liabilities. £ s. d. £ s. d. .: ' Capital—loo,ooo shares of £5 ss. .. .. .. .. 525,000 0 0 50,000 „ £7 10s. .. .. .. .. 375,000 0 0 900,000 0 0 Reserve fund (invested in Consols) .. .. .. .. .. 45,000 0 0 Notes in circulation .. .. .. .. .. ~ 515,568 0 0 Bills payable .. .. .. .. .. .. .. 1,413,996 15 4 Deposits and other liabilities .. .. .. .. .. 8,213,199 14 8 Profit and Loss .. .. .. .. .. .. 60,239 17 1 Less interim dividend, at 5 per cent, per annum, for halfyear ended 30th September, 1893 .. .. .. 22,500 0 0 : 37,739 17 1 £11,125,504 7 1 Assets. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. .. 1,463,364 3 0 [>ii Bullion on hand and in transit .. .. .. .. .. .. 98,655 9 0 Bills receivable and bills discounted.. .. .. .. .. .. 2,383,072 14 9 Advances and other debts due to bank .. .. .. .. .. 4,855,569 0 8 Investments in consols and other stocks .. .. .. .. .. 61,523 15 5 Bank of New Zealand Estates Company (Limited) shares (par value) .. .. 1,850,000 0 0 Landed property, bank premises, &c. .. .. .. .. .. 413,319 4 3 £11,125,504 7 1 Profit and Loss Account. £ s. d. i;.-,' Interim dividend, at rate of 5 per cent, per annum, for half-year ended 30th September, 1893 .. .. .. .. .. .. .. .. 22,500 0 0 Balance carried forward .. .. .. .. .. .. .. 37,739 17 1 £60,239 17 1 £ s. d. Balance from last year .. .. .. .. .. .. .. 19,161 0 0 Net profit for year ended 31st March, 1894 .. .. .. .. .. 41,078 17 1 £60,239 17 1 :-..-.... . Resebve Fund. "~ Balance from last year ~ ~ ~ ~ ~ ~ ~ £45,000 0 0
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The Chairman said : Gentlemen, —We have advised you by circular, and I have no doubt you have informed yourselves through the medium of the newspapers, of the rather startling events which have taken place in the history of this bank since we last met you. I refer to the application we made to the Government of New Zealand to authorise the issue of £2,000,000 4-per-cent. preference stock, and the successful issue of that stock on the market. I have no doubt the shareholders fully appreciate in how much better a position the bank stands to-day than when me met in February last, and as this will be our last appearance as a board it affords a better opportunity for me to give a sort of account of our stewardship for the last four years, and explain the reasons why we approached the Government in the way we did. In order that you may understand the matter thoroughly, I ask you to carry your minds back four years, to August of 1890, which was the time when the present board took office. Very considerable changes were made at that time, and, as you remember, a large amount of capital was written off. A company was formed, called the Bank of New Zealand Estates Company, to purchase what were then called the globo assets, which company issued one million and a half debentures, and handed over to the bank shares valued at £1,850,000. This was done upon a very exhaustive examination, which was made by the late Mr. D. Hean. He was a gentleman not before connected in any way with the bank. He was well known in the colony, and in high repute there, and I think there is no reason to doubt that the valuation he put upon the property at that time was very fairly made, and in accordance with the existing state of things. Eecent events have since altered and complicated all these matters. Well, the present board of course have had nothing whatever to do with the troubles which the bank got into under the Auckland management prior to 1890, but we are responsible as to what has happened since, and, that being so, I think I can show you a very clean sheet; but bear in mind that the board had to take office on the understanding that this report of Mr. Hean was to be accepted by the shareholders as the basis for what was practically reorganisation. Of course, the result of this was that in the balance-sheet of the bank there appeared, in August, 1890—and has always appeared since—this large asset, £1,850,000 in the Estates Company's shares, and the bank has for the last four years had a sort of dual existence—there has been the purely banking business of the concern, and there has been this huge lock-up in the Estates Company. Now, the purely banking business of the concern has been good—it has been distinctly good, I may say. We have not only been able to pay—what I admit is not an exorbitant dividend of 5 per cent., but we have also written off something like £60,000 bad debts, and we have put £45,000 into Consols, which are there still in the name of the Bank of New Zealand. But we have not been so fortunate with this huge lock-up in the Estates Company, and there are a great many reasons for it. We started well. For the first two years we thought we should be able to turn it within a reasonable time into an agricultural estate, but things have gone very much against us within the last two years—and especially within the last year. First of all, there has been the land policy of the Government, which, with high taxation, low prices of produce, and bad trade generally, have very much affected the returns from the Estates Company. Undoubtedly, we have not been able to realise the estates to anything like the extent we expected we should, but still we have done something in that direction. The total amount of sales to the end of March, 1894, is about £730,000, and, although there is still owing from purchasers £156,000, that is good enough, for it is all secured by mortgage on property. Then we have paid off prior encumbrances to the extent of £200,000, leaving £340,000 on deposit at the bank, which really belongs to the debenture-holders. You will see that within the last year or two our realisations have been very small, owing to the causes I have pointed out to you. Now, just consider for one moment what a load this lock-up in the Estates Company has been upon the bank —£1,850,000 in this balance-sheet, on which, had it been liquid, we could easily have earned 6 per cent., but we never get more than I^-per cent, as dividend from the Estates Company, so the bank has always been working with a loss of profit of from £75,000 to £80,000. Had this asset been a liquid one the bank could easily have earned 10 per cent., if not a little more. Of course, with so much money locked up, the bank, as I have remarked before, has been much dependent for its dividends on what it got out of the Estates Company. I have told you before how slow trade has been, but this year it has been worse than ever. So that, instead of getting a dividend, we have had to find money to pay the debenture interest, and the company has been worked at a loss. This is an exceptional year, and Ido not suppose the same thing will occur for a long time; but, as a matter of fact, the bank put its hand into its pockets and paid the interest for the Estates Company. Now, I have extracted some of the figures from the Neiv Zealand Herald —a well-informed newspaper —which will give some idea as to the reasons a concern of this sort could not pay a dividend. The New Zealand Herald says five years ago the value of the wool crop was twenty-one millions sterling. Between 1889 and 1894 the increase in the number of sheep was estimated at 24,000,000, still the market-value of the present clip is not so much now as it was then. With regard to agricultural interests for 1891 to 1892, the wheat crops of New Zealand were £4 7s. 6d. per acre ; in 1893 they were £2 10s. per acre ; and in 1894 they were only £1 10s. lid. per acre, and the yield per acre has been the smallest on record. These, I think, are good enough reasons why the Estates Company was not able to pay any dividend this year. Well, now, the position we had to face last June was simply this :It was pretty evident that there would be no dividend from the Estates Company, and it was equally evident that if there was no dividend from the Estates Company the bank would either have to reduce or pass its dividend entirely. We, of course, recognised for a long time that if this bank was ever to be • thoroughly reestablished and put upon its legs again, it would be necessary to raise fresh capital against this lock-up, but we have never been able to get any encouragement here for raising it on our own credit —at any rate, except at very exorbitant prices. Well, now, there was a great cause of fear if the bank passed its dividend, because there was a great amount of. tension in the colony at that time—the shares of the bank had fallen a great deal, probably owing:to the sales of people', who wanted to pay up their calls in the New Zealand Loan and Mercantile Agency Company:,, and •
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owing, I think, more than anything, probably, to the fact that people began to realise the depreciations in the Estates Company's assets. Things were bad in the colony, and we were very much afraid that if we passed our dividend, or even if we reduced it, that there would be a big run on the bank, and as our cash liabilities were somewhere between two millions and two millions and a half, chat would have been a very serious matter for us. We therefore consulted Mr. John Murray, who is well known to most of you, and who has been the confidential adviser of the directors for many years, and on his recommendation we placed the matter before the Govornment of New Zealand. Well, the Government met us in the kindest possible spirit, and not only that, but they did what was more important—they acted promptly, and I venture to think that the Government not only acted in a statesmanlike, but also in a businesslike way. In the first place, they avoided what might have been a most serious panic, and, on the other hand, in guaranteeing the preference stock of the bank, I fail to see that there is any chance that the Government can lose any money under ordinary business circumstances ; and therefore I think it was a statesmanlike and businesslike proceeding. I would here mention that our worthy general manager —Mr. Holmes —took no part in these negotiations with the Government, for the simple reason that he was on his way Home, for not knowing exactly what we were going to do, at any rate not knowing what view the Government might take of it, we thought that in certain eventualities his presence here might be very important to us, and therefore he was practically on the water when these negotiations were carried on, and took no part in them. I need hardly say that the creditors of the bank are satisfied with this arrangement. The bank is now in a strong position; certainly there is no bank south of the Equator stronger than this bank, and, as far as we shareholders are concerned, we are in a very much better position. We have saved the good-will of our business, and we have done what is an absolutely good business transaction —we have borrowed money for ten years at 4 per cent. We have been in the habit ever since I have been on the board of giving 4 J per cent, for perhaps three or five years, and doubtless the money can be used to great advantage at the rate we have borrowed it at. Now, the next point is about this Act. I may say we should have been glad to have met the shareholders earlier if we could have done so; but we were obliged to wait until we got the text of the Act, which we have only had within the last few days. The Act overrides the old deed of settlement, and the chief points in it are these: There is clause 5, in which it is made to be incumbent upon the directors, if the Colonial Treasurer require, that a call of one-third of £10 per share, for which the shareholders are liable under the aforesaid section 21, shall be made within twelve months of the date of such requisition. Ido not know what it was put in for, but, as a matter of fact, the present board have power under the old deed to do a good deal more than that. On an emergency, approved by the auditors, this board could call up what is supposed to be our reserve liability. Then there is a clause added to this which seems to me an advantage, and it has been suggested to me before. It goes on to say, " That the directors may, subject to the approval of the Colonial Treasurer, pay interest at a rate not exceeding 5 per cent, per annum." Whether there is any intention to call it, or whether it is put in for convenient purposes, Ido not know. The next point is, that the head offices of the bank are to be removed from London to Wellington. Although I am not sorry to be personally relieved from the responsibility, I am sorry the office is to be moved — that is, I think it better to have the head office in London. However, I will not question the wisdom of the Legislature, and they having a large interest no doubt wanted the office there, and no doubt it is right and proper. Then there is an official president to be appointed, and there are some other details which I need not trouble you with—the appointment of auditors, which is to be done by the Government in the colony, and here by the Agent-General. I may briefly refer to the balance-sheet. There is not a great difference in the figures between the balance-sheet published at this time last year and the present, and I will not go into them with any detail. I think a good deal has been said of the loss of English deposits, and, of course, I mean Scotch as well. During four years that loss has been about £950,000, all of which has been made up in the colony, and, as T remarked before, I think it is a good change, for, unless English deposits are got at a low rate of interest, it is a great mistake on the part of colonial banks to take them at all. The balance of £37,000 we have carried forward, leaving that to be dealt with by the new board in the colony. What will happen now is this : A meeting has been advertised, and will be called in Wellington on 26th September to elect the new board, and when that is done the old board will resign. We wish the new board every success, and an improved position of the bank. Now it is possessed of plenty of capital, and with the additional credit it will receive from the fact that it has at its back the New Zealand Government, I hope the new board there will have a fairly easy time of it. I do not think that the bank has suffered anything from the transfer of its head office from Auckland to London; in fact, if anything, it has gained a little. When we took it up it had no credit at all, and was a bye-word for absolute mismanagement. Well, by nothing else than sheer conservative management we contrived to get the bank into a far better position. In the past their bills had been absolutely unsaleable, but until recently they have been in good demand, and I hope the shareholders will consider, although we have had a very difficult and troublesome task, we have at least done our best in a conservative way, and carried it out. I should now, in conclusion, simply like to express to the shareholders how very much the board have appreciated the uniform kindness and courtesy we have received from them on every occasion. You have recognised that we have had a very rough time of it, and that it was a very hard task, but we have tried to do our best, and I am bound to say you have supported us in a most splendid way, and we are much obliged to you. I would also like to express my best thanks to the staff, as it will be my last opportunity, both here and in the colony, for their zeal and energy in the management of the business. A pleasanter set of men to deal with it has never been my good fortune to meet with before, and I have been in constant contact with them. With these remarks I formally move the resolution, "That the report and balance-sheet presented be received and adopted."
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Sir James Fergusson said he would second the resolution. Their President had entered very fully into the present state of the bank, and the great changes which had taken place in its affairs, and he would not speak on that; but he desired to say a few words, going back, as one of the old directors of the board, and, therefore, one who was not free from some share in the errors of management to which the chairman had referred. He would like to say just one or two words on that, as it was not a business matter but a personal matter. He would like to remind them that the London board had nothing whatever to do with the misfortunes which befell the bank, and that the London board was only an advisory board, and was not aware of the transactions which led to the lock-up of capital, but when the board did become aware of it they insisted on the general manager being sent Home to explain the state of affairs, and proceeded to institute a radical reform. He himself would have been glad to have been relieved of his share in the management of the institution which had fallen into such misfortune. He had accepted a seat there when he returned from being Governor of New Zealand, knowing what a high position the bank held, and he was so much pressed by public men in the colony not to leave the board that he remained there. He desired at that, the last time they met them in the capacity of directors, to remind them that the misfortunes which befell the bank were not of London making. The London board had never made any bad debts or losses, but they were the result perhaps of the sanguine appreciation of the position of the colony by reason of which the values now known to be inflated were accepted as real. He was not talking of the present London board, but of the London advisory board prior to 1890. Mr. Herbert Snow said it was not with feelings of satisfaction or content that he appeared there that day. Their chairman had always been courteous, and they had always appreciated his remarks, but he asked for a clear statement of what the globo accounts were. Mr. Snow then moved : " That a committee of seven, consisting of directors or officials of the bank and shareholders, be formed to ascertain what the securities are which are held by the bank against advances included in the globo assets, what cost the bank is put to to carry them on, and what profit is obtained from them, and to forward a printed copy of such report to every shareholder by the said committee." A Shareholder asked that the clauses of the recent Act might be read. The Solicitor read the following clauses of the Act : Clause 5. "It shall be incumbent upon the directors, if the Colonial Treasurer shall in writing require them so to do, and they are hereby empowered to call up one-third of the sum of £10 per share, for which the shareholders are liable under the aforesaid section 21, within twelve months from the date of such requirements. And the directors may, subject to the approval of the Colonial Treasurer, pay interest out of the moneys of the bank on such amounts called up and collected, as aforesaid, at a rate not exceeding 5 per centum per annum." Clause 11. " Until the A shares shall be called in and cancelled, as aforesaid, the directors shall not pay any dividend to the holders of any ordinary share without the consent, in writing, of the Colonial Treasurer, who, before giving such consent, shall be satisfied that any such dividend may be paid without unduly affecting the security of the colony in respect of such guarantee, as aforesaid." Clause 14. "The Colonial Treasurer may from time to time make, alter, or revoke regulations defining the duties and powers of the auditor or auditors of the bank." Clause 15. "If, upon the report of the auditors, or either of them, confirmed by the president of the bank, it shall appear to the Colonial Treasurer that the affairs and business of the bank are in any respect improperly or unsafely conducted, he shall call the attention of the directors thereto, and it shall be imperative upon the directors to amend the management and conduct of the said affairs and business, in such manner as the Colonial Treasurer may by any writing require." Mr. Bedford : Will you kindly tell us what our position will be when this Act is passed ? The Chairman : The Act has been passed. Mr. Bedford : Who by ? The Chairman : By the New Zealand Government. Mr. Bedford : Without our consent ? The Chairman : They have overridden us. An Act of Parliament can do anything. A Shareholder : Will you tell us what our position is now ? Mr. Van Heems asked if it were correct that the shareholders could not dispose of their shares without the consent of the board on the other side. The Chairman said that was only the usual custom. Every board of directors had that power where there was uncalled capital. It would not be fair to the other shareholders if a shareholder was allowed to transfer his holding to a person who had not sixpence in the world. They had borrowed £2,000,000 from the Government at 4 per cent., which they would gladly have borrowed from outsiders at 4| per cent. He did not think that Mr. Snow realised the fact that the bank was practically handed over to the Government, and that it was no use appointing a committee or doing anything of the sort. They were now a moribund board, and could not accept any such resolution. The whole matter would now be referred to the new board at Wellington. They were going to have a Government president and Government auditors, and everything would be looked into, and they had no power to do anything at all. Mr. Snow : I take it you have powers until the new board is elected. The Chairman : But we should not accept such a resolution as that. Mr. G. D. Hatterley said he would second Mr. Snow's resolution. Mr. Glass said he must call attention to the very meagre balance-sheet put into their hands. The Chairman said that things had gone very badly indeed with them in the past year, but he did not think it was at all unlikely that some arrangement might be made now that the bank was in much better credit to put the Estates Company on a much better footing. As to the appointment of a committee, as suggested by Mr. Snow, it could do no possible good, and as notice had not been given of the resolution he ruled it out of order. B—l. 6.
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In answer to further questions, the chairman said that, in accordance with the Act, of the £2,000,000 fresh capital £1,000,000 would be invested, subject to the approval of the Colonial Treasurer, and would be a sort of reserve fund. With reference to the paragraph in the report which said —" There are certain accounts in the bank's books for which, in the opinion of the board, it is probable provision may later on have to be made," he stated that some of the old accounts which were taken over when the present directors joined the board were not in as good a position as they could wish. They were not actually realised losses, but the board thought it likely that some provision might have to be made for them; this, however, should be left to the new board in the colony. It was not those accounts which prevented their paying a dividend. Being in the position of borrowing £2,000,000 under the guarantee of the Government of New Zealand, it would not have been the right thing to have paid a dividend. He did not think a better stroke of business was ever done for the bank than borrowing this money at 4 per cent. He then put the resolution to the meeting for the adoption of the report, which was carried by a large majority, and the proceedings terminated with a vote of thanks to the chairman for presiding.
1895, The first half-yearly meeting of the shareholders of the Bank of New Zealand since the head office was removed to Wellington was held on 7th February. There were about sixty shareholders present. Mr. W. Watson, President of the bank, occupied the chair. The President said : It is not customary at this, the half-yearly meeting, to present accounts, but on this particular occasion your new directors consider it advisable to state the figures of a balance-sheet which has been prepared for the 30th September, 1894, that being the end of the halfyear, and to tell you what you should know regarding the position. The following are the comparisons between the figures of the 31st March and the 30th September, 1894 : — Liabilities. March. Sept. ' Capital paid up .. .. .. .. .. .. £900,000 £2,416,440 Reserve fund .. .. .. .. .. .. 45,000 45,000 Notes in circulation .. .. .. .. .. 515,568 464,811 Bills payable .. .. .. .. .. .. 1,413,997 870,106 Deposits and other liabilities .. .. .. .. .. 8,213,199 7,649,303 Profit and loss account .. .. .. .. .. 37,740 17,324 £11,125,504 £11,462,984 A cpj/c Coin, <fee. .. .. .. .. .. .. .. £1,463,364 £1,637,023 Bullion .. .. .. .. .. .. .. 98,655 78,900 B. R. and B. Dis. .. .. .. .. .. .. 2,383,073 1,366,403 Advances and other debts due to the bank .. .. .. 4,855,569 5,506,544 Investments in British consols, &c. .. .. .. .. 61,524 608,685 Bank of New Zealand Estates Company shares .. .. 1,850,000 1,850,000 Landed property, premises, &c. .. .. .. .. 413,319 415,429 £11,125,504 £11,462,984 The increase of £1,516,440 in capital is due to the instalments of the Government guaranteed stock having been received. Decreases in notes and bills payable are usual at the time of the year. Deposits and other liabilities show a decrease of £563,896, but this is in most part due to withdrawals in the United Kingdom, partly on account of the events which occurred in June last, and partly because the rates of interest have been lowered. "You are, in fact, to be congratulated on having exchanged these deposits for guaranteed stock. The bank had too much borrowed in the United Kingdom by way of deposits, and will not again take so much. The excess was both costly and unreliable. Profit and loss account shows a decrease of £20,416, which represents, lam sorry to say, the loss made during the half-year ended 30th September on the bank's working. This makes it hardly necessary for me to say that we do not propose to pay any interim dividend. On the assets side there are increases in the coin, cash balances, money at call and short notice, and consols and other stocks, amounting to £720,820, due to temporary and permanent bestowal of part of the new capital. The item "Advances and other debts due to the bank" shows an increase of £650,975, also due to the above cause, as at 30th September over £700,000 was invested in short loans in London, returning very small interest, whilst we were paying 4| per cent, on deposits and b\ per cent, on Bank of New Zealand Estates Company debentures. Our rates for deposits are now reduced, the Estates Company having given notice to pay off £750,000 debentures in May next, and I have pleasure in being able to inform you that, with the sanction of the Colonial Treasurer, we have already invested almost all the second million derived from the guaranteed capital in sound and liquid securities, which bring in interest approximating closely to what we now pay in London for twelve months' fixed deposits. Some shareholders wish for closer information regarding the investment of this second million, and it has been said that it is not good banking to pay 4 per cent. for money and invest it to yield a lower rate. Remember, however, that this is a reserve, and that it is indispensable that the investment should be of a safe and liquid nature. Every bank taking fixed deposits has to keep a certain proportion of reserves which do not earn the rates paid for deposits. The London board had invested a large portion of the second million in foreign 3-per-cent. stock, but when this was referred to the Colonial Treasurer he demurred to it, on the ground that it was of too speculative a character, and agreed with us that the money should be rather invested in colonial stocks, so as to yield a higher interest and benefit the colonies rather than foreign countries. So a large amount has been invested in colonial inscribed stocks in London. Purchases of stock are still going on in London, and probably by this time the balance is invested; but from our latest
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advices we know that we have £608,000 in Colonial Government stocks, besides British consols and other liquid securities aggregating £172,000 more. The balance, if any, will be held in coin until it can be judiciously invested in accordance with the Act. Altogether, the figures show vastly greater strength when compared with the previous half-year, and very full security to those dealing with the bank. But, although the security to depositors is more than ample, it must be borne in mind that, in order to work the bank advantageously for the proprietors, we must let the public see it to be a profit-earning bank. Success to a bank means better rates for its exchanges and many other advantages. You will remember that at the ordinary general meeting of the bank, held in London in August last, the late president stated that it was likely some provision would be required for bad and doubtful debts. We found, on making a careful examination of the bank's affairs, in which examination we were ably assisted by the Government Auditor, that there were losses to be provided for somewhat exceeding £300,000. As we did not see our way to declaring future profits with these unprovided for, and as it was found to be imperatively necessary to add to the earning-power of the bank, in order to rehabilitate your property, it was evident that the call of one-third of the reserve liability could not be avoided. We have satisfied ourselves that when this call is paid, and provided we can work on the lines we have laid out for ourselves, of which we have every expectation, then the earning-power of the bank will be placed beyond doubt, and no further call will be necessary. It is well known that the bank has to carry a load in the Bank of New Zealand Estates Company's affairs. The assistance from the Government, both in guaranteed capital and legislation, is calculated, however, to enable us to clear up that dependency. When we assumed office we found the direction of the Estates Company located in London, entailing an unnecessary expense of several thousands of pounds per annum, besides rendering the management of the company's affairs more complicated and difficult. The direction will now be entirely in the hands of two of your directors, the Hon. W. W. Johnson and Mr. William Booth, with whom I am associated for the purpose of consultation and signature of deeds, and I venture to say that no two gentlemen could have been selected with more fitness than those mentioned. The economies effected in the salaries of the Estates Company alone will be very considerable, and all unnecessary and unremunerative expenditure, has been stopped. A good deal has been said about money being tbrown away in the expenditure of the Estates Company. Perhaps there have been some errors of judgment in that respect, but a large portion of the money expended has gone to pay off mortgages and to increase the live-stock of the company, as well as the carrying-capacity of the estates, and that cannot be taken as thrown away. We have a most valuable and productive asset in the sound business of the bank, and here I would like to signify my admiration of the way in which the majority of the staff have kept the good business together, and also of the loyal way in which the customers of the bank have rallied round it. These factors are of immeasureable advantage to you, and are, indeed, invaluable assets, which, with proper treatment, I firmly believe will succeed in making your property again valuable. Success has already attended several efforts for the more profitable working of the bank, and I can assure you that economy is being studied to the utmost in its direction and management. Branches at Newcastle, Dargaville, Sydenham, and Cromwell have been closed; Eussell branch will shortly be withdrawn; and we have secured the good business of other banks which have closed in Whangarei and Tauranga. Several of the oldest members of the staff are being retired on pensions, which will be paid from the officers' own funds, and consequently without cost to the bank ; and other reductions have been made in the staff. Mr. Andrews, a gentleman well known throughout the colonies, and respected for his probity and ability, has been appointed acting general manager. All doubtful advances have been stopped for liquidation, and fresh advances, as well as current business, are closely examined by the directors. The yearly balance will be struck on 30th March, and it is the directors' intention to thereafter propose to you certain measures which are at present in course of preparation and inadvisable to disclose at this stage, but which, if carried, they think will be to your advantage. This will probably be done at the yearly meeting in August, if not previously, and when I meet you then I hope to have a more pleasant tale to tell than I have now; but you will bear in mind that the savings we have effected and the results of our working will not bear fruit until some months past. In the meantime, and until your new board have had reasonable time to show you what they can do in your interests, I would submit to you that it is both unfair to them and disadvantageous to yourselves to foment agitation, which gets published abroad and is calculated to be useful only to the enemies of the bank. Shareholders residing out of the colony have, no doubt, been disturbed in mind by the recent reports of low prices and dulness of trade. They would, however, do well to note the large increases which, in the two years ending March, 1894, have taken place in the possessions of the people. During that period sheep in the colony increased by 1,660,077, and cattle by 138,772, whilst the increase in cultivated land was 1,169,826 acres. The exports of mutton were steady. Those of butter increased by 6,842cwt. and cheese by 13,161cwt. per annum. With these proofs of the growing capacity of the colony and the industry of its people we may, I think, have confidence in the future, and if prices improve we shall derive all the greater benefit from them. I now move the adoption of this report. Mr. B. Hallenstein seconded the motion. As an old shareholder, and one who had lost a lot of money in the bank, he did not do so with satisfaction and pleasure, but he had always recognised that it was the best, the most prudent, to do the best they could under adverse circumstances, rather than to give way to gloom and inaction, and worse still, injudicious action. The old board, with Mr. Glyn as president, had acted wisely in taking the advice of Mr. John Murray, who placed the position of the bank before the Government, and, he need not tell them, brought matters to a successful issue skilfully and promptly. Personally he was independent of any bank, and he could have faced the winding-up of the Bank of New Zealand, even had the call been made at once, but he shuddered to think what would have been the consequences to New Zealand. Great credit was due to the Government and the patriotic feeling on both sides of the House in averting a great calamity, in assisting the bank, which, with the present call of £3 6s. Bd., ought to be one of the strongest banks in the Australian Colonies. Hard as the call might be on some shareholders, with
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whom he heartily sympathized, it was, he understood, perfectly legal, and he did not think that it would be wise to foment agitation and try and resist the call. With an energetic and clever man at the helm, who had plenty of the right ambition, and surrounded as he was by a good drrectorate, the bank at no very distant date, they might reasonably expect, would again be a dividend-paying institution. The president had told them that it had one of the finest connections in all New Zealand, and they might reasonably expect, therefore, that with good management they would get dividends again. That was what they all wanted; but before all he, as one of the shareholders, thought, and would uphold the directory in seeing, that their depositors were safe before they paid a dividend. As far as he could see from the figures disclosed, for depositors this was one of the safest banks in New Zealand. They must bear* in mind, in justice to the directors, that the earning-power of all institutions had very much decreased. Every country was shaken to the very foundations by the low prices ruling all over the world, and it would be a hard job for anybody to do more than, for some time, make both ends meet. The outlook was not good. However, when things were at the darkest in the hours of adversity, they sowed the seeds of prosperity, and the president had told them that New Zealand, with all its drawbacks, was making progress. Notwithstanding that last year they had shipped close upon two millions of sheep, and he did not know how many head of cattle in the shape of tinned meat, the flocks and herds had wonderfully increased. The population, if slowly, was steadily increasing. The country, especially in the North Island, was duly being reclaimed from wilderness, and he looked forward to the not distant day when the country would be again prosperous. The prosperity of their financial institutions depended upon the prosperity of the country, and it was gratifying that, notwithstanding all drawbacks, they were making substantial progress in settlement. He liked this especially for the benefit of outsiders, who did not know what New Zealand was made of. He did not believe there was a country under the sun with conditions of life as pleasant as they were in New Zealand, which has a greater future before it. Mr. A. W. Blanchard, of Nelson, did not think the report conveyed sufficient information to shareholders to warrant them in accepting exactly the figures the president had given them as sufficient information, and, in order to get the information, it would be necessary to move an amendment.' He then moved, " That the report of the president is not satisfactory, as it does not convey sufficient information." Mr. R. Allan, of Nelson, seconded the amendment. The President said Messrs. Allan and Blanchard had submitted a number of questions, which he would read, with his answers, after the adoption of the report was discussed. After some discussion, during the course of which the president, in accordance with clause 88 of the deed of settlement, declined to receive proxies which had not been left at the banking-house at least twenty-four hours before the holding of the meeting, the amendment was put and lost on a show of hands. Mr. Blanchard demanded a poll. In answer to a shareholder, the president said the directors were willing to allow him to read the questions and answers, and he proceeded to do so. Questions asked by Mr. Blanchard. " In what manner the debt of the old New Zealand Loan and Mercantile Agency Company to this bank was settled ?—This was settled before we took office. The Estates Company were jointly interested with the New Zealand Loan and Mercantile Agency Company in some properties. We took over the properties from the Loan and Mercantile Agency Company for part of our debt, and for the balance, amounting to about £115,000, we took prior-lien debentures. These have now been reduced by sales to £76,000. "If by debentures, what security does the bank hold, and what rate of interest do these debentures pay ?—The debentures are secured by a first charge on the Loan and Mercantile Company's assets, including uncalled capital. The debentures bear 4 per cent., but by arrangement the bank gets 5 per cent., and holds a margin of security for its debt. " Has the bank retained the whole of the banking business of the Government?— Yes, it has all the banking business of the Government in this colony, except one-third of the remittances to London, which was given to the Colonial Bank in the late Mr. Ballance's time. " If not, what other bank is it shared with, and did the directors of the Bank of New Zealand assent ? Does it not break the agreement made with the Bank of New Zealand for conduct of the Government banking business ?—I have already answered that question. "In what securities is the second million raised for the bank by preference stock invested?— I have already answered this in my report. " What rate of interest do the securities yield? —About 3f per cent." Questions asked by Mr. Allan. " Has the Bank of New Zealand Estates Company (Limited) any separate existence from the Bank of New Zealand?— Yes; it is a limited joint-stock company, registered in London, and has a separate existence. "If it has a separate existence, where is the head office? Who are the directors? Has any balance-sheet been issued? If so, when? —Head office is in London. Directors: Messrs. Jeffray, Glyn, Ewen, Johnston, Booth, and Watson. Balance-sheets have been issued to shareholders of the company as at 31st of March of each year. As already stated, the direction is practically in the hands of Mr. Johnston, Mr. Booth, and myself. " Will you cause to be published, and issued to shareholders of the Bank of New Zealand, a detailed statement of account between the bank and the Bank of New Zealand Estates Company (Limited), say, from August, 1890, to 31st December, 1894?— The board do not consider it to be to the interests of shareholders to publish this information,
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" Is it true, as published in the Auckland Observer of sth January, 1895, that 16s. in the pound was offered and refused for the business known as " T. and S. Morrin and Co., Auckland, ironmongers," although the said business has been and still is carried on at a loss ?—lt is not true, and the business is carried on at a profit. No good opportunity of quitting it will be lost. " From information which has reached me I gather that a number of shareholders will be unable to pay the call of £3 6s. Bd. Should such be the case, how will the directors proceed to make up the amount necessary to pay off half the debenture-holders in the Estates Company ? Will they call up any more of the reserve capital for other than liquidation purposes ? —There will be no difficulty in paying the £750,000 debentures due in May next, apart altogether from the call. It is not contemplated that any further amount of the reserve liability will be called up. " Under the Guarantee Act of last session two million pounds, we understand, has been raised. One million was to be applied to the bank's ordinary business. The other million pounds was to be invested in liquid securities. Will you inform the meeting what those liquid securities are, what interest they bear, and where situated ?—I have answered this in my statement just made. " Will you inform the meeting what is the actual position of the bank, and how will it stand financially after the call is paid?—l have already stated to you the position of the bank at 30th September. This is the last balance-sheet, including London accounts. The bank's financial position will be, of course, strengthened by the amount since received from guaranteed stock and the call. " Upon what authority is the President's salary fixed at £2,250? Does the bank provide the salary ? If so, will you inform the meeting by what Act of Parliament this has been brought about, as there is no provision made in ' The Bank Guarantee Act, 1894,' nor in the deed of settlement, other than £2,500 to be divided amongst the whole of the directors ? —Due provision exists in the deed of settlement, as per clause 70, amended at recent meetings of shareholders, and the President's salary has been duly authorised in accordance therewith." The President continued: Although no direct notice of a question has been given, lam aware that a shareholder wishes to know the following : Has the bank paid or promised to pay any sum of money to' any person for services rendered to the bank in connection with the passing of the Guarantee Act? Beyond the usual small fees to the bank's solicitor for advice and a not more than adequate allowance by the London board to Mr. John Murray to cover his expenses, there was nothing paid or promised to be paid to any person. The President (to Mr. Blanchard) : Do you still press your amendment ? Mr. Blanchard pressed the amendment, and, after further discussion, it was put and lost by 17,991 to 388. The original motion on being put was declared to be carried unanimously. Mr. Goddard asked whether the practical result of the call now being made would be to reinstate some of the capital that had been written off? The President, in reply, said the call would be applied strictly according to law. Mr. R. Allan moved, " That a committee of investigation be formed, consisting of seven shareholders and officials of the bank, to ascertain what the securities are which are held by the bank against advances included in globo assets, what it costs the bank to carry them on, what profit is obtained from them, and to find out what is the actual financial position of the bank, and forward a printed copy of such report to every shareholder." He moved the motion, he said, for the purpose of eliciting that information which he felt sure most of the shareholders wished to obtain, and which he thought they were entitled to. What constituted the globo assets, and what proportion they bore to the whole of the Bank of New Zealand Estates Company, were matters of deep interest to the shareholders. He had always understood that since the bank's previous " wash-up " in 1890, the Bank of New Zealand Estates Company had been entirely separate, and most of the shareholders he had spoken to were of the same opinion. However, it seemed such was not the case. Further, he maintained they were entitled to a committee of investigation into the working of a concern which had brought ruin to hundreds of people. With regard to the bank's balance-sheet, they were now in a worse position than before, inasmuch as the Colonial Treasurer alone appoints the auditors, and, although they might be upright men, still, being dependent on that gentleman for their situations, they might have a leaning towards any suggestions he might offer. It had been the custom in the past, and is now, to give the shareholders little or no information ; and, notwithstanding anything that had been said to the contrary, he had very much doubt whether the Government, the directors, or the officials of the bank really knew its true position. It had got into such a state of entanglement that it would require the whole of the ingenuity of the Colonial Treasurer to extricate it. At a meeting of shareholders held in London some twelve months ago, the chairman, in answer to a question, said the bank had ample money and did not want to make any calls on shares. Let them contrast this with the statement made by the Colonial Treasurer in regard to one of the Bank Bills of last session. He then said that the Government was aware that the bank was weak or wanted help nearly twelve months previously. To say the least, that was inconsistent. He had not the slightest intention of casting any reflection on the present board of directors, nor did his resolution reflect upon them in any way, because it covered a time altogether before they took office; but he should like to know how it was they had made, as it were, a change of front. The meeting would remember, when the present directors took office, one gentleman, in returning thanks, said they undertook the responsibility with the full intention of not harassing the shareholders. Well, within five weeks of that they harassed them in a very bad way. That change led him to conclude either that they had no power at all, but must do as directed by the Colonial Treasurer, or that they were very vacillating. If they were to have confidence in the head of this house, they must have candour. He maintained the shareholders were entitled to the information asked for in his motion. Mr. Blanchard said he would formally second the motion, in order that the information might be circulated amongst the shareholders.
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Mr. T. W. McKenzie said that if the applicant went to the bank and asked for the information in a proper manner, he would be able to obtain all he required. He thought the shareholders should be told that it was not to the interest of the bank that that information should be given, and if they had confidence in the directors they had elected, they would be content with that assurance. [Mr. R. Allan :We have no confidence in them.] It would be treating the directors in a very rough way indeed to do what it was now proposed to do, and would put them in a false position. Let them have time, and he had no doubt the interests of the bank would be conserved, and that they would meet under happier auspices on a future occasion. As to the call, he thought it was right to make it, and that it should have been made ten years ago instead of borrowing money. They now belonged to the Government, " body and bones," and he suggested that the Government should buy some of the land belonging to the bank, which would be an excellent method of getting them out of their difficulties. Mr. Blanchard suggested that the mover of the resolution should withdraw it and give notice of it for the annual meeting. Mr. Allan said he would do so if every shareholder was notified that it would come on at the annual meeting. The President said that could not be done by the bank, and Mr. Allan thereupon refused to withdraw it. Mr. W. Brown said the shareholders had elected a President and directors to manage the affairs of the bank, and he did not think it was at all complimentary, four months afterwards, that the shareholders should ask for a committee to act with them in a scrutiny of its affairs. His view of the case was that the President and directors are really a committee of management, and he could not understand why they should want to add to that committee. It might be the Nelson people wanted more information than it was prudent to give, and he thought their suggestion was very unwise, and he should vote against it. Mr. B. Hallenstein remarked that if such a motion as this was carried, every client of the bank who could do so would leave it. That was the most damaging thing they could do to the bank. The.Hon. W. W. Johnston said that one of the matters about which Mr. Allan felt somewhat sore was that, at the last meeting one of the directors, in returning thanks for being elected (very likely it was himself), said it would be the effort of the board to inflict no unnecessary hardship on the shareholders, and he came to the conclusion that the present board was either a very vacillating body or else in reality they felt themselves compelled to do what the Colonial Treasurer ordered them to do. He was perfectly right in saying that, as he would show him by reading a clause of the Bank Share Guarantee Act. Mr. Allen : I understand all about that. Mr. Johnston, continuing, said it was incumbent on the directors, if required to do so by the Colonial Treasurer, to make this call. That being so, the meeting would recognise at once there was no inconsistency between the minds of the directors as expressed at the last meeting and their compulsory action with regard to this call. The motion before the meeting dealt with two matters, the first being, what is the actual position of the bank ? One of the duties which the board took upon itself on being elected was this very task, which it was now suggested a special committee should be appointed to do—namely, it was their duty to inquire into the actual position of the bank and to make it known to the shareholders. They had heard the president say, so far as six months' working of the bank was concerned, that there was a loss of £20,000. So far as they could ascertain on going through the accounts, they were very sorry to say they showed a deficiency of something over £300,000. They would see that the directors, acting on the lines that this proposed committee would have to go upon, had not at all shirked their duty. They had disclosed what they had found out. He fancied, looking at this resolution, that at the meeting in Nelson the shareholders must have been under the impression that the board wanted to hide something. The shareholders would see that was not the case. What they knew they had disclosed, and not only had the board been occupied in making estimates of losses made during a former administration, but, as the president had said, they were doing much more than that—they had taken hold of all the hazardous accounts, they were doing what they could to stop them, they had prevented their growth, and doing what they could to contract them. So far as he knew, the present board had made no risky advance of any sort. If they erred it was on the side of prudence, and he did think it was casting a must undeserved censure upon a board freshly brought into being to say they would supplement the board's efforts by the appointment of such a committee. Now, with regard to the position of the Bank of New Zealand Estates Company. The position was this : Clause 16 of the Bank of New Zealand Share Guarantee Act said : "In valuing the shares held by the bank in the Bank of New Zealand Estates Company (Limited), or any items which shall take the place of such shares or any of them, the directors and auditors shall treat the same as an account in liquidation, and pending the completion of such liquidation such shares or items shall be taken at the par or book-value thereof." Clause 11 enacted : " Until the said A shares shall be called in and cancelled as aforesaid, the directors shall not pay any dividend to the holders of any ordinary shares without the consent, in writing, of the Colonial Treasurer, who, before giving such consent, shall be satisfied that any such dividend may be paid without unduly affecting the security of the colony in respect of such guarantee as aforesaid." What did that mean ? The Legislature had given their administrators, whoever they might be, a considerable time in order that they might have plenty of opportunity to realise this property to the very best advantage. At the same time, the Legislature had said they should not pay any dividend on ordinary shares unless they satisfied the Colonial Treasurer as to the soundness of the bank ; that was to say, the Colonial Treasurer would have to be satisfied that there was not too wide a gap between the book-value of these various assets and what they would most likely realise when they came to be sold. What better position could they be in than that ? They were given time, certainly not less than ten years, during which every convenient opportunity would be availed of in order to dispose of these assets, and during the whole of that
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time the law said the directors should value these things at par. Then, supposing during the course of ten years or so any rise in the value of wool or wheat took place, then the value of all these properties would materially benefit; very likely during that period they might come out at par. But supposing now, when wool and wheat were very low, a committee of investigation said that on present value they thought there would be a certain gap between the book-value and the value that might be realised, would that be to their interest ? It might be that with the time given by the Legislature, together with aggregate profits which would accrue during that period, they would come out all right; but would, any announcement such as he had shadowed forth benefit them in any way? He could see many ways in which it would be detrimental to them, and therefore he hoped the meeting would not hesitate to reject this motion on the grounds he had mentioned. Firstly, in regard to the affairs of the bank, they had been told exactly how matters stood, the losses during the past six months, and the probable total losses, and with regard to the position of the assets, they now saw that if the directors had not made any reference to any further loss that might be occasioned on their realisation it was because they were constrained by law to value them at par, and the Legislature had put them in an exceptional position to realise over a number of years. He hoped the motion would be negatived. The President said: I must remind you that I have duties to perform as president of the bank appointed to conserve the interests of the colony because of its guarantee to this institution, and also to safeguard the interests of the shareholders. I would, therefore, be failing in my duties did I remain silent on this occasion. He added that from the knowledge he had gleaned during his term of office he was strongly of opinion that the carrying of any such motion as this would not only be injudicious but detrimental to the interests of all concerned. He, therefore, suggested to Mr. Allan that, after what had been said, he should withdraw his motion, which could do no good whatever. Mr. Allan said he was not himself responsible for the motion. He was deputed by the Nelson shareholders to press it, and, further, he could not withdraw it unless it was to come up at the next meeting, and notice of it given to all the shareholders. The motion was put to the meeting, and lost on the voices. Mr.' R. Allan said he hoped that in future meetings would be convened by circular, so that ail the shareholders might know the date it would be held. Mr. Allan was proceeding to give notice of a motion to that effect when— The President requested him to send it into the banking house, as required by the deed of settlement. Mr. Ryley proposed a vote of thanks to the present directors and staff of the bank. He had been connected with the bank for thirty years, and more courteous and obliging men than the officers of that institution could not be found. The vote of thanks was seconded by Mr. Knigge and carried unanimously. The President briefly returned thanks, saying that the officers of the bank had had little of late to cheer their arduous labours, and the kindness of the shareholders would be deeply felt and much appreciated. The minutes were read and confirmed, and the meeting terminated.
The annual meeting of the Bank of New Zealand shareholders was held in Wellington on the 30th August. There was about thirty present. Mr. Watson, President, presided. The following report and balance-sheet were presented : — The directors submit the balance-sheet for the year ended 31st March last. It will be seen that it is necessary to make provision for bad debts to the extent of £376,898, after writing off reserve fund £45,000 and balance of profit and loss £383. The retiring directors are Messrs. Booth and McCarthy, who are the only candidates. During the year branches were closed at Cromwell, Sydenham, Dargaville, Russell, Kawakawa, Aratapu, Shannon, and Newcastle (New South Wales). The business of other banks was taken over at Whangarei and Tauranga. Balance-sheet, 31st Maech, 1895. Capital— Liabilities. £ s. d. 4-per-cent. guaranteed stock .. .. .. .. .. .. 2,000,000 0 0 100,000 shares at £5 ss. .. .. .. .. .. .. 525,000 0 0 50,000 shares at £7 10s. .. .. .. .. .. .. 375,000 0 0 Call of 1895 account .. .. .. .. .. .. 159,745 0 8 Total capital .. .. .. .. .. 3,059,745 9 2 Reserve fund .. .. .. .. .. .. .. .. 45,000 0 0 Notes in circulation .. .. .. .. .. .. .. 468,195 0 0 Bills payable .. .. .. .. .. .. .. .. 1,486,891 3 5 Deposits and other liabilities .. .. .. .. .. .. 7,222,201 16 1 Balance of profit and loss .. .. .. .. .. .. 383 11 1 Total liabilities .. .. .. .. .. £12,282,416 19 9 Assets. Coin and cash balances .. .. .. .. .. .. .. 1,302,009 5 10 Bullion .. .. .. .. .. .. .. .. 92,185 3 11 Investments .. .. .. .. .. .. .. .. 880,213 0 4 Bills receivable and discounted .. .. .. .. .. 2,112,347 13 0 Other advances and securities and debts due to bank .. .. .. 5,203,449 13 10 Estates Company's shares, par value, as per statute .. .. .. 1,850,000 0 0 Landed property, bank premises, &c. .. .. .. .. .. 419,931 2 10 Bad and doubtful debts .. .. .. .. .. .. .. 422,281 0 0 (Deduct reserve fund and profit and loss balance, £45,383 lis. Id., leaving net amount, £376,897 Bs. lid.) Total assets .. .. .. .. .. £12,282,416 19 9 Profit and Loss.—The profit and loss account, which, on 31st March, 1894, showed a credit balance of £37,739 17s. Id., shows a loss during the year of £37,356 65., leaving a balance of £383 lis. Id.
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The President said : The balance-sheet and report of the directors are now in your hands. In view of the measure before Parliament, and the very full discussion on the figures of both the bank and the Estates Company that is at present going on, your directors think it would be out of place to-day to discuss the bank's affairs or pass any resolutions regarding them beyond the necessary election of directors in room of those who have retired. As stated in the report, Messrs. W. Booth and T. G. McCarthy are the only candidates, and as they have complied with the necessary formalities, I have, therefore, to declare these gentlemen duly elected. I move, "That this meeting do now adjourn until Friday, the 6th September, at 3 p.m.," and I may state your directors then propose to enter exhaustively into the whole position. In answer to a question, he said that shareholders would still be shareholders if the Bill passed, and questions asked at the adjourned meeting without notice would be answered if they did not affect the stability of the bank. The motion was then agreed to.
The adjourned half-yearly meeting was held on the 6th instant. Mr. Watson, President of the bank, was in the chair, and about thirty shareholders were present. The President, in moving the adoption of the report, said : You have had the balance-sheet of the bank in your hands for the past week, and are doubtless aware of the full text of " The Bank of New Zealand and Banking Act, 1895," which has just become law. Into the figures of the balance-sheet I need hardly enter beyond saying that it is proposed now, in addition to the entries required by the Act, to write off the reserve fund of £45,000 and the balance of the profit and loss account of £383, so as to reduce the item " Bad and doubtful debts " to £376,900, the amount to be written off as provided by the Act. As many of the shareholders may not see the Act itself, or, although seeing it, they may not be able to apply its provisions to the circumstances of the bank so as to form a correct conclusion, I take this opportunity of placing on rpcord the provisions of the Act, and the exact position in which it will leave the bank. In the first place, the paid-up capital of £900,000 and the proceeds of the call of £3 6s. Bd. per share, payable this year, are written off. To replace these by way of capital the Government are to subscribe £500,000 preferential shares, bearing interest at the low rate of 3-J- per cent. These shares may be repurchased by the shareholders at par within the next six years. Shareholders are called upon to pay another £3 6s. Bd. per share in four half-yearly instalments, beginning on 30th June next year, and ending 31st December, 1897. This will be the share capital, and it is stipulated that out of the net annual profits of the bank, after the payment of £50,000 to the Assets Eealisation Board, 5 per cent, interest on these shares will go to the shareholders for the present, and in the event of no deficiency remaining on account of the properties removed from the bank's control, the whole profits of the institution will be payable to the shareholders. In any event no further call can be made until after 31st December, 1898. The £1,000,000 invested according to the Bank of New Zealand Share Guarantee Act of 1894 is freed for use in the bank's ordinary business. The Government appoint one director of the bank while the liability on the part of the colony exists. The whole of the stations, stock, and implements, and other landed properties in New Zealand, including the Auckland Agricultural Company, and the Estates Company's shares in the Thames Valley Land Company are to be sold to a corporate body termed the " Assets Eealisation Board" for the price of £2,731,806, and such additional sum as may be found necessary in order to adjust the accounts after 31st March. This sum represents the book-values of these properties, and this incubus on the assets of the bank and the Estates Company will now be replaced by debentures of the Assets Board, bearing 3-J- per cent, interest, and having any deficiency upon them guaranteed by the colony. By this transaction the balance-sheet of the Bank of New Zealand Estates Company will be reduced to small figures, and the position of the company will be rendered thoroughly sound, while its liquidation and total extinction in a very short time will be feasible. The amount to be written off as bad in the books of the Estates Company will be £467,100, against which no assets exist, and £296,500 to bring down the remaining assets to their proper realisable values. The present deficiency in the assets to be taken over by the Assets Board is computed at £850,000. With Government and economical management on the part of the Assets Eealisation Board, and an increase in the values of wool and other products, of which there is every likelihood, this deficiency might be made to disappear, and the capital and goodwill of the bank, which will now be very valuable, would be then the free property of shareholders. In order to secure the above deficiency the colony is to have a lien upon the shareholders' capital and the uncalled reserve liability. The Assets Board will consist of three persons, two to be appointed by the Government and one by the directors of the bank. Power is given to the bank to purchase the business of any other bank doing business within the colony, but so that only the sound business of such bank shall be taken over, and that the selling bank will have to liquidate its own bad and doubtful debts. It is estimated that by such purchase the Bank of New Zealand will be enabled to pay the shareholders regular dividends of 5 per cent, per annum, and contribute materially to the reduction of the deficiency of the assets of the Eealisation Board. The Act further provides that whilst the liability of the colony exists the shareholders are not to wind up or dissolve the bank so as to cause a loss to the colony ; and the Government, through the President, have the power of vetoing such proceedings as might be considered detrimental to the interests of the colony. These are the principal changes brought about by the Act. Their effect will be to separate entirely from the bank, and to free the creditors of the bank from any risk attending the large mass of properties standing in the books at £3,000,000 of money, which have so weighed down the bank during the past ten years. Had the directors of the bank known when the Bank of New Zealand Estates Company (Limited) was incorporated that the prices of wool and other products would fall so low as they have done, they would probably never have incorporated the company at all, but would have taken other measures at that time. Had prices not fallen it is probable that the deficiency with which we are now dealing would not have been so serious as to ■warrant the present measure. I would ask those whose first impulse would be to impute blame to
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consider what the values of the properties were ten years ago and what they are now, and to remember that the shareholders of nearly every important financial institution doing business principally in the colony have suffered severally, and in many instances have not only had to pay calls, but have completely lost their properties. On 7th February last, in this place, I stated to you that it was not contemplated that any further amount of reserve liability should be called up. At that time we had probed into the affairs of the bank, but were unable to ascertain the position of the Estates Company until the accounts of the head office were removed from London to the colony, and until we could strike a balance-sheet for the year ended 31st March last. By "The Share Guarantee Act, 1894," the directors and auditors of the bank were enjoined to treat the item of £1,850,000 shares in the Estates Company at par value. On ascertaining the result of the working of the Estates Company for the year ended 31st March last, and on becoming aware of the whole actual position of the Estates Company and the Auckland Agricultural Company, it was apparent that under the system then existing the Estates Company was unable to pay interest on its indebtedness to the bank; and if the prices of produce did not rise very considerably, yearly deficiencies would accrue which we should not be justified in concealing from shareholders. Had we, merely come to this meeting with tidings of deficits, the credit of the bank would be gone, and the bank itself would soon follow it. We did not consider it to be our duty to throw up our hands in such a way, but we represented our position to the Government, the Parliament having already assisted the bank by the guarantee of £2,000,000, and we asked for reasonable assistance in the interests both of the colony and of the shareholders. The Joint Committee of both Houses set up an inquiry into the affairs of the bank. This Committee, while being careful not to destroy the confidence of the customers of the bank by probing into individual accounts, made a most careful investigation into the general business and affairs of the Estates Company, and asked the directors to put forward their recommendations as to what should be done to rehabilitate the bank. Thereupon the directors recommended a scheme in most respects similar to that which was subsequently adopted by the Committee in their report. The most important alterations made by the Committee were that, instead of £1,000,000 preferential shares being subscribed for by the Government, only £500,000 has been subscribed, and that instead of shareholders having issued to them deferred shares (which they would be able to deal with in lieu of capital written off) and hypothecating the whole of the £6 13s. 4d. against any deficiency on the estates, the Committee reported that there should be a call of £3 6s. Bd. per share to be turned into capital, dividends on which up to £50,000 per annum to the Assets Realisation Board, should if earned, be paid to the shareholders, and that this capital, together with the remaining £3 6s. Bd., should be secured to the colony for any deficiency on the assets realisation. But had the directors' recommendation been carried out no call might have been necessary. We consider, however, that the shareholders should be grateful for what the Committee recommended, and for what Parliament has given effect to. Had the bank been allowed to go into liquidation, the shareholders would undoubtedly have had promptly to pay the whole reserve liability, or as much of it as they conditionally could. Now there is only onehalf of the reserve liability to pay, and spreading the payments over two years, commencing nine months hence, will be agreeable to those who are not in affluent circumstances ; while both to them and to those who are rich there is the consolation that on the payments there is every probability of their getting 5 per cent, interest, besides having, under favourable circumstances, the good-will of an enhanced business reserved to them by Act of the Legislature. The position of the bank as regards its creditors is rendered as secure and strong as that of any institution doing business south of the Equator, and, the position being now thoroughly ascertained, shareholders may well look forward with confidence and hope. The prospects of the colony, with which the bank is as much bound up, are brightening—wool and other products are advancing in price—and, when it is taken into account that a Id. per pound rise in w T ool alone will mean £12,000 per annum to the Assets Realisation Board, it will be seen how important any rise in price must be. The active development of the mining industry at the Thames and Coromandel districts, and on the west coast of the South Island, cannot fail to enhance the profits of the bank. He concluded by moving the adoption of the report and balance-sheet. The Hon. W. W. Johnston seconded the motion. In answer to Mr. Blanchard, The Chairman stated that the adoption of the report bound them to writing-off the bad debts mentioned in the report. The motion was put and carried without discussion. Major Messenger asked what the good-will of the bank meant to shareholders, as they did not know what they had to look forward to. When he took shares they were £10 in value, for which he gave over £20, and understood he had to find £10 and no more. He wanted also to know, as the bank had been declared in Parliament to be solvent, how it was necessary to call on the reserve liability ? He noticed that the board, in the morning paper, stated that shareholders would have a reversionary interest in the property. It appeared to him they, as shareholders, were there simply as matter of form, as Parliament cancelled whatever they did. The President said shareholders had active power, as they appointed their directors, but Parliament had the power of veto, which was only right in consideration of the guarantee. He explained that the good-will was the reversionary interest in the bank, which would come back to shareholders when the whole deficiency on the Assets Company was cleared off, and, as to the reserve liability, what Major Messenger had said was true before the Act of 1894 was passed, but the Act of 1895 had altered the position. Mr. Blanchard moved that the London directors be called upon to resign, but there being no seconder, the motion fell to the ground. Mr. Ryley (Dunedin) moved : " That this meeting desires to accord a hearty vote of thanks to Parliament, and especially to the Government, for the timely assistance rendered to the Bank of New Zealand and the colony at large at a most critical period in their history by the Banking Act 9—l. 6.
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of this week, and also to express its gratitude for the consideration shown to the poorer class of shareholders in spreading the call over two years; further, the meeting cordially acknowledges its deep obligations to the President and directors for the efforts they have made to conserve the interests of shareholders and to put the bank on the solid foundation on which it now rests." The motion was seconded by Mr. Tanner, solicitor, Wellington, and after some discussion was carried unanimously. A vote of thanks to the officers of the bank for their services during the past year was carried, and Mr. Andrews, auditor, responded.
AGREEMENT BETWEEN THE BANK OF NEW ZEALAND AND THE COLONIAL BANK OF NEW ZEALAND. 1. The Text op the Ageeement. The following is a copy of the banks' agreement laid on the table in accordance with the provisions of " The Bank of New Zealand and Banking Act, 1895 " (certified as a correct copy of the original agreement by Mr. Jas. B. Heywood, Secretary to the Treasury) : — An agreement made this 18th day of October, 1895, between the Colonial Bank of New Zealand (hereunder) called the " selling bank ") of the one part and the Bank of New Zealand (hereinafter called the " purchasing bank ") of the other part, whereby it is agreed as follows : — 1. The selling bank agrees to sell and the purchasing bank agrees to purchase the business and assets of the selling bank, except the uncalled capital and reserve liability of shareholders and the assets and debts mentioned in a certain list marked " D," which has been prepared and is identified by being signed by three directors of the selling bank and the purchasing bank respectively, and except also as hereinafter mentioned. 2. The business and assets of the selling bank, as disclosed in its balance-sheet hereinafter mentioned, a copy of which balance-sheet has been signed by such directors as aforesaid, should, for the purposes of this agreement, be considered as the basis of the contract entered into between the-said parties. 3. For the purposes of this agreement the face-value of the consideration is estimated at £461,211, but from this sum shall be deducted and retained by the purchasing bank the sum of £327,305 as security pending the taking over, realisation, or adjustment of the accounts in the "B " and "C " lists respectively as hereinafter mentioned. The sum of £133,906 shall be paid in cash by the purchasing bank through the selling bank on the ratification and approval of this agreement as hereinafter. 4. Three lists of debts and accounts have been prepared, and marked respectively " A," " B," and " C," which are identified by being signed by such directors as aforesaid. 5. The debts and accounts mentioned in the " A " list shall be taken over by the purchasing bank as of the value set opposite to the same respectively in such list. 6. The said sum of £327,305, part of the said purchase money, represents sums in the righthand columns of the said " B " and " C " lists as marginal sums to be held by way of security pending the taking over, realisation, or adjustment of accounts in the said " B " and " C " lists respectively, and shall, subject to the provisions hereafter contained, be retained by the purchasing bank for such purchase. 7. The assets and debts mentioned in the said " D " list shall not pass under this agreement or become the property of the purchasing bank, but shall remain the property of the selling bank. 8. The business and the assets hereby agreed to be sold shall be retained by the selling bank up to the date hereinafter fixed for the transfer of the said business, and as from the 31st day of May last in London, and as from the 31st day of August last in New Zealand up to such date so fixed, the selling bank shall be deemed to have been and to be carrying on business on behalf of the purchasing hank, and shall accordingly account to the purchasing bank for all benefits received, and be indemnified by the purchasing bank against all liabilities, obligations, and expenses (unless arising from the wrongful or negligent act of the selling bank or its officers) incurred in carrying on the business of the bank. All rates, taxes, and fire-insurance premiums in respect of the premises and assets hereby agreed to be sold up to the said 31st day of August last shall be discharged by the selling bank, and thereafter by the purchasing bank, and all such rates and taxes and premiums shall, if necessary, be apportioned. 9. The purchasing bank shall realise, manage, and adjust the accounts mentioned in the "B " and "C" lists respectively under the supervision of the selling bank, to whom monthly returns shall be furnished by the purchasing bank, and no increase of indebtedness shall be allowed in respect of any such account except by mutual agreement between the selling bank and purchasing bank; but if any such indebtedness is increased by mutual consent, the selling bank, if required, shall provide a further guarantee to secure such increased indebtedness, and if the purchasing bank shall allow any increase which may not be so mutually agreed upon, such increase of indebtedness shall be at the sole risk of the purchasing bank. 10. The purchasing bank shall be entitled to apply any surplus arising from any of the said marginal sums in the " B " list in aid of any deficiency which may arise in any accounts in such list until the whole of such accounts in such list shall have been taken over, liquidated, or adjusted. There shall be no liability on the part of the selling bank to the purchasing bank beyond the said marginal sums in respect of the said accounts or any of them. 11. If the selling bank shall consider that any steps or proceedings are necessary for the protection of the said accounts, or any of them, in the said " B" and "C " lists respectively, the purchasing bank shall, on receiving written instructions from the selling bank, take such steps and proceedings, but at the risk and expense of the selling bank. 12. If the purchasing bank shall represent to the selling bank that any account or accounts in the " B " list is or are in its opinion becoming bad, or in the event of a customer failing to pay
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interest on any such account, the purchasing bank may require that such account or accounts shall be closed and realised after one month's notice to the selling bank; but the selling bank shall have the option of withdrawing such account from the assets hereby sold on paying to the purchasing bank the amount then due thereon, and thereupon the amount standing opposite such account in the right-hand column sffidl be paid to the selling bank; and in the event of the selling bank declining to exercise such option within such month, then the purchasing bank may deal with the same in such manner as it thinks fit. 13. If at any time on the rendering of the monthly accounts or returns aforesaid it shall be found that the total amount standing in the right-hand column of the " B " list shall exceed the total amount of debts to which they stand opposite in such list, then, and so often as the same shall occur, such excess of the total amount in such right-hand column shall be paid to the selling bank. 14. On the expiration of six months from the date of the transfer of the said business, and on the expiration of every six months thereafter, a statement shall be prepared by the purchasing bank and furnished to the selling bank of such accounts in the "B " and " C " lists as may have been taken over by the purchasing bank, liquidated or adjusted ; as also a statement of the position of the amounts in the said right-hand column of the " B " list. 15. An equitable adjustment shall be made of the interest due to, and to be allowed to, the selling bank on any amount standing in the said right-hand column of the said " B " list which may ultimately be found to be in excess of the amount necessary for securing the debts mentioned in the said " B " list, and the rate of such interest shall be based on the current rates of interest for fixed deposits for twelve months paid by the purchasing bank. 16. After the expiration of two years from the 31st of August last, the selling bank may require the purchasing bank to pay over to the selling bank the whole of the amounts in the right-hand column of the said "B " list, and surrender all securities held in respect of the debts or accounts mentioned in such list on payment of the total amount of the balance then owing on such debts or accounts ; but the parties hereto may arrange from time to time to continue the liquidation of any of the accounts mentioned in the said "B " list for a further term. In the absence of any such arrangement the purchasing bank may proceed to liquidate all or any of the accounts mentioned in the said'" B " list. 17. The purchasing bank shall not, so long as it retains any part of the said marginal sums as security as aforesaid, realise or discharge (except in payment) any security held by the purchasing bank for or in respect of such accounts, nor realise or compound for such accounts without the consent of the selling bank. 18. With respect to the accounts appearing in the said "C " list, the selling bank shall indemnify and protect the purchasing bank against any loss or deficiency on the realisation of such accounts respectively, providing that the purchasing bank shall, immediately on this contract taking effect, write-off the amounts standing in the right-hand column of the " C " list, and credit the respective accounts in such list with the amounts so written-off. The purchashing bank shall have the option within three months from the date of this contract taking effect to take over all or any of the said accounts in the " G" list, and in the event of the purchasing bank deciding to take over any such accounts the selling bank shall stand released from its agreement to indemnify and protect as aforesaid. The selling bank may at any time require the purchasing bank to elect whether such bank will take over all or any of the accounts in the " C" list or reject the same, and in the event of the purchasing bank refusing to take over all or any of such accounts the selling bank shall be entitled to take over the account or accounts respectively, or require the purchasing bank to realise or liquidate the account or accounts which the purchasing bank refuses to take over, and any deficiency arising on such liquidation shall be made good by the selling bank. 19. The assets agreed to be sold as aforesaid shall be subject to all tenancies, liens, and equities subsisting or affecting the same or any part thereof. 20. The purchasing bank shall pay, satisfy, and discharge all deposits, bank-notes, creditbalances, bills, drafts, letters of credit, and circular notes for or in respect of which the selling bank shall be liable, and which are disclosed in the selling bank's books at the time appointed for the transfer of the business of the selling bank, and shall also pay and satisfy all liabilities and obligations of the selling bank incurred or undertaken in carrying on its ordinary business and which shall be disclosed in the books of such bank, but nevertheless without prejudice to the provision contained in the next clause, and also will from time to time pay the rents payable, and observe and perform the covenants and conditions to be fulfilled or observed by the selling bank under any lease or tenancy held by the selling bank and agreed to be sold by it. But nothing in this clause contained shall render the purchasing bank liable in respect of any contract entered into by the selling bank with any of its officers or servants, or for any loss arising from the improper conduct or neglect of any of such officers or servants. 21. Notwithstanding anything contained in the last preceding clause, the selling bank shall guarantee the purchasing bank against all loss which it may sustain in respect of any letters of credit granted by the selling bank prior to the time of the said business being transferred ; but the purchasing bank shall elect, within fourteen days thereafter, whether it will stop or continue any credit in respect of such letters or any of them after the expiration of such fourteen days. The liability of the selling bank under this clause shall cease and determine in respect of any operation thereafter on any such letters of credit. 22. A list of the officers and servants of the selling bank shall be furnished to the purchasing bank, and their names shall be placed on such bank's register of applications for employment, and as many of such officers and servants shall be taken into the employ of such last-mentioned bank as the exigencies of the interest thereon may require. 23. The purchasing bank shall be entitled at any time within six months from the time appointed for the transfer of the said business to reject any securities which it may consider contain onerous conditions.
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24. The selling bank shall, if a written request in that behalf be made to it by the purchasing bank within nine months from the date appointed for the transfer of the said business, at the cost and charges of the selling bank, complete any incomplete securities (according to the nature of the security intended) for any of the assets sold and purchased as aforesaid, and in the event of the selling bank neglecting for a reasonable time to complete such security, the purchasing bank may do so at the cost of the selling bank. 25. The selling bank shall guarantee,— (a.) That the balance-sheet made up to the 31st day of March in London, and up to the 31st day of August last in New Zealand, contains a true statement of the position of the selling bank at those dates, except as any variation thereof appears in this agreement, (b.) That all items (not included in the " A," " B," and "C " lists, and any securities held for the accounts therein) submitted to the purchasing bank during the negotiations for the sale and purchase, are of the value which they were represented to be ; but the landed property and bank premises appearing in such balance-sheet shall be taken at the values appearing in the said balance-sheet. The furniture and stationery mentioned in the said balance-sheet, after deducting an allowance in respect of working the business in London, has been assessed at £6,250. (c.) The accounts in the " A " and " B " lists taken over by the purchasing bank which have not in the meantime been paid off or reduced shall at the time appointed for the transfer of the business be in a safe or substantially good position, having regard to the nature of the accounts and the circumstances of the debtors as they were respectively in on the 31st day of August last, (d.) That the items shown in the balance-sheet as being in transitu between the various branches of the selling bank are of the value which they were represented to be in such balance-sheet, (c.) If any account taken over by the purchasing bank shall be wholly or partially secured by shares of the selling bank, such last-mentioned hank shall make good any deficiency which may arise in realising any such security to the extent which such security was estimated in taking over such accounts or any of them. (/.) That the selling bank will, if required by the purchasing bank, within six months from the time when this contract takes effect, make good any defect in the title to all or any of the assets sold, which may have been represented to consist of freehold land belonging to such bank as its own property and not held by way of security only; and as to leasehold properties, that all rents have been paid and all covenants performed in respect thereof up to the 31st August last. If the selling bank is unable or unwilling to make good any such defect in title within a reasonable time after being so requested so to do as aforesaid, compensation shall be allowed to the purchasing bank for any deficiency in value of any freehold property prejudicially affected by any such defect in title, such compensation to be settled by arbitration in case of disagreement between the parties hereto as to the amount thereof. 26. Agency work in connection with the liquidation of the selling bank shall be undertaken for such bank by the purchasing bank free of expense, except such charges as the purchasing bank may actually pay in respect thereof, but such last-mentioned bank shall not be under obligation to carry out any agency work which it may consider detrimental to its own business. 27. There shall be expected from the said contract for sale the share-register, transfer-books, board minute-books, transfer of shares, and other documents relating to the ownership of shares in the selling bank, and also its seal, all of which shall remain the property of the selling bank. All other books of the selling bank shall become the property of the purchasing bank, but until the dissolution of the selling hank the purchasing bank shall produce and show at such times and to such persons as the selling bank shall from time to time reasonably require such books, documents, and papers of the selling bank passing to the purchasing bank, but the selling bank shall pay any actual outlay occasioned by such production. 28. It is agreed that the selling bank shall guarantee the due payment of all amounts payable under or in respect of any security mentioned in the memorandum at the foot of the said " C " list as being held by the purchasing bank, and given or executed by any person or company whose name appears as a debtor in the said "C " list. But the said selling bank shall be entitled at any time to pay-off and take a transfer of all or any of the said securities. 29. Subject to the payment of the said sum hereinbefore agreed to be paid in cash, the time or date appointed for the transfer of the business of the selling bank shall he the second Monday after the ratification and approval of this agreement as provided by "The Bank of New Zealand and Banking Act, 1895." 30. If any difference shall arise between the selling bank and the purchasing bank touching these presents or the construction thereof, or any clause or thing herein contained, or any matter in any way connected with these presents, or the rights, duties, and liberties of either party in connection with the premises, then and in either or any such case the matter in difference shall be referred to two arbitrators to be appointed by each of the parties in difference, or by any umpire to be appointed by the said arbitrators. 31. The expression " the selling bank," or any words importing the same meaning, shall extend to and include the liquidator- or liquidators for the time being of the selling bank. 32. This agreement for the sale and and purchase as aforesaid is conditional upon (a) the subsequent ratification thereof by resolution passed by the proprietors or shareholders of the selling bank in the manner provided by " The Bank of New Zealand and Banking Act, 1895 " ; and (b) the approval of the Parliament of New Zealand, to be signified as prescribed in the last-mentioned Act. In witness whereof the selling bank and purchasing bank have caused their respective common seals to be affixed to this agreement, written on fifteen sheets of paper, each sheet of which has been signed by three directors of such banks respectively, the day and year firstly hereinbefore written. The common seal of the Colonial Bank of New Zealand was hereunto affixed by authority of the board of directors of such bank in the presence of H. Mackenzie (general manager), George McLean, William H. Reynolds, W. Downie Stewart. The common seal of the Bank of New Zea-
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land was hereunto affixed by authority of the board of directors of such bank in the presence of C. G. Andrews (acting general manager), W. Watson, Walter W. Johnston, William Booth (directors) . II. —Repoet by Mb. W. Watson, the President op the Bank op New Zealand. As requested, I have now the honour to report as under on the agreement between the Colonial Bank and the Bank of New Zealand, for the purchase by the latter of the Colonial Bank's assets: — 1. The amount of assets referred to in the " A " list, and to be taken over, is £926,197 ; in the "B " list, £604,695; in the "C " list, £98,382. 2. The total amount of assets to be purchased as good by the Bank of New Zealand is £2,643,190, and the total amount of liabilities to be taken over £2,509,284. The difference between these amounts (£133,906) is to be paid in cash to the Colonial Bank of New Zealand. 3. As stated in the agreement, the Bank of New Zealand is to hold the sum of £327,305, being part of the assets shown in the books of the Colonial Bank, pending the taking over, realisation, or adjustment of certain accounts set forth in the " B " and " C " lists. 4. The assets mentioned in the list "D " amount to £102,274. They are not to be purchased by the Bank of New Zealand, but are eliminated in accordance with the Act. 5. The Colonial Bank directors and staff afford every facility to the purchasing bank for a thorough investigation of their business. The examination by the directors, auditors, and officers of the Bank of New Zealand was of a most searching and exhaustive character, and I may here state that the directors of the Colonial Bank anticipate that, in addition to the £133,906 agreed to be paid in cash, they will receive out of the £327,305 a further sum for distribution amongst its shareholders. 6. I am of opinion that the Bank of New Zealand will receive sound value in the assets (aggregating £2,645,190) it has undertaken to purchase, and that, with prudent management on the part of the purchasing bank, an increased earning-power from this source, and stated in the report of the Banking Committee, should be fully realised; also, that the purchase on the basis of the agreement will be beneficial to the interests of the colony, and to the shareholders of the Bank of New Zealand. III.—" Bank op New Zealand and Banking Act Amendment Act, 1895." The following is the full text of "The Bank of New Zealand and Banking Act Amendment Act, 1895 " :— Whereas in exercise of the powers in that behalf conferred by section thirty-six of " The Bank of New Zealand and Banking Act Amendment Act, 1895 " (hereinafter called " the principal Act"), a contract of sale and purchase, bearing date the eighteenth day of October, one thousand eight hundred and ninety-five, was executed by and between the Bank of New Zealand, as the purchasing bank, and the Colonial Bank of New Zealand, as the selling bank : And whereas for the purpose of procuring the approval of Parliament, as prescribed by the principal Act, the said contract was laid on the table of each House of the General Assembly on the said eighteenth day of October : And whereas doubts have been raised whether the said contract was duly laid on such table, owing to the absence of certain lists, books, and document, which are referred to in the said contract, but which could not conveniently be incorporated therewith: And whereas it is expedient to set such doubts at rest, and also to amend the principal Act in other respects:— 1. The Short Title of this Act is "The Bank of New Zealand and Banking Act Amendment Act, 1895," and it shall be read with the principal Act. 2. The contract referred to in the preamble hereto as having been laid upon the table of each House of the General Assembly on the eighteenth day of October, one thousand eight hundred and ninety-five, is thereby declared to be a contract within the meaning of section thirty-six of the principal Act, and to have been duly and properly laid upon such table, notwithstanding the absence of any lists, books, or documents therein referred to or forming part thereof. 3. The said contract and the sale and purchase thereby contracted for are hereby declared to be approved by Parliament within the meaning and for the purpose of sections thirty-seven and thirty-eight of the principal Act, and upon the ratification by the proprietors or shareholders of the Colonial Bank of New Zealand, as the selling bank, in manner prescribed by the principal Act for such sale and purchase, the said contract shall become absolute, and shall be given effect to, and be carried out. 4. From and after the date appointed by the said contract (if duly ratified as aforesaid) for the transfer of the business of the Colonial Bank of New Zealand, any cheque, bill of exchange, promissory note, or other instrument made payable at any office of that bank shall be presented for payment at the office of the Bank of New Zealand nearest thereto, and when so presented shall be deemed to have been duly presented for payment in like manner as if it had been originally made payable at such last-mentioned office. 5. With respect to each of the three lists of debts and accounts referred to in clause four of the said contract as being marked respectively " A," "B," and "C," it is hereby declared that in all actions, suits, and proceedings relating thereto, or to any matter contained therein, the production of any such list shall not be necessary or compellable; but a certificate purporting to be under the seal of the Bank of New Zealand and the hand of the President or any director thereof, or under the seal of the Colonial Bank of Zealand and the hand of a director or a liquidator thereof, shall be admitted as evidence of any entry or item in any such list without the production of the list itself. 6. The provisions of the last-preceding section shall apply to the list of assets and debts referred to in clause one of the said contract as being marked " D," nevertheless with this modification, that the certificate shall purport to be under the seal of the Colonial Bank of New Zealand and the hand of a director or a liquidator thereof.
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7. It shall not be necessary to produce any of the said lists, "A," "B," "C," or "D," or any of the aforesaid books and documents, at any meeting of the proprietors or shareholders of the Colonial Bank of New Zealand, called for the purpose of ratifying the said contract, and the validity of any resolution of ratification passed at such meeting shall not be affected by the fact that any such list, book, or document was not produced thereat, nor shall any such proprietor or shareholder be entitled at any time, and for any purpose, to require the production of any such list. 8. If such resolution is passed a copy thereof, certified under the hand of the chairman of the meeting, shall be forwarded to the Colonial Treasurer, who shall publish the same in the Gazette, and the production of the Gazette containing such resolutions and certificates shall be conclusive evidence of the matters therein set forth. 9. With respect to the accounts mentioned in the said lists "B" and "C," respectively, it is hereby declared that the management, realisation, and adjustment thereof by the Bank of New Zealand, as provided in clause 9 of the said contract, shall, for the purposes of section 15 of "The Bank of New Zealand Share Guarantee Act, 1894," be deemed to be part of the affairs and business of the Bank of New Zealand, and the provisions of that section, as also the powers and functions of the auditors of the Bank of New Zealand, shall apply, and be exercisable, accordingly. The provisions of the principal Act are hereby modified in so far as they are in any way inconsistent with this Act.
Note on Sections 2 and 3. Sections 36, 37, and 38 of the principal Act, referred to in sections 2 and 3 of the Amendment Act (given above), are as follows : — 36. Section 3 of " The Banking Act, 1894," is hereby repealed, and it is hereby enacted that, subject to the approval of Parliament as hereinafter provided, and notwithstanding anything to the contrary contained in any deed of settlement or memorandum or articles of association of any bank, or in any Act or law, it shall be lawful and competent for the Bank of New Zealand to purchase and to take over from any other bank carrying on business in the colony, and for such other bank to sell, and make over to the Bank of New Zealand the business and assets of such other bank, excepting such portions of the assets of the selling bank as the directors of the Bank of New Zealand and the Auditors appointed by the Governor under the Share Guarantee Act shall certify in writing to be, in their opinion, bad, doubtful, or valueless ; and the directors of the Bank of New Zealand and of the selling bank are hereby empowered to enter into a contract for such sale and purchase accordingly. 37. Any such sale and purchase shall, in the first instance, and the contract therefor shall be expressed to be, conditional upon— (a.) The subsequent ratification thereof by resolution passed by the proprietors or shareholders of the selling bank, in the manner hereinafter provided; (b.) The approval of Parliament to be signified as follows : The contract for sale shall be laid on the table of both Houses whilst Parliament is in session, and unless within ten days after it is so laid on the table a resolution disapproving of it is passed by either House, such contract shall be deemed to be approved of by Parliament : Provided, nevertheless, that if, within the said ten days, a notice of motion is given dissenting from such contract such notice of motion shall be placed at the head of the Order Paper of either House within the said ten days, or not later than four days thereafter; and, until the decision of such House on such notice of motion has been given, such contract shall not be or be deemed to be approved by Parliament. 38. Upon such ratification and approval having been given, the sale and purchase, and the contract therefor, shall become absolute, and shall be given effect to and carried out.
A special general meeting of the shareholders of the Bank of New Zealand was held at Wellington on 19th November. Mr. Watson, President of the bank, said the meeting had been called for the purpose of altering the deed of settlement of the bank, so as to make it conform to the provisions of " The Bank of New Zealand and Banking Act, 1895." These alterations were considered by the directors to be beneficial to the interests of shareholders. The Board had learned with regret that some unknown person or persons had sent circulars to shareholders, asking for proxies to be used in opposing the carrying of these alterations. The Board were quite aware that the response to this anonymous invitation had not been such as to cause anxiety in the minds of those who had the best interests of the bank at heart, but they thought it well that he should there state the difference between the footing upon which the bank now stood and that upon which it would have stood had not the Banking Acts of last session been passed. There could hardly be any doubt in the mind of any one that had the directors, in the first instance, and without taking any steps to obtain the assistance of the Legislature, made public the actual state of affairs found by them after balancing the accounts at 31st March last, the bank would have had to stop payment, and probably to wind up its affairs. Neither could there be any doubt in the case of the bank having had to wind up that shareholders would have had promptly to pay the last farthing of the reserve liability. Happily the appeal to Parliament averted all this. It had been a noble feature of the politics of all English-speaking countries that when public danger had threatened, the members of the Legislatures had risen superior to considerations of party. That was the case in the crisis which it fell to the New Zealand Legislature to deal with last session. The leader of the Opposition and several of his followers in Parliament were as earnest in supporting the banking measures as were the Premier of the colony and others on the Ministerial side. In the Upper House there were only four dissentients to the measure, and it might therefore be said the Parliament of the colony on
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that occasion had put aside all party spirit and acted, after due deliberation, in the manner which appeared to them best in the interests of the colony. The Legislature, by contributing fresh capital to the bank and separating from the bank the landed properties in New Zealand, had enabled provision to be made for all bad and doubtful debts, had strengthed and established the bank's credit, and placed it—as regards facilities for the transaction of business —in a position equal, if not superior, to that of any other bank. The second call on the reserve liability of £3 6s. Bd. was to be spread over eighteen months, from the 30th June, 1896, and there was every probability that on account of this call shareholders would receive interest. No further call would be made on the reserve liability until after the 31st December, 1898, and unless the price of produce declined to such an extent as to make a loss on the Assets Board unavoidable, it was extremely improbable that any further call would be made. With regard to the veto of the President, it was simply intended to set aside any resolution which would damage the large interests which the colony now held in the bank. He thought it would be admitted that the Legislature, in making this provision, were only safeguarding to a reasonable extent the interests of the colony. The shareholders, having a majority on the board of directors, continued to hold the actual management of the bank in their own hands. No advance could be made and no policy adopted if a majority of the Board opposed it. Therefore the interests of shareholders were in every way conserved. He then moved the first resolution, namely : " That the deed of settlement of the Bank of New Zealand be altered so as to make it in conformity with the Act of the General Assembly of New Zealand called ' The Bank of New Zealand and Banking Act, 1895.' " The Hon. W. W. Johnston seconded the motion. Mr. R. Allen (Nelson) moved as an amendment: "- That in the opinion of shareholders it is not desirable to alter the deed of settlement in the manner proposed." Mr. W. Weir seconded the amendment. After some discussion a ballot was taken, with the following result: For the amendment, 4,349 votes; against, 17,541 votes. The amendment was lost, and the motion put and carried on the voices. Mr.. Watson then moved: "That the capital of the said bank, consisting of £900,000 in 100,000 ordinary shares of £5 ss. each paid up, and 50,000 ordinary shares of £7 10s. each paid up, and also the proceeds of the call of £3 6s. Bd., made by the directors of the said bank on the 29th day of November, 1894, be dealt with by the directors as provided by the said Act and be cancelled." He said the resolution was only to bring the deed of settlement in line with the Act. Mr. Coffey asked what amount of the March and July calls was defaulted, and had any steps been taken to recover the amounts from the defaulters ? Mr. Watson said the last time he had looked into the matter he found that about 95 per cent, had been paid, and quite recently he had looked at it a second time, and found that it was coming in pretty satisfactorily. Steps had been taken in some cases. As a rule, those who could pay the call had done so. Some people were unable to pay, and it was no use ruining people, and they had not been too hard. The motion was then put and carried, there being one or two dissentients. The meeting then concluded.
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COLONIAL BANK OF NEW ZEALAND. 1888. Twenty- seventh report of the directors to the half-yearly meeting of the proprietors, held at Dunedin on the 28th March, 1888 :— The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended the 29th February last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £17,924 10s. lid. To this has to be added balance from last half-year, £3,962 3s. 2d. ; total, £21,886 14s. Id.; and there must be deducted tax on note-circulation and property-tax, £2,760 3s. lid., leaving available £19,126 10s. 2d., which the directors recommend to be applied as follows : To reserve fund (which will then stand at £49,000), £1,000; payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000; balance to be carried forward, £4,126 10s. 2d.; total, £19,126 10s. 2d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 29th instant, and at the branches on receipt of the warrants. Branches of the bank have been opened during the half-year at the Bluff on the 18th August, 1887; at St. Bathan's on the 22nd November, 1887 ; and at Queenstown on the 21st December, 1887. The branch at Motueka was withdrawn on the 30th December, 1887. The Hon. William James Mudie Larnach, C.M.G., is the director who retires from the board at this meeting, in accordance with clause 42 of the deed of settlement, and, being eligible, offers himself for re-election. He is the only candidate for the vacant seat. John Macfarlane Ritchie, Esq., having resigned his seat at the board on his departure for Europe, the directors, in accordance with clause 44 of the deed of settlement, nominated Edwin John Spence, Esq., to fill the vacancy until this meeting. Mr. Spence now offers himself for election by the proprietors, and is the only candidate. Both the auditors retire from office at the present meeting. One only, J. Edmund Smith, Esq., is eligible for re-election, and he offers himself accordingly. Balance-sheet as at the 29th February, 1888, including London Office at the 30th November, 1887. Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 105,059 10 0 Bills payable and other liabilities .. .. .. .. .. .. 276,474 18 8 Deposits .. .. .. .. .. .. .. .. 1,721,184 010 Balances due to other banks .. .. .. .. .. .. 222 19 3 Beserve fund .. .. .. .. .. .. .. .. 48,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 19,126 10 2 £2,570,067 18 11 Cr. Coin and cash balances .. .. .. .. .. .. .. 310,586 19 3 Bullion in hand and in transitu .. .. .. .. .. .. 3,924 0 7 Government securities, 3 per cent, consols, and colonial debentures .. .. 371,439 410 Notes of and balances due by other banks .. .. .. .. .. 59,857 10 11 Landed property and bank premises .. .. .. .. .. 111,130 11 9 Bank furniture and stationery .. .. .. .. .. .. 7,321 3 4 Bills discounted, bills receivable, and all other debts due to the bank .. .. 1,705,808 8 3 £2,570,067 18 11 Profit and Loss Account. Dr. £ s. d. To Transferred to reserve fund on the 27th July, 1887 .. .. .. 1,000 0 0 Dividend at 7 per cent, per annum, at the 30th June, 1887 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office and twentyfive branches .. .. .. .. .. .. .. 28,140 2 11 Tax on note-circulation .. .. .. ~ .. .. .. 1,453 7 5 Property-tax on paid-up capital and reserves to the 29th February, 1888, .. 1,306 16 6 Proposed addition to reserve fund .. .. .. .. . 1,000 0 0 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital 14,000 0 0 Balance .. .. .. .. .. .. .. .. 4,126 10 2 £65,026 17 0 Cr. By Balance profit and loss at the 30th June, 1887 .. .. .. .. 18,962 3 2 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. 46,064 13 10 £65,026 17 0 Reserve Fund. Da. £ s. d. To Balance .. .. .. .. .. .. .. .. 49,000 0 0 Cr. By Balance 30th June, 1887 .. .. .. .. .. .. 47,000 0 0 Transfer from profit and loss, 27th July, 1887 .. .. .. .. 1,000 0 0 Proposed addition now .. .. .. .. .. .. .. 1,000 0 0 £49,000 0 0
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The chairman, in moving the adoption of the report, said : Gentlemen, the statement of the operations for the half-year has been laid before the shareholders a little later than usual, but I am glad to say that, considering the drawbacks, to which I will refer presently, the shareholders have reason to be satisfied with the steady progress that has been made in these times. We are progressing gradually but safely. We have a large number of shareholders scattered fairly throughout the colony, and these are making considerable demands for the opening of branches. It is not advisable at the present time for us to open branches too rapidly or spread our wings too widely, but there are certain points at which we have had to take up a position and open branches where we have found profitable business to be done. lam glad to say that these have realised expectations. There have been many drawbacks, however, lately, which we have had to contend against. As you all know, rather dear money has prevailed. A rate of 6 per cent, for deposits had been forced on us by the Australian banks. In January, 1887, the rate came down to 5 per cent., and in August last to 4f; therefore, not until January of this year did the 6 per cent, money run off, and until August next we will continue under obligations entered into at 5 per cent. Of course, the rate for advances came down in proportion to the rate paid for deposits, and one of the drawbacks has been that we had to lower the rate for advances, while we were still paying the high deposit rates. Then we had a good deal of money thrown on our hands by repaid advances, and in these times, as you know, it would not be well for us to force this money out suddenly, because it is just in these times when money is plentiful that the seeds of bad debts are sown, and the harvest is reaped when money gets scarce. The directors have had all these things to contend with, and I am happy to say we have been able to place some of the money in Government securities in such a way that it will come into our hands whenever it is wanted for the ordinary business of the bank. I am not sure that this is as profitable a way of investing money as could be wished, but it is always ready whenever it is wanted for more payable openings. And so far as security is concerned, with resources such as we have—a good wool-growing country, with land yielding fifty-five or sixty bushels of wheat to the acre, as against other countries' fifteen, ten, or even six, and although New Zealand has been decried a good deal at Home and elsewhere—will any one tell us that the Government of New Zealand is not as good security as any Government on the face of the earth ? I have been accustomed on these occasions to go through the balance-sheet and discuss the different items, but on this occasion it shows such an even face compared with former times that I think it necessary to refer to but this one item in it. I may state that for my own part I think it is useless in these times to say we are not making bad debts like other people, but this being a favourable opportunity, we have taken advantage of it to make more than ordinary provision for them. I venture to say that the board has surrounded itself with as good officers as any in the colony ; and the bank has been handled as sharply and with as great care as could well be done. Still it would be idle to pretend to carry on so extensive a business as ours in these times and not make bad debts. Gentlemen, Ido not know that I need detain you longer, but I may say that we have a good list of shareholders well spread out, from whom we get a lot of support and help as it is, and I ask all of you to lend assistance to bring business to the bank, because at the present time we can find plenty of money to take up good business sent our way. I have much pleasure in moving the adoption of the report, which you have all, I presume, had time to peruse. Mr. W. D. Stewart said : I have much pleasure in seconding the motion. The balance-sheet, I think, indicates on the whole a healthy state of affairs, and that the bank has made substantial progress, even as you, Sir, have said, under somewhat adverse circumstances. I think the amount placed by way of deposit shows that the bank has the confidence of the public; and looking at the amount paid on note-circulation, and the amount paid for property-tax, I think to be able to place a sum to the credit of the reserve fund may be looked on as satisfactory. There are, no doubt, as you have pointed out, influences at work in a colony such as this affecting the rate of interest for deposits. No doubt banks hailing from other colonies make the interests of New Zealand subordinate to those of the colony with which they may be more especially identified. We have had experience in the past that when pressure is brought to bear in other colonies, the banks whose head offices were there withdrew money from this colony—a course which worked disastrously in commercial affairs. I think this should not be overlooked by those who take an interest in an institution such as ours. But- this bank is an essentially New Zealand institution, carrying on business here only, and when there is either a dearth or a plethora of money, its interests and those of the colony are identified. I have pleasure in seconding the adoption of the report, which I think will be satisfactory to shareholders all through the colony. The motion was then put and carried unanimously. The Hon. W. J. M. Larnach and Mr. E. J. Spence were elected directors, and Mr. Edmund Smith and Mr. A. G. Fenwick were re-elected as auditors. The meeting closed with a vote of thanks to the directors and officers.
Twenty-eighth report of the directors to the half-yearly meeting of the proprietors held at Dunedin on the 26th September, 1888: — The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 31st August last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £16,135 Os. 6d. To this has to be added balance from last half-year, £4,126 10s. 2d. : £20,261 10s. Bd. ; and there must be deducted tax on note-circulation and property-tax, £1,985 12s. lid.; leaving available £18,275 17s. 9d., which the directors recommend to be applied as follows : Payment of dividend at the rate of 7 per cent, per annum on the paid-up 10—I. 6.
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capital, £14,000; balance to be carried forward, £4,275 17s. 9d. : £18,275 17s. 9d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 27th instant, and at the branches on receipt of the warrants. Balance-sheet as at 31st August, 1888. (Including London office at 31st May, 1888.) Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 100,332 10 0 Bills payable and other liabilities .. .. .. .. .. .. 516,521 14 6 Deposits .. .. .. .. .. .. .. .. .. 1,684,448 2 3 Balances due to other banks .. .. .. .. .. .. 542 13 2 Reserve fund .. .. .. .. .. .. .. .. 49,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 18,275 17 9 £2,769,120 17 8 Cr. Coin and cash balances at banker's .. .. .. .. .. .. 343,819 0 6 Bullion on hand and in transitu .. .. .. .. .. .. 4,503 10 4 Government securities, consols, &o. .. .. .. .. .. .. 152,458 4 5 Government loans .. .. .. .. .. .. .. 404,493 2 11 Notes of and balances due by other banks .. .. .. .. .. 12,372 10 3 Landed property and bank premises .. .. .. .. .. 112,219 1 9 Bank furniture and stationery .. .. .. .. .. .. 7,385 19 9 Bills discounted, bills receivable, and all other debts due to the bank .. .. 1,731,869 7 9 £2,769,120 17 _8 Profit and Loss Account. Dr. £ s. d. Transferred to reserve fund on 28th March, 1888 .. .. .. .. 1,000 0 0 Dividend at 7 per cent, per annum at 29th February, 1888 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses, at head office and twentyfive branches .. .. .. .. .. .. .. .. 21.226 8 5 Tax on note-circulation .. .. .. .. .. .. .. 1,013 18 5 Property-tax on paid-up capital and reserves to 31st August, 1888 .. .. 971 14 6 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 4,275 17 9 £56,487 19 1 Cr. Balance, profit and loss at 29th February, 1888 .. .. .. .. 19,126 10 2 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 37,361 811 £56,487 19 1 Beserve Fund. Dr. £ s. d. Balance .. .. .. .. .. .. .. .. .. 49,000 0 0 Cr. Balance, 29th February, 1888 .. .. .. .. .. .. 48,000 0 0 Transfer from profit and loss, 28th March, 1888 .. .. .. .. 1,000 0 0 £49,000 0 0 At the meeting, the chairman, Hon. G. McLean, M.L.C., said, —Although some people may say that shareholders are only getting their dividends at the present time, and that we are not putting anything to the reserve fund, I may mention as satisfactory that the profits of the bank were never higher than they have been for the last half-year, and the directors have taken the opportunity of doing what might be called a washing-up to a certain extent. The business we have is a going business. No institution can avoid making bad debts, and we have made some ; but we have taken the opportunity of wiping them off. I may say that in dealing with bad debts the directors have probably gone in a direction different from what is usually taken. When an account is in difficulties it is not unusual to take a second mortgage as security; but very often this means having to pay off the first mortgage; and in some instances the directors, rather than be burdened with properties, have determinedly faced the losses and wiped them off. No doubt it may be thought by some that it would have been justifiable, seeing the turn of the tide in respect to affairs in the colony, to have taken a different course ; but that is the course which has been taken, and I think the shareholders will do well to leave the directors to deal with these matters. That is the reason why we have not put anything to the reserve fund. Gentlemen, that is regarding the past. Now, as regarding the future, I think we may discuss things a good deal more cheerfully than we have hitherto done. I think that a decided turn in the tide of our affairs has taken place, and, although we have suffered a great deal through loss of population, I think the time is not far distant when you will have the population streaming back to New Zealand as fast as they went away. Take, for instance, the advance in the price of wool and frozen mutton. When you think that Id. per lb. advance in wool means to New Zealand £350,000 extra, and that there is a large increase in the price of frozen mutton, and a large increase in the price of wheat (with an extra quantity exported), and that there has been considerable success in the dairying industries of the country, which now show that they are arriving at a point when they will be profitable to a good degree, you will see that there is reason for asserting that the outlook is favourable. Then, we
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have got our mining looking well. Our coal industry is being developed to a good extent; and, although we may look with compassion on the difficulties of our neighbours, still there is no doubt that the circumstances that have arisen in Australia are tending to develop our coal-mines far more rapidly than would otherwise be the case. Taking all these things into consideration, it has been put by a very shrewd man that the improvement amounts to a million sterling for the year, and in that opinion I quite concur. Then, if you have a million of money extra flowing into this colony, such an inflow over and above what came last year will considerably improve matters. Then, you have to remember that we have a producing country, and that Australia must draw heavily on us for produce, and, though they have put heavy import duties on such produce, still that is apparently making no difference in the demand. With a colony producing as we do, Ido not think we need fear the result, and I feel certain that the prosperity now setting in will soon manifest itself in a decided degree. Gentlemen, I do not know that I need detain you longer. If there are any questions to ask I shall be very happy to answer them. I will now content myself with moving the adoption of the report. Mr. W. Acton-Adams seconded the adoption of the report. Though he was a stranger to most present, he had had an interest in this bank from its start, and both in Nelson and Christchurch he thought he had been one of its warmest supporters. It was extremely satisfactory, at the end of three years' continual depression, to find the figures of the bank such as they appeared on the balance-sheet. Without going into them in detail, it was plain, from glancing at the coin and cash balances, that they had rather a larger amount of strength than usual to take advantage of the increased prosperity that was likely to come to the colony. He thought that that fact, and the further one that this bank, which was purely a colonial institution, had been able to come to the assistance of the Government in one of the years of trial, were certainly things of which the shareholders might be proud. Having been in Victoria for the last two months, he might, perhaps, be able to look at affairs more impartially than if he had remained in the colony ; and there were one or two words he would like to say about the prosperity flowing over Melbourne. He thought that those in New Zealand who fancied that the boom in Melbourne would overflow to this colony would be very much disappointed. From conversations he had had with two of the managers of leading banks there,' and with the manager of one of the most successful financial companies, he was quite sure that the Melbourne people had within themselves so many avenues for the investment of money that there was little chance of much of their capital being available for New Zealand. They had in Melbourne more than they could do with their capital, as they would perhaps find out to their sorrow in trying to hold their own. Speculation there had been very wild indeed, and he knew of two or three instances that were very startling. An acre of land bought for £23,000 was sold within ten days for £35,000. As long as there were fish in the sea nets would be cast to catch them, and a great deal of money had been made in Melbourne in that way. But the question would be, Who would hold the land at last ? Although the prosperity of Melbourne City was undoubted, the state of the country districts was another thing. What he wished to say was that he did not think there would be any land boom in New Zealand in city and suburban sections, consequent on the Melbourne boom ; but, looking at the increased price of our exports, he believed that the country and farming lands of this colony would take an upward tendency. Wool was now 10 per cent, better, wheat 20 per cent, better, and frozen meat, he thought he might say, 30 per cent, better than a year ago, while in oats and potatoes a very large increase in price had taken place. The country that could produce what New Zealand could, when the products are increasing in value, must ultimately come to the front. In 1885 the colony imported £660,000 more than it exported; last year, 1887, it exported £620,000 more than it imported; and this year he might venture to say it would export £1,500,000 more than its imports. That must tell ; and the turn-out of wool and wheat, frozen mutton, gold, and coal must ultimately right the colony in the opinion of financiers at Home. He thought that the turn had come, and he was very glad to see their bank standing so strongly on its legs, and in a position to share in the increasing prosperity. With these remarks he would second the adoption of the report. The adoption of the report was carried unanimously. A resolution was adopted raising the remuneration of the directors to £1,100 per annum, in order that the chairman might receive £400 more than at present. The usual vote of thanks to the directors, the managers, and the officials of the bank was passed.
1890. Thlbty-first report of the directors to the half-yearly meeting of the proprietors, held at Dunedin on 26th March, 1890 :— The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 28th February last : The net profits for the half-year, after deducting interest paid and accrued on fixed deposit, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £15,533 17s. ; to this has to be added balance from last half-year, £4,361 os. 9d. : total, £19,894 17s. 9d.; and there must be deducted tax on note-circulation and property-tax, £2,031105. 3d., leaving available £17,863 7s. 6d., which the directors recommend to be applied as follows: To payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; balance to be carried forward, £3,863 7s. 6d. ; total, £17,863 7s. 6d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 27th instant, and at the branches on receipt of the warrants. An agency of the bank was opened at Fortrose on 24th January, 1890. John Hislop, Esq., LL.D., F.R.S.E., is the director who retires from the board at this meeting, in accordance with clause 42 of the deed of settlement, and, being eligible, offers himself for re-election. He is the only candidate for the vacant seat.
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The Hon. Richard Oliver, M.L.C., having resigned his seat on the board, in consequence of his departure for Europe, the directors, in accordance with clause 44 of the deed of settlement, appointed Edwin John Spence, Esq., to fill the vacancy until this meeting. Mr. Spence now offers himself for election by the proprietors, and is the only candidate. Both the auditors retire from office at the present meeting ; one only, Thomas Moodie, Esq., is eligible for re-election, and he offers himself accordingly. Balance-sheet as at 28th February, 1890. (Including London office at 30th November, 1889.) Dr. £ s. d. Capital, £2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 115,211 10 0 Bills payable and other liabilities .. .. .. .. .. .. 460,493 410 Deposits .. .. .. .. .. .. .. .. .. 2,036,062 11 9 Balances due to other banks.. .. .. .. .. .. .. 789 19 11 Beserve fund .. .. .. .. .. .. .. 50,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 17,863 7 6 £3,080,420 14 0 Cr. £ s. d. Coin and cash balances at bankers' .. .. .. .. .. .. 412,585 8 0 Bullion on hand and in transitu .. .. .. .. .. .. 19,939 7 11 Government securities, consols, &c. .. .. .. .. .. 167,653 18 8 Government loans .. .. .. .. .. .. .. .. 403,333 6 8 Notes of, and balances due by, other banks .. .. .. .. .. 20,380 4 5 Landed property and bank premises .. .. .. .. .. .. 118,494 15 2 Bank furniture and stationery .. .. .. .. .. .. 8,777 17 9 Bills discounted, bills receivable, and all other debts due to the bank .. .. 1,929,255 15 5 £3,080,420 14 0 Dr. Profit and Loss Account. £ s. d. Transferred to reserve fund on 25th September, 1889 .. .. .. .. 1,000 0 0 Dividend at 7 per cent, per annum at 31st August, 1889 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty branches, and four agencies .. .. .. .. .. .. .. 22,603 8 8 Tax on note-circulation .. .. .. .. .. .. .. 1,056 16 0 Property-tax on paid-up capital and reserves to 28th February, 1890 .. .. 974 14 3 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 3,863 7 6 £57,498 6 5 Cr. £ s. d. Balance profit and loss at 31st August, 1889 .. .. .. .. .. 19,361 0 9 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 38,137 5 8 £57,498 6 5 Reserve Fund. £ s. d. Balance, 31st August, 1889 .. .. .. .. .. .. .. 49,000 0 0 Transfer from profit and loss, 25th September, 1889 .. .. .. .. 1,000 0 0 Balance .. .. .. .. .. .. .. .. .. £50,000 0 0 At the meeting, the chairman, Mr. George McLean, in moving the adoption of the report and balance-sheet, said : It ought to be gratifying that our deposits have increased, and that there is a gradual increase from last year of £300,000, and from the last half-year of £175,000. The increase is spread over, as it were, week by week. I congratulate you more that these deposits are taken entirely in New Zealand; and you will see with what confidence the bank is looked upon. For some time it has been a matter for discussion with the directors whether it was advisable to take further deposits in London, and according to the increase of the business the directors limited the amount they would take. The maximum they decided upon has been reached for some time past, and we do not allow any increase to arise there, but new money only is taken to replace any old money that happens to be withdrawn. We resolved upon this because it is well known that, whether a bank is good or bad in itself, the colony with which it is identified, as a rule, is taken as a guide regarding it, because people think if the colony is in bad credit so must anything in it be. Therefore the directors hold, and I agree with them, that it is not advisable to have too much English money in the business. Seeing that we have refused deposits elsewhere—we have no other office out of the colony excepting that in London—it is a matter for congratulation that our deposits are increasing in the ratio they are doing. Then, gentlemen, turn to the other side : although some of you may remark that we are standing in too strong a position, a certain amount of our assets are as liquid, as any of the most fastidious could desire. W T e have considered it necessary to keep them in that state under present circumstances, and I think shareholders will agree that that is a wise policy. You must understand that if we keep a lot of coin in our coffers, not earning money, we cannot look to make the same profit as if we kept it fully employed. But I think it is a wise precaution; and shareholders will, I think, agree that we should look to strengthening the bank at a time when it is necessary that the bank should be strong, and at a time when we are anxious for new business—anxious for all the good business that comes our way ; and although you may say that our advances for the last half-year have not increased in proportion to our deposits, still we have received a considerable accession to our business in new and valuable accounts,
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and that the process of weeding out our old business has been steadily going on. We have had to liquidate some accounts here, as you know, and we have had also to take a fairish amount of losses in doing so. Therefore our advances have not progressed probably in the way you would expect in proportion to our deposits, but it is no use forcing our money. We are pursuing a conservative policy, and were quite ready and willing to take all good business; and lam quite sure that, this being a colonial institution, when we have used up all this, we have only to appeal to our local shareholders for further capital, and it will be granted without the least hesitation so long as we can show good business. However, we have a good deal of money in hand before we need do that, and we stand in a position that presently we shall be the only purely New Zealand bank, our capital being held, our affairs being directed, and our dividends spent in the colony; and, as such, we ought to command the support of the people of New Zealand. I hope shareholders will use their best energies to bring to the bank all the good business they can, and keep all the bad away. Not that we cannot get business. We can get plenty of business. But it is very desirable that we should profit by the experience of the past, now that we are in a good position, and pick our business and be careful what we take. Ido not think myself that the outlook in New Zealand is very bad. No doubt farmers have been a little depressed over the prices of their grain, but if they had only sold out their wheat last year, when they could have got proper prices, they would probably have been, some of them, in a better position. I must say when people are offered 4s. a bushel for wheat no one can have sympathy with them if they, refusing to accept such a price, make losses. Ido not think there is need for anxiety. The London market is the guide, and last quotations are not such ruinous prices. London market will prevent prices from going too low. With regard to oats, there is considerable demand for them in Sydney now. As to other products, wool and frozen meat keep up wonderfully, and I think that at the close of the year you will find that our exports will not be far behind those of the previous year. Mr. Edmund Smith, in seconding the motion, said: I think we all agree that the directors have followed the wise course in strengthening the institution as much as possible, and keeping the funds available to meet any exigencies that may arise. The report was unanimously adopted. Dr. John Hislop and Mr. Edwin John Spence were elected directors, on the motion of the chairman, seconded by Mr. J. M. Ritchie. On the motion of Mr. Colin Allan, seconded by Mr. John Mitchell, Thomas Moodie and Keith Eamsay were elected auditors. A vote of thanks to the directors and staff of the bank was carried unanimously, and the chairman having returned thanks, the meeting closed.
1891, Thibty-thied report of the directors to the half-yearly meeting of the proprietors, held at Dunedin on 25th March, 1891 :— The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 28th February last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amounts to £16,677 155.; to this has to be added balance from last half-year, £3,976 9s. Bd.—total, £20,654 4s. Bd.; and there must be deducted tax on note-circulation and property-tax, £2,096 Bs. 4d.; leaving available, £18,557 16s. 4d., which the directors recommend to be applied as follows: Payment of a dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; balance to be carried forward, £4,557 16s. 4d.: £18,557 16s. 4d. Upon confirmation by the proprietors of the foregoing appropriations the dividend will be payable at the head office on and after the 26th instant, and at the branches on receipt of the warrants. A branch of the bank was opened at Petone on tbe 24th November, 1890. The Nenthorn agency was closed on the 20th December, 1890. The Hon. George McLean, M.LO, is the director who retires from the board at this meeting in accordance with clause 42 of the deed of settlement, and, being eligible, offers himself for re-election. He is the only candidate for the vacant seat. John Roberts, Esq., C.M.G., having resigned his seat on the board in consequence of his departure for Europe, it will devolve upon this meeting to elect a director in his place. The Hon. William Downie Stewart, M.L.C., is the only candidate. Both the auditors retire from office at the present meeting; one only—Keith Ramsay, Esq.—is eligible for re-election, and he offers himself accordingly. Balance-sheet as at 28th February, 1891. (Including London Office at 30th November, 1890.) Db - £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400 000 0 0 Notes in circulation .. .. .. .. .. .. .. 124 669 10 0 Bills payable and other liabilities .. .. .. .. .. ~ 789 835 6 9 Deposits .. .. .. .. .. .. .. .. .. 2,138,703 3 7 Balances due to other banks .. .. .. .. .. ~ 4 474 g 3 Reserve fund .. .. .. .. .. .. .. .. 50,000 0 0 Profit and loss .. .. .. .. .. .. .. ~ .48 557 45 4 £3,523,237 5 11 Cr. -— -- £ s. d. Coin, bullion on hand, and cash balances at banker's .. .. .. .. 380 003 0 4 Government securities, consols, &c. .. .. .. .. .. ~ 469 898 18 8 Government loans .. .. .. .. .. .. .. .. 403 333 6 8 Notes of and balances due by other banks .. .. .. .. .. 4 628 16 2 Landed property and bank premises .. .. .. .. .. 420 388 1 0 Bank furniture and stationery .. .. .. .. .. .. 9 ggg 4 7 Bills discounted, and all other debts due to the bank, including remittances in transitu .. .. .. .. .. .. .. .. 2,435,465 18 6 £3,523,237 5 11
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j) B Profit and Loss Account. £ g 3 Dividend at 7 per cent, per annum at 31st August, 1890 .. .. .. 14,000 0 0 Charges for the naif-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty branches, and four agencies .. .. .. .. .. .. .. .. 22,969 18 1 Tax on note-circulation .. .. .. .. .. .. .. 1,122 10 2 Property-tax on paid-up capital and reserves to the 28th February, 1891 .. 973 18 2 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. ■■ .. .. .. 4,557 16 4 £57,624 2 9 Cr. £ s. d. Balance, profit and loss at 31st August, 1890 .. .. .. .. .. 17,976 9 8 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 39,647 13 1 £57,624 2 9 Reserve Fund. ~ Dr. Balance .. .. .. .. .. .. .. .. .. £50,000 0 0 At the meeting, the chairman, Hon. G. McLean, M.L.C., in moving the adoption of the report, said : Gentlemen, —The report has been in your hands for a fortnight, and from it no doubt you will have observed that, as has been usual with us of late, a satisfactory increase in our business is apparent. The progress the bank is making we feel confident will continue. Its earning-power is slowly but surely increasing, despite the fact that in these days competition is so keen that banking profits are not what they once were ; indeed, it seems to be getting the custom in this colony for banks to undertake some transactions without getting any profit at all, and it is a well-known fact that advance rates in Dunedin have of late been cheaper than in Melbourne or Sydney, although the deposit rates were lower there than here. Still, as I say, our earning-power is holding its own, and holding it well, too; and we are steadily increasing a very satisfactory class of business. Some people are fond of decrying New Zealand, but we ought to feel proud of this colony of ours, in which all our business is centered and conducted —a colony that exported last year nine millions sterling of produce, and this year ten millions, or between three and four millions per annum in excess of its imports. Any colony that can do that has a great future before it. I can with more confidence dilate on the future of the colony, as, since I last had the pleasure of meeting you, I have paid a visit to America ; and, although my stay there was short, and I had not the time to travel much, still, being naturally an observing man, and not idle in my inquiries, I can with satisfaction say that the contrast in the condition and prospects of the settlers of both countries is much to the advantage of New-Zealanders. In this prospect there is every indication of a full share of the future prosperity coming to us, having the careful management we now possess, and identified as we are with the colony. Gentlemen, I need not trespass further on your time, but will just move the adoption of the report. I shall be happy to answer any questions you may like to put. Mr. P. G. Pryde seconded the motion, which was put and carried unanimously. Hon. George McLean, M.L.C., was re-elected as a director, and Hon. W. Downie Stewart, M.L.C., was elected a director. Messrs. Keith Ramsay and Walter Hislop were unanimously elected auditors. Mr. Petitt proposed a hearty vote of thanks to the directors and officers of the bank, which was seconded by Colonel Wales, and carried unanimously. The Chairman having returned thanks, and the rough minutes of the meeting having been read and confirmed, the proceedings closed. Thihty- fourth report of the directors to the half-yearly meeting of the proprietors, held at Dunedin, on the 30th September, 1891: — The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 31st August last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £18,892 2s. 7d.; to this has to be added the balance from last half-year, £4,557 16s. 4d., making £23,449 18s. lid.; and there must be deducted tax on note-circulation and property-tax, £2,219 15s. 3d., leaving available £21,230 3s. Bd., which the directors recommend to be applied as follows : To payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000; balance to be carried forward, £7,230 3s. Bd. : total, £21,230 3s. Bd. Upon confirmation by the proprietors of the foregoing appropriations the dividend will be payable at the head office on and after the Ist October next, and at the branches on receipt of the warrants. A branch of the bank was opened at Palmerston North on the Ist July, 1891. Balance-sheet as at 31st August, 1891. (Including London office at 31st May, 1391.) Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 117,150 0 0 Bills payable and other liabilities .. .. .. .. .. .. 942,306 5 6 Deposits .. .. .. .. .. .. .. .. .. 2,158,108 2 4 Balances due to other banks .. .. .. .. .. .. 1,543 6 3 Reserve fund .. .. .. .. .. .. .. .. 50,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 21,230 3 8 £3,690,337 17 9
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Cr. £ s. d. Coin, bullion on hand, and cash balances at banker's .. .. .. .. 380,904 10 1 Government securities, consols, &c. .. .. .... .. .. .. 177,942 12 2 Government loans .. .. .. .. .. .. .. .. 403,333 6 8 Notes of and balances due by other banks .. .. .. .. .. 10,934 12 8 Landed property and bank premises .. .. .. .. .. 122,097 16 10 Bank furniture and stationery .. .. .. .. .. .. 10,014 13 8 Bills discounted and all other debts due to the bank, including remittances in transitu .. .. .. .. .. .. .. .. 2,585,110 5 8 £3,690,337 17 9 Profit and Loss Account. .==== Dr. £ s. d. Dividend at 7 per cent, per annum at 28th February, 1891 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty-one branches, and four agencies .. .. .. .. .. .. .. .. 23,210 15 1 Taxes on note-circulation .. .. .. .. .. .. .. 1,244 12 11 Property-tax on paid-up capital and reserves to 31st August, 1891 .. .. 975 2 4 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 7,230 3 8 £60,660 14 0 Cr. ———= Balance, profit and loss at 28th February, 1891 .. .. .. .. 18,557 16 4 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 42,102 17 8 £60,660 14 0 Reserve Fund. Balance, 28th February .. .. .. .. .. 0 0 At the meeting, the chairman, Hon. Mr. George McLean, M.L.C., in moving the adoption of the report, said : Gentlemen, —The continued steady progress made by this institution, as shown by the balance-sheet under review, must be no less gratifying to the shareholders than it is to the directors, who now most heartily congratulate you on the result of the half-year's operations, which enables us to pay the usual 7-per-cent. dividend. This, in these days, ought to be considered satisfactory. Besides which we have been enabled to make large provision for bad and doubtful debts, and carry forward an increased amount to next half-year. We have seen the difficulties experienced by some of our neighbours, and it must not be thought that your institution has escaped scatheless, but our methods of dealing with difficulties have been different. The parliamentary returns of land held by various institutions and companies in the colony, furnished during the last session of Parliament, will show that we prefer to face loss rather than be hampered with properties. The result has shown the wisdom of our method. For several years, to meet these contingencies, the Colonial Bank has put aside money out of profits to a far greater extent than any of you would suppose. Our way seems clear for the future—so far as human foresight can guide us. New Zealand is not likely to go backwards; and, although it may be impossible to have in the future complete immunity from bad debts, still we are sanguine that our policy, our control, and care in management are such that the risk of making losses is reduced to a minimum. What led in the past to most of the troubles of colonial banking was the ease with which money could at one time be procured in England, necessitating its being forced out here so as to earn a profit, and in a manner not consistent with the principles of prudent banking. As I explained to you some time ago, we limited the amount of our English deposits in proportion to the amount of business we were doing here, preferring that our business should gradually increase by deposits intrusted to us in the colony, so that the people interested, being conversant with our management, would repose confidence in us to a greater extent than could be expected from strangers. English deposits, when taken largely, are liable to be withdrawn when a colony gets into temporary disrepute with Home investors, and, though our onward progress may be slower by limiting these deposits, it is surer ; and I think we have under this policy grown as quickly and prosperously as our supporters could wish. Gentlemen, we are a New Zealand institution; we have no share-register outside New Zealand; our 200,000 shares are held by 1,415 proprietors: of these, 1,327 proprietors, holding 182,414 shares, are resident within the Colony of New Zealand ; the remaining eighty-eight proprietors, holding 17,586 shares, reside outside of New Zealand, some only temporarily, but all are interested in New Zealand. I have thought it proper to refer to this matter on account of a statement having been made in Parliament that the capital of all the banks was held outside the colony, and to show how little this statement applied to us. Our deposits, with the exception oE £600,000 held in London—the limit up to which we now take there—are all New Zealand deposits. Our fixed depositors number 5,753, and, including those in London, average £294 each. Now, seeing how much we are bound up with the colony, and the only bank now directed and managed in New Zealand, it is natural that we should look to the Government for a share of their banking account ; and here a history of our transactions with the Government, and how we came to their aid in a time of necessity, may not be out of place. We had had for some time the profession of an influential representative of the Bank of New Zealand that when the Colonial Bank was ready to take a share of the Government account it could be arranged. In the meantime the difficulties of the Bank of New Zealand presented themselves. That institution had advanced more to the Government than they were by their contract bound to advance, and were unable to assist them further. Owing to several circumstances the credit of the colony was low in London, and it was imperative that provision should be made for the payment of interest on its debentures falling due. The Colonial Treasurer, having appealed indirectly elsewhere for help, and none forthcoming, applied to us. The directors, having perfect faith that only temporary aid was necessary and that
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the colony would soon recover its position, set to work, and, with the bank's own funds and borrowing on £400,000 of short-dated debentures, advanced to the Government £700,000, and so relieved them of their difficulties. This, you will acknowledge, was a great feat for an institution like ours to accomplish, as we were much less powerful then than we are now. For this operation we earned the expressed gratitude of the then Treasurer and the Agent-General. This money, gentlemen—under the belief and understanding with the Treasurer that we would receive a share of the Government Account—we advanced the Government at 5 per cent, per annum, although at the time their own bankers had charged them 6 per cent, for the amount they had advanced in excess of their contract amount. Had we asked, as we should have done, that the understanding as to a share of the Government Account coming to us should be put in writing, or had we charged a higher rate for the advance, the Treasurer must have agreed; but, gentlemen, we relied on the understanding already stated, of which the Treasurer was aware, and the service we had rendered the colony as sufficient claim on the Government. This the Treasurer agreed to recognise, and, as part recognition, bought our drafts on London with the leave of the Bank of New Zealand, and continued to do so until I, on behalf of your directors, urged (while a Treasurer was in power who was conversant with all the circumstances) the fulfilment of the promise I have just mentioned. After several meetings with the representative of the Bank of New Zealand and the Colonial Treasurer, the former urged that the matter should be left over until the new general manager should arrive ; but it was finally decided by the Treasurer undertaking to give notice to the Bank of New Zealand of the termination of their agreement, so that the matter of division should be sure to be arranged. The notice was delayed, and that Treasurer had to give way to another. We have placed the matter before the present Government, and it was also brought up independently in Parliament as a proposal to divide the account amongst all the banks, to which we have not the least objection, and I am not sure whether this might not be more in the interests of the colony. We cannot complain of the present Treasurer claiming time to look into matters before deciding on the course to pursue. I can confidently say that there are not ten members in the House who do not wish the account divided; and I feel sure that a sense of justice on the part of both Government and members for the extraordinary service rendered the colony by us will before long bring a portion of the banking account of the colony in our way. In connection with this, I would point out that this bank, as a bank, has no politics whatever; its doors are open for business to every shade of politics and opinion, and the general manager's instructions to his officers are not to use the bank's influence in any political or public matter. While, however, we consider that as a corporation we should take no part in politics, we would strongly urge upon the individual shareholders, interspersed as they are over the whole of the colony, to use their influence with a view towards bringing to the bank a portion of the Government business of the colony, to which, as I have above said, we think we are justly entitled. With these'remarks I beg to propose the adoption of the report and balance-sheet which is now in your hands. I shall, of course, be glad to reply to any questions that you put to me. Mr. T. Brown seconded the motion. Mr. W. R. Cameron : I would like to ask whether, in view of the recent writing-down of capital and calls made by other banking institutions, there is any likelihood of the capital of this bank being written-down, or of calls being made on shareholders. The Chairman : There is no chance whatever. Mr. J. B. Nevill said that it was a very great question whether such a large amount as that— the whole of the paid-up capital of the bank—should be loaned even to the present Government. He thought that unless they do get a share of the Government business, the directors should try to get that amount reduced as soon as possible. The Hon. Mr. W. J. M. Larnach : Mr. Chairman, I should like your answer a little more fully in regard to the question put by Mr. Cameron. The intention was to ascertain from you whether there was the slightest chance or probability within your knowledge of the possibility of any necessity for forming globo assets, because that is reported throughout the town in several places. I think it is only fair to you and your colleagues that you should have an opportunity of explaining fully to the present meeting. The Chairman : I am very glad you have given me an opportunity of answering that. A public statement of the property owned by corporations over a certain amount has been placed before Parliament, I think you will see how small a sinner in that respect we are. I think you will also see how unlikely it is that we should need to form globo assets. There is no chance of our making calls for such a purpose, and we have no need to do so. If our business increased so that we had need of more capital—and it is only natural, if our business keeps improving as it has been doing, that you must look to an increase of capital —the directors propose to raise it by issuing fresh shares instead of by calls; and, no doubt, notwithstanding all the trouble that has taken place in other institutions, we are in such a position now that any issue of fresh shares would readily be taken up without any difficulty. lam glad to get an opportunity of making that clear, because I am quite aware that statements have been made to our detriment. All successful institutions will have enemies. With regard to what was said about the Government money, I am quite satisfied that we are so bound up with the Colony of New Zealand that if they wanted double or treble that amount, and we could afford it, we should be glad for them to have it. lam quite satisfied with the resources of New Zealand, and there is no fear of making any mistake that way. The motion for the adoption of the report and balance-sheet was unanimously carried. .'.' . The Hon. Mr. W. J. M. Larnach proposed a vote of thanks to the directors and officers, coupled with the names of the chairman and general manager. Mr. W. R. Cameron seconded the motion, which was carried unanimously. The Chairman, in returning thanks, said that they had an active, energetic, well-regulated staff from top to bottom. He thought they had quite as zealous a staff as any other bank in the colony.
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1892, The thirty-fifth half-yearly meeting of the proprietors of the Colonial Bank of New Zealand was held in Dunedin on 30th March. The Hon. George McLean, M.L.C., chairman of the board, presided, and there were about thirty proprietors present, including the following directors : The Hon. W. H. Reynolds, M.L.C. ; the Hon. W. Downie Stewart, M.L.C.; Dr. Hislop, Messrs. E. J. Spence, and P. C. Neil. The half-yearly report of the directors, and balance-sheet, which were taken as read, were as follows:— The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 29th February last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £17,677; to this has to be added balance from last half-year, £7,230 3s. Bd.: £24,907 3s. Bd. ; and there must be deducted tax on note-circulation and property-tax, £2,190 13s. lOd.; leaving available, £22,716 9s. 10d., which the directors recommend to be applied as follows: To payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; to balance to be carried forward, £8,716 9s. lOd.: £22,716 9s. lOd. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 31st March next, and at the branches on receipt of the warrants. Agencies of the bank were opened at Ashurst on the 23rd September, Waitara on the 13th October, and Inglewood on the 14th October of last year. The Petone branch was converted into an agency on the 19th October last. The Hon. William Hunter Reynolds, M.L.C, is the director who retires from the board at this meeting, in accordance with clause 42 of the deed of settlement, and, being eligible, offers himself for re-election. Both the auditors retire from office at the present meeting; one only—Walter Hislop, Esq.—is eligible for re-election, and he offers himself accordingly. Balance-sheet as at 29th February, 1892. (Including London office at 30th November, 1891.) Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 118,792 0 0 Bills payable and other liabilities .. .. .. .. .. .. 829,768 17 3 Deposits .. .. .. .. .. .. .. .. .. 2,238,026 3 2 Balances due to other banks .. .. .. .. .. .. 486 19 8 Reserve fund .. .. .. .. .. .. .. .. 50,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 22,716 9 10 3,659,790 9 11 Cr. Coin, bullion on hand, and cash balances at banker's .. .. .. £325,184 19 9 Government securities, consols, &c. .. .. .. .. .. .. 186,882 11 8 Government loans .. .. .. .. .. .. .. 403,333 6 8 Notes of and balances due by other banks .. .. .. .. .. 15,513 2, 8 Landed property and bank premises .. .. .. .. .. 121,620 0 4 Bank furniture and stationery .. .. .. .. .. .. 9,918 15 7 Bills discounted, and all other debts due to the bank, including remittances in transitu .. .. .. .. .. .. .. .. 2,597,337 13 3 £3,659,790 9 11 Dr. Profit and Loss Account. £ s. d. Dividend at 7 per cent, per annum at 31st August, 1891 .. ... .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty branches, and eight agencies .. .. .. .. .. .. .. .. 23,450 2 6 Tax on note-circulation .. .. .. .. .. .. .. 1,210 0 1 Property-tax on paid-up capital and reserves to 29th February, 1892 .. .. 980 13 9 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 8,716 9 10 62,357 6 2 Cr. Balance, profit and loss at 31st August, 1891 .. .. .. .. ~ £21,230 3 8 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. 41,127 2 6 £62,357 6 2 Reserve Fund. Balanoe, 31st August, 1891 .. .. .. .. .. .. .. £50,000 0 0 The Chairman, in moving the adoption of the report and balance-sheet, said: Gentlemen—The report and balance-sheet have now been in your hands for some time, and if you have no objection we will take it as read. In the balance-sheet there is no feature of importance to which to direct your attention. A perusal of it will show you the sure and steady progress we are making. We have been able to pay the usual dividend and carry an increased amount forward, besides putting aside a liberal allowance for bad debts. All this, seeing the competition we have had to meet, should be satisfactory to the shareholders. I must congratulate you on the smoothness with which our institution moves onward. I think the directors may take some credit to themselves for this, and for limiting the total of British deposits to an amount that cannot materially affect us, whatever lack of confidence in the colony may occur at Home. In connection with this matter, lam happy 11—I. 6.
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to say, however, that there has been no lack of confidence so far as our institution is concerned, for the total of our deposits has easily been maintained at Home, while in the colony deposits keep on steadily increasing. That our business should go steadily on without disturbance must be gratifying to you all, especially when we consider the financial disturbances that are taking place in the neighbouring colonies, and even in our own colony, for we cannot ignore the fact that considerable sums of English money are being called up and withdrawn from New Zealand to meet engagements coming due at Home, which timid people are afraid to renew. That this nervousness will pass away I have little doubt, as the resources of our colony must assert themselves, and people at Home will come to believe that if any British colony is to be trusted, New Zealand is one of the first deserving of their trust, and it hehoves every one who can contribute to this end, from the Government downward, to do so. I was asked a question at last meeting respecting properties held by this bank apart from our own premises. Gentlemen, you are all aware we have to make returns of such properties to the Land-tax Department, and here is our list: it amounts to £52,925. The highest valuation put on any one property is £3,279, and the lowest £1. From the valuations of the Land-tax Department which are now coming in, the department itself appears to have a better idea of their worth than we have ; but we mean to stick to our own values, and if the department are desirous of acquiring the properties they have the power under the Act to claim them, and we shall be quite satisfied if we get our own valuation. Meantime I am glad to say hardly a week passes but some of them are disposed of. Now, considering our ramifications in business throughout the colony, and the depression in land-values that we have come through, I think you will admit that the figures I have given are not such as to give you concern. With these remarks I propose the adoption of the report. Mr. Edmund Smith seconded the motion, which was carried unanimously. Mr. Wm. Hunter Reynolds was re-elected a director. Mr. Walter Hislop and Mr. A. G. Fenwick were elected auditors. A vote of thanks to the directors and officers of the bank was moved by Mr. W. J. M. Larnach and seconded by Mr. David Baxter. The Chairman, in acknowledging the vote, said: There is no doubt that for some time—a long time— : the directors and officers of the bank have had very anxious times, but now we see the institution gradually, year after year, sailing into smooth water, when our anxieties will probably cease. With reference to what Mr. Larnach has said about other institutions, I dare say many of them have learned now that it would have been better to refuse money than to run after it, and to seek large sums to lend them out when they had to push the money out without adequate security. We all at one time have had to do that, but we all have learned sense in New Zealand, and these people are coming through the same ordeal as we did ; and I must say that the unanimous resolutions of the directors from time to time to take little money out of the colony —and then only in London—and our resolutions not to accept money over a certain amount there, have been the means of keeping us out of many troubles, and if other people would now only refuse money, when they could not do with it, it would be well for them. All these difficulties that you see on the other side are principally arising from their accepting money away from themselves. Gentlemen, there is no doubt that if we had taken money outside the colony we should have extended and grown faster, but we have-always professed to be a local institution—we have kept all our shareholders in the colony, and our principal deposits, with the exception of the sum of £600,000, which we do not allow to be exceeded in London, are largely spread in small sums over the colony. In fact, what is aimed at is that this should be the people's institution, and so long as we spread in that way, and we are carrying on business here, everybody sees what we are doing, and we are the more likely to gain the confidence of people who might be startled at any time by any cry.
Thirty-sixth report of the directors to the half-yearly meeting of the proprietors, held in Dunedin> on 28th September, 1892 :— The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 31st August last. The net profits for the halfyear, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £18,149 9s. 4d.; to this has to be added balance from last half-year, £8,716 9s. 10d., making £26,865 19s. 2d.; and there must be deducted tax on note-circulation and property-tax, £2,239 12s. Id. ; leaving available, £24,626 7s. Id., which the directors recommend to be applied as follows: To reserve fund (which will then stand at £52,500), £2,500; to payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; to balance to be carried forward, £8,126 7s. 1d.—£24,626 7s. Id. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 29th September next, and at the branches on receipt of the warrants. John Macfarlane Ritchie, Esq., having resigned his seat on the board in consequence of his departure for Europe, the directors, in accordance with clause 44 of the deed of settlement, appointed the Hon. Richard Oliver, M.L.C, to fill the vacancy until this meeting. Mr. Oliver now offers himself for election by the proprietors, and is the only candidate. Balance-sheet as at 31st August, 1892. (Including London office at 31st May, 1892.) Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 123,008 0 0 Bills payable and other liabilities .. .. .. .. .. .. 809,843 17 7 Deposits .. .. .. .. .. .. .. .. .. 2,306,204 16 7 Balances due to other banks .. .. .. .. .. .. 1,162 8 1 Reserve fund .. .. .. .. .. .. .. .. 50,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 24,626 7 1 £3,714,845 9 4
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Cr. £ s. d. Coin, bullion on hand, and cash balances at banker's .. .. .. .. 387,146 19 6 Government securities, consols, &c. .. .. ... .. .. .. 162,496 6 8 Government loans .. .. .. .. ~ .. .. .. 403,333 6 8 Notes of and balances due by other banks .. .. .. .. .. 12,641 19 8 Landed property alid bank premises.. .. .. .. .. .. 121,456 15 4 Bank furniture and stationery .. .. .. .. .. .. 9,829 16 8 Bills discounted, and all other debts due to the bank, including remittances in transitu .. .. .. .. .. .. .. .. 2,617,940 410 £3,714,845 9 4 Dr. Profit and Loss Account. £ s. d. Dividend at 7 per cent, per annum at 29th February, 1892 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, twenty-nine branches, and nine agencies .. .. .. .. .. .. .. 23,291 6 8 Tax on note-circulation .. .. .. .. .. .. .. 1,251 14 1 Property-tax on paid-up capital and reserves to 31st August, 1892 .. .. 987 18 5 Proposed addition to reserve fund .. .. .. .. .. .. 2,500 0 0 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 8,126 7 1 £64,157 5 10 Cr. ' Balance, profit and loss at 29th February, 1892 .. .. .. .. £22,716 910 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 41,440 16 0 £64,157 5 10 Reserve Fund. £ s. d. Balance, 29th February, 1892 .. .. .. .. .. .. 50,000 0 0 Proposed addition now .. .. .. -~--■ .. .. .. 2,500 0 0 £52,500 0 0 At the meeting the Chairman, Mr. George McLean, M.L.C, said : Gentlemen, —The report and balance-sheet having been in your hands for some time, I propose to take them as read. The figures call for no special mention, but show the steady all-round progress we are making. The profits have been such that, after providing for bad and doubtful debts, we have been able to pay the usual dividend of 7 per cent, per annum, put £2,500 to the reserve fund, and carry forward £8,126 to next account. Our deposits are gradually increasing, and this in spite of the financial disturbances that have taken place in London and Melbourne. It is in times such as these that the wisdom of our policy to take only a limited amount of money on deposit in London is apparent. With reference to what I said to you a year ago regarding the Government account, we, after consideration, deemed it advisable to petition Parliament setting out the statements I then made, and prayed that Sir Harry Atkinson and I should be examined before a committee. Unfortunately, after the petition was forwarded, Sir Harry Atkinson suddenly died, and I in Wellington was obliged to take the responsibility of deleting his name from the petition before it was presented. Parliament on presentation of the petition referred it to the Public Accounts Committee, who after investigating the matter- came unanimously to the resolution (as you will have seen from the newspapers) that this bank rendered an important service to the colony; and they further recommended that arrangements should be made to give us a share of the Government remittances. By next meeting I hope to be able to inform you that the Government are remitting through us to London at the rate of at least £500,000 per annum. Regarding a share of the operative accounts of the Government, I can only say that this bank is known to the Government, to the members of Parliament, and to the public at large as a purely local institution, having no interests but which are hound up in the colony. Its management is conducted on the principle of aiding agriculture, mining, and trade ; but on the principle also of non-intervention and non-interference with the business of its various customers ; of abstaining from exercising influence either in private or political contests, and I have had reason of late to be satisfied that the public are well aware of this, and looking to the position we now occupy, and the progress we are making, I think we are justified in expecting that some of the Government banking accounts of the colony will ere long come to the Colonial Bank. Gentlemen, with these few remarks, I beg to move the adoption of the report. Mr. W. Wills : I beg to second the motion which you have just made for the adoption of the report. I think, Sir, that on the whole the statement just submitted is highly satisfactory to every one of the shareholders. lam glad personally, and I dare say that others will be, to see that you have resolved again to put a small amount to the reserve fund. I think that is a very sound policy, and one that the bank has suffered in the past through not having adhered to. So far as the Government business is concerned, I think the shareholders are quite satisfied to leave that matter with you, because I do not think it could be in better hands. The Hon. W. J. M. Larnach : Seeing that you have not referred to the old securities account, which you brought prominently before the meeting this time last half-year, when it was announced that the account had been reduced and stood only at some £50,000,1 should like to ask whether it has remained in a dormant state or whether it is in a liquid condition, or whether it has been reduced in any way ; because it would be satisfactory to the public to be assured afresh that there is no nucleus of an assets account ? The Chairman: Hardly a week passes but what we sign some deeds of sale, and such sales have been at satisfactory prices to us. Last half-year I think we have signed for three thousand pounds' worth of deeds and got the money for them. The total amount is reduced now under £50,000.
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The Hon. W. J. M. Larnach : That is satisfactory. The Chairman: I would like to add, with regard to these assets, that the income from them gives a fair percentage. However, we are parting with them as quickly as possible. The motion for the adoption of the report was then carried unanimously. The Hon. W. J. M. Larnach proposed that the Hon. R. Oliver, M.L.C, be elected as a director in place of Mr. J. M. Ritchie. Mr. B. C. Haggitt seconded the motion, which was carried. Mr. John Mitchell: I rise with great pleasure to ask the meeting to accord a vote of thanks to the directors and officers of this institution. The balance-sheet shows that the business has been worked satisfactorily during the half-year, and I hope that it will go on making the same progress as in the past. From the experience I have had of the officers and directors, lam quite sure that our business is intrusted to good keeping. Mr. J. F. Herbert : As a country customer, I think it falls to my lot to bother the officers of this bank more than most persons, and I must say that I have always had the greatest consideration and courtesy and kindness shown me. I have therefore very great pleasure in seconding the motion. The motion was carried unanimously. The Chairman : On behalf of the directors and management of this institution, I am delighted to see that you have given unanimous expression of your approval of the actions of the officers of this bank. The shareholders will understand what it has been to work an institution like this during the past few years, and I may say that no set of officers could have deserved more praise at your hands for the energetic manner in which they have conducted the business. The way the business has been handled ought to command, and does deserve, the confidence of the shareholders. I have therefore great pleasure in returning thanks on behalf of the directors and officers for the way in which you have accorded them a vote of thanks.
1893, Thirty-seventh report of the directors to the half-yearly meeting of the proprietors, held at Dunedin on 29th March, 1893 : — The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 28th February last. The net profits for the halfyear, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £19,013 Is. 7d., to this has to be added balance from last half-year, £8,126 7s. Id., making a total of £27,139 Bs. Bd.; from which must be deducted tax on note-circulation and landand income-tax, £2,215 18s. 4d., leaving available £24,923 10s. 4d., which the directors recommend to be applied as follows : To reserve fund (which will then stand at £55,000), £2,500; payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; balance to be carried forward, £8,423 10s. 4d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 30th March next, and at the branches on receipt of the warrants. Percival Clay Neill, Esq., is the director who retires from the board at this meeting, in accordance with clause 42 of the deed of settlement, and being eligible, offers himself for re-election. He is the only candidate for the vacant seat. Both the auditors retire from office at the present meeting; one only—A. G. Fenwick, Esq. —is eligible for re-election, and he offers himself accordingly. Branches of the bank have been opened during the past half-year at Sydenham on 28th November, 1892 ; at Kurow on the 19th December, 1892 ; and at Fielding on the 7th February, 1893. An agency of the bank was opened at Pleasant Point, Timaru, on the Bth February, 1893. Balance-sheet as at 28th February, 1893. (Including London office at 30th November, 1892.) ■Dr. £ s . d. Capital —£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 128,236 0 0 Bills payable and other liabilities .. .. .. .. .. .. 877,575 2 5 Deposits .. .. .. .. .. .. .. .. .. 2,320,219 7 3 Balances due to other banks .. .. .. .. .. .. 932 8 9 Reserve fund .. .. .. .. .. .. .. .. 52,500 0 0 Profit and loss .. .. .. .. .. .. .. .. 24,923 10 4 £3,804,386 8 9 Cr. Coin, bullion on band, and cash balances at banker's .. .. .. .. £396,109 16 2 Government securities, consols, &c. .. .. .. .. .. .. 162,496 6 8 Government loans .. .. .. .. .. .. .. .. 403,000 0 0 Notes and balances due by other banks .. .. .. .. .. 10,900 10 10 Landed property and bank premises .. .. .. .. .. 121,302 15 4 Bank furniture and stationery .. .. .. .. .. .. 10,016 3 7 Bills discounted, and all other debts due to the bank, including remittances in transitu ~ ~ ~ ~ ~ .. .. .. 2,700,560 16 2 £3,804,386 8 9
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Dr. Profit and Loss Account. £ s. d. Transferred to reserve fund, 28th September, 1892 .. .. .. .. 2,500 0 0 Dividend at 7 per cent, per annum at 31st August, 1892 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty-two branches, and ten agencies .. .. .. .. .. .. .. .. 24,050 12 2 Tax on note-circulation .. .. .. .. .. .. .. 1,202 19 1 Land-and income-tax .. .. .. .. .. .. .. 1,012 19 3 Proposed addition to reserve fund .. .. .. .. .. .. 2,500 0 0 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 8,423 10 4 £67,690 0 10 Cr. —***—*,=— Balance, profit and loss at 31st August, 1892 .. .. .. .. .. £24,626 7 1 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 43,063 13 9 £67,690 0 10 Dr. Reserve Fund. £ s. d. Balance .. .. .. .. .. .. .. .. .. £55,000 0 0 Cr. — Balance 31st August, 1892 .. .. .. .. .. .. .. £50,000 0 0 Transfer from profit and loss, 28th December, 1892 .. .. .. .. 2,500 0 0 Proposed addition now .. .. .. .. .. .. .. 2,500 0 0 £55,000 0 0 At the meeting, the Chairman, Mr. Geo. McLean, M.L.C, said : Gentlemen, —As the report and balance-sheet have been in your hands for some time, I propose to take them as read. It is with deep regret that I have to remind you of the death since we last met of the valued chairman of our London board, Mr. Alexander Gavin Anderson, who had been associated with the bank almost since its initiation, and to whose wise counsels and assistance we are all deeply indebted. The appointment of a successor lies with this board, and the necessary steps in connection are being taken. Gentlemen, it is with pleasure the directors present you this report for your adoption, evincing as it does the sure progress of your institution. We are opening branches and agencies when we can see reasonable prospects of their paying, and will continue to do so, and so extend the sphere of our influence; and it is with satisfaction your directors are able to assure you that the future looks encouraging. We are this half-year able to pay our usual 7 per cent, per annum dividend, add a fair amount to our reserve fund, and carry forward a somewhat increased amount. The bank is being carefully handled by able officers, and all going along comfortably. Our shares are well held, and although a considerable number have been thrown on the market through the death of some large holders, they have been readily absorbed without appreciably affecting the price. These shares having to be sold has been the means of considerably adding to the number of our shareholders, and by this means spreading our influence. This being a good opportunity, we avail ourselves of it to ask our new shareholders, and also to remind our old, of their duty as to bringing their own business and influencing others to bring theirs to their own institution, and we will give them the assurance that it will be well conducted for them. I am happy to inform you that we have now secured a share of the Government business. The Government, now under agreement with us, remit through this bank a third of all the money they send to London. This third—our share—will amount to about £600,000 in the year ; and although I cannot yet announce that we have secured a share of their operative account that is sure to follow. Our claim to it is great, and in most quarters recognised. We cannot regard the depression and the state of the financial market in some of the neighbouring colonies without deep regret. We, as a bank, are fortunately not interested, except so far as regards the welfare of this colony, which must, to a certain extent, be affected. In this colony we have much to be thankful for. The harvest, a fairly bountiful one, is well garnered, and, although the prices of some of our staple products are not what we could wish, the freezing, dairying, and manufacturing industries are going on successfully. The prices of wool and kauri-gum appear to be on the rise, and I may say the outlook generally is encouraging, and the colony making fair progress. We cannot forget that a few years ago we as colonists had to face depression and difficulties of no ordinary type, now, fortunately, surmounted. I have no hesitation in saying that our friends the neighbouring colonists will meet their difficulties with the same energy and determination that we showed, and that they will shortly emerge triumphantly I have no fear. Gentlemen, with these few remarks I move the adoption of the report and balance-sheet. Mr. Thomas Brown: I have much pleasure in seconding the adoption of the report. In these days of trouble to so many financial institutions the shareholders have good cause, I think, to congratulate themselves on the position they occupy, when the directors are not only able to pay the usual dividend but to keep steadily adding to the reserve fund. One cannot help regretting sometimes that such a large item should appear on the balance-sheet for Government taxes, over 10 per cent, of the profits being absorbed in that direction. Of course, that is inevitable, and it is perhaps some satisfaction to be able to help in bearing such a large proportion of the necessities of the State. It was very gratifying to hear the chairman speaking in the tone we find generally adopted now, a tone of hope and confidence in the future. The motion was then put and carried unanimously. Mr. P. C Neill was re-elected as a director on the motion of Dr. John Macdonald, seconded by Mr. J. B. Reid; and Messrs. A. G. Fenwick and T. Moodie were elected auditors on the motion of Mr. A. Melville, seconded by Mr. J. Mitchell.
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Mr. Edward Herbert: If there is no other business, Mr. Chairman, I have much pleasure in proposing a cordial vote of thanks to the directors and the staff—to the directors for the care they have exercised in carrying on this great business through very trying times. There is one feature in the balance-sheet that is very gratifying to me—that is, the augmenting of our reserve fund. I think this a policy which is a right one, and I hope it will be continued in years to come. The question may be asked probably, How is this to be done ? Well, for my own part, I would rather be satisfied with a smaller dividend even, and see the reserve fund strengthened, but I am hopeful that in the future the directors may be able to pay the same dividend at least, and also to swell the reserve fund. The zeal with which the staff have carried out the duties lam fairly well acquainted with, and I can speak from considerable personal knowledge that it is worthy of all praise. Mr. A. G. Fenwick seconded the motion, which was carried unanimously. The Chairman : Gentlemen, the directors and officers are very much obliged to the shareholders for expressing a renewal of confidence in them. I can say for our officers that we have got a really zealous staff, and they work with an interest in the institution which cannot be surpassed. The bank is well handled, sharply handled and carefully; and we are very glad indeed to see that the shareholders give the staff a vote of confidence, because I assure you they will appreciate it. As far as the directors are concerned, they are very pleased to have a renewal of your confidence in them. We are sailing in smooth waters now compared with what we experienced during the difficulties that formerly beset New Zealand. Happily we have got through all that. Gentlemen, I have to thank you very much for the vote of confidence you have passed in the directors and officers of the bank. The draft minutes having been read and signed, the meeting terminated.
Thiety-eighth report of the directors to the half-yearly meeting of the proprietors, held at Dunedin, on 27th September, 1893 :— The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 31st August last. The net profits for the halfyear, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £19,212 16s. To this has to be added balance from last half-year, £8,423 10s. 4d.: £27,636 6s. 4d.; and there must be deducted tax on note-circulation and land- and income-tax, £2,201 13s. Bd., leaving available £25,434 12s. Bd., which the directors recommend to be applied as follows: To reserve fund (which will then stand at £60,000), £5,000; to payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; to balance to be carried forward, £6,434 12s. Bd. : £25,434 12s. Bd. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 28th September next, and at the branches on receipt of the warrants. Balance-sheet as at 31st Augtst, 1893. (Including London office at 31st May, 1893.) Dr. £ s. d. - Capital—£2 paid up on 200,000 .. .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 117,147 0 0 Bills payable and other liabilities .. .. .. .. .. .. 662,766 7 10 Deposits .. .. .. .. .. .. .. .. 2,186,173 11 1 Balances due to other banks .. .. .. .. .. .. 721 3 7 Reserve fund .. .. ... .. .. .. .. .. 55,000 0 0 Profit and loss .. .. .. .. .. .. . .. .. 25,434 12 8 £3,447,242 15 2 Cr. ' , Coin, bullion, and cash balances at banker's .. .. .. .. £346,126 8 1 Government securities, consols, &c. .. .. .. .. .. 206,175 13 0 Notes of and balances due by other banks .. .. .. .. .. 14,202 14 4 Remittances in transitu and awaiting maturity .. .. .. .. 622,996 8 1 Landed property and bank premises .. .. .. .. .. 124,143 13 5 Bank furniture and stationery .. .. .. .. .. .. 9,983 10 1 Bills discounted, and all other debts due to the bank .. .. .. 2,123,614 8 2 £3,447,242 15 2 Dr. Profit and Loss Account. £ s. d. Transferred to reserve fund on 29th March, 1893 .. .. .. .. 2,500 0 0 Dividend at 7 per cent, per annum at 28th February, 1893 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty-one branches, and eleven agencies .. .. .. .. .. .. .. 25,261 8 10 Tax on note-circulation .. .. .. .. .. .. .. 1,270 18 2 Land- and income-tax .. .. .. .. .. .. .. 930 15 6 Proposed addition to reserve fund .. .. .. .. .. .. 5,000 0 0 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital.. 14,000 0 0 Balance .. .. .. .. .. .. .. .. 6,434 12 8 £69,397 15 2 Cr. — Balance, profit and loss at 28th February, 1893 .. .. .. .. £24,923 10 4 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 44,474 4 10 ✓ £69,397 15 2
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Reserve Fund. £ s. d. Balance, 28th February, 1893 .. .. .. .. .. .. 52,500 0 0 Transfer from profit and loss, 29th March, 1893 .. .. .. .. 2,500 0 0 Proposed addition now .. .. .. .. .. .. .. 5,000 0 0 Balance .. .. .. .. .. .. £60,000 0 0 At the meeting the chairman, Mr. G. McLean, M.L.C, said : Gentlemen, —The report having been in your hands a fortnight, I presume that you will all be agreeable to take it as read. The only unusual features are the shrinkages, mostly consequent upon the repayment of the £400,000 Government loan, the expansion of the exchange business (owing to the Government purchases of our drafts], and the separation of the " remittances in transitu and not due " from the other advances. The latter change makes the balance-sheet more complete. I can assure you that it is with no ordinary degree of satisfaction that your directors are able to produce such a favourable report, and to recommend the payment of the usual 7 per cent, dividend, besides placing £5,000 to the reserve fund, and carrying forward £6,434. This satisfactory state of affairs is a matter for more than usual congratulation at a time like this, when our success stands, as it were, in relief against the recent panic in Australia—a panic which, I venture to say, is unparalleled in history. Happily, that panic, with the exception of the short and absurd run on the Auckland Savings-Bank, did not extend to New Zealand. The temporary scare caused by the Auckland run was, however, sufficient to make the Government feel the necessity of enacting legislation to meet cases of panic, and the necessary Bill was passed to enable the Government, under certain conditions, to declare notes a legal tender, and to afford help, if necessary, in cases of emergency. Let us hope that there will be no need to call this Act into operation. The Government have also had under consideration the question of a Government audit of the banks in the colony, and, as such would give more confidence to the public, and prevent senseless panics, this bank would hail such legislation with great satisfaction. Indeed, I myself had in contemplation the introduction of such a measure, and procured certain Acts and papers from America, which, on learning the Government's intention, I handed to the Colonial Treasurer, offering him at the same time all the information I had acquired regarding the working'of the law on the subject in force in America. Reverting to the late financial crisis which swept over Australia, you will naturally expect some statement as to how it affected us. I am happy to be able to tell you that through the arrangements we had with our various agents in the other colonies, no inconvenience has been experienced by any of our customers, whose business with Australia was conducted without hitch, while so far as we ourselves are concerned, the total amount we have locked up owing to the crisis is a sum under £30, owing to us in balance of account by one of the suspended banks. With regard to the suspension of the New Zealand Loan and Mercantile Agency Company (Limited), we, as a bank, are in no way interested. We, however, deplore the trouble that has befallen them, and hope soon to see the institution in active business again. From a return laid before Parliament, we find that we are very harshly treated in having to pay 40 per cent, of the whole income-tax collected from the six banks doing business in the colony. This certainly shows that a radical change in the law is necessary, for surely, if any advantage is to be given, it should be on the side of an institution that is purely a New Zealand one. With regard to our shares, though they have suffered the least depreciation of those of any colonial bank, still they are low. There is, however, no real reason for this, as our business is a good and liquid one, and the shares are now intrinsically worth more than ever they previously were. With regard to the state of the colony, it is, upon the whole, prosperous. The rabbit pest and the preferential demand for long wool have doubtless adversely affected some interests, but the vast majority of settlers have greatly benefited by the continued high prices of sheep and cattle. When we compare these prices with those obtainable only a few years ago, before meat-freezing superseded the boiling-down of carcases for tallow, it is manifest that great praise and thanks are due to those who promoted and carried to its present state of success the great industry of freezing, exporting, and selling mutton and beef, these being products which New Zealand is so well qualified to produce. With these remarks, gentlemen, I beg to propose the adoption of the report and balance-sheet. Mr. C Haynes (Mayor of Dunedin), in seconding the motion, expressed his gratification at the very excellent report which had been placed in their hands as the result of the past half-year's business. The motion was carried unanimously. Mr. W. Barron : I beg to move a vote of thanks to the directors and staff of the bank. As a rule this is merely a formal motion, following, as a matter of course, upon the presentation of the balance-sheet, but I think we should treat it as more than a conventional motion. We all feel that the directors and staff of the bank deserve at our hands something more than a merely formal vote of thanks. Considering the very critical times through which we have been passing, it is an excellent balance-sheet which has been presented to us. I would also remind the shareholders that the directors and staff of the bank are immediately under our personal notice, and, as a rule, are personally known to us. We can therefore estimate their business capacity, and we all have opportunities of knowing whether the institution is prospering or not, better than if it were managed by a board in London, and by officers and directors about whom we know nothing. Mr. John Wright seconded the motion, which was carried unanimously. The Chairman: Gentlemen, —On behalf of the directors, the general manager, and the staff of this bank, I desire to return thanks for the vote which you have given, more especially on the present occasion, because, gentlemen, you will naturally feel that to our officers and to all connected with the institution, the severe panic which has been going on in the adjacent colonies must have caused considerable anxiety; and the manner in which all the officers have devoted
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themselves to the business of this institution is deserving of more than ordinary praise. It is true, as Mr. Barron has said, that we are here before the public, and any one can see what we are doing. We are now the only banking institution in this colony which is managed, directed, and, I may say, owned in this colony ; and, gentlemen, let me say this, that with your confidence in the future as in the past, you will yet find this the leading bank in the colony. Gentlemen, I thank you cordially for the vote you have just passed, more especially because, as I say, in times like these, more than at an ordinary time, such a vote can be appreciated. The draft minutes having been read, the meeting terminated.
1894. Thiety-ninth report of the directors to the half-yearly meeting of the proprietors, held at Dunedin, on 28th March, 1894 :— The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 28th February last. The net profits for the halfyear, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £20,476 19s. ; to this has to be added balance from last half-year, £6,434 12s. Bd.; total, £26,911 lis. Bd. ; and there must be deducted tax on note circulation and land- and income-tax, £2,119 17s. 4d.; leaving available, £24,791 14s. 4d., which the directors recommend to be applied as follows : To reserve fund (which will then stand at £65,000), £5,000; payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000; balance to be carried forward, £5,791 14s. 4d. : total, £24,791 14s. 4d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 29th March next, and at the branches on receipts of the warrants. For the vacant seat on the board, Edwin J. Spence, Esq., the retiring director, and the Hon. W. J. M. Larnach, C.M.G., formerly a director, have both given the requisite notice, and, being eligible, offer themselves for election. Both the auditors retire from office; one only, Thomas Moodie, Esq., is eligible for re-election, and he offers himself accordingly. The agency at Sydenham was closed on the 28th February. Balance-sheet as at 28th February, 1894. (Including London Office to 30th November, 1893.) Dr. £ a. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 116,793 0 0 Bills payable and other liabilities .. .. .. .. .. .. 780,441 13 6 Deposits .. .. .. .. .. .. .. .. .. 2,024,313 5 3 Balance due to other banks.. .. .. .. .. .. .. 7,394 15 6 Reserve fund .. .. .. .. .. .. .. .. 60,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 24,79114 4 £3,413,734 8 7 Cr. Coin, bullion, and cash balances at banker's .. .. .. .. .. £362,098 3 3 Government securities, consols, &c. .. .. .. .. .. .. 206,417 13 0 Notes of balance due by other banks .. .. .. .. .. 12,766 14 7 Remittances in transitu and awaiting maturity .. .. .. .. 684,255 10 6 Landed property and bank premises .. .. .. .. .. 124,396 11 9 Bank furniture and stationery .. .. .. .. .. .. 9,960 7 7 Bills discounted, and all other debts due to the bank .. .. .. .. 2,013,839 711 £3,413,734 8 7 Profit and Loss Account. Dr. £ s. d. Transferred to reserve fund on 27th September, 1893 .. .. .. .. 5,000 0 0 Dividend at 7 per cent, per annum at 31st August, 1893 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty-one branches and eleven agencies .. .. .. .. .. .. .. 24,609 0 6 Tax on note-circulation .. .. .. .. .. .. .. 1,184 8 2 Land- and income-tax .. .. .. .. .. .. .. 935 9 2 Proposed addition to reserve fund .. .. .. .. .. .. 5,000 0 0 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 5,79114 4 £70,520 12 2 Cr. Balance, profit and loss at 31st August, 1893 .. .. .. .. .. £25,434 12 8 Gross profits for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 45,085 19 6 £70,520 12 2 Reserve Fund. £ s. d. Balance, 31st August, 1893 .. .. .. .. .. .. 55,000 0 0 Transfer from profit and loss, 27th September, 1893 .. .. .. .. 5,000 0 0 Proposed addition now .. .. .. .. .. .. .. 5,000 0 0 £65,000 0 0
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At the meeting, the Chairman, Mr. G. McLean, M.L.C., in moving the adoption of the report said : It is with a considerable degree of pleasure that your directors are able to place before you the result of the past half-year's operations, a result that must be as pleasing to you as it is to themselves. You have now had the report in your hands for some considerable time, and have no doubt scanned it well. You will therefore, I presume, have no objection if I ask you to take it as read. The balance-sheet itself does not call for any special remarks from me. The bills payable, and opposite item, remittances in transitu, both show a satisfactory increase, due to the larger volume of exchange transactions, and also to the season of the year. As was the case with other banks, when the Australian banking crisis occurred we lost some deposits. This experience, however, confirmed the soundness of the policy adopted by the directors, and carried out by them for some years past, in restricting the amount as accepted on deposit in London—a policy of which we are now reaping the benefit in a comparatively small disturbance caused to our business by withdrawals ; the total amount of deposits now held by us in London being under £400,000, distributed in small amounts payable over the next five years. As our colonial produce meets with better markets, to which end strenuous efforts are being directed, we may fairly count on a steady increase in the savings of the colony, and, as it is from this source the bank chiefly derives its deposits, we may confidently look for a steady increase in them here. Business throughout New Zealand is fairly sound, but we cannot ignore the fact that the great farming industry has this year had much to contend with. In most districts the harvest season has been bad, and consequently the yield has been deficient. Added to this, the price obtainable is low and out of all proportion to the cost of production. Kauri-gum, our staple product in the North, has, in sympathy with the depression in the American markets, suffered a heavy fall in value, and the price this year obtained for wool, both locally and in London, has not been equal to our expectations. On the other hand, the strides that the frozen-food trade is taking give assurance of the constant progress of the colony. The large amount of Home capital now invested in the improved class of refrigerating steamers which find constant employment in the trade between this colony and England shows that others have confidence in the frozen-food trade, and with us think it capable of further development. New Zealand, like other colonies, will have her ups and downs. Better seasons will come, and peopled as she is with a courageous and energetic race, her immense power of production will keep her always in the foremost ranks of exporting colonies ; and this bank, with its entire interests centred in New Zealand, is ever sure to share in the general prosperity. Mr. K. Ramsay seconded the motion, which was agreed to. Mr. W. J. M. Larnach was elected a director, and Messrs. Thomas Moodie and Henry Eose were appointed as auditors. Mr. C. W. Adams proposed and Mr. J. Wright seconded a vote of thanks to the directors and staff, which was carried unanimously. The Chairman returned thanks on behalf of the directors and staff. There was, he said, no doubt that just now many industries in New Zealand were not as prosperous as might have been expected. In such times caution was required on the part of directors and officers of the bank. He was happy to say their institution had a very efficient and a very zealous staff. There was every reason for hope as to the future. One, two, or three bad years would never kill New Zealand. This colony would stand a lot of killing, and would rise triumphant out of any depression that might come upon it. The vote of thanks just passed would act as an encouragement to the staff, for it was helpful in such times that faithful services should be acknowledged.
The fortieth half-yearly meeting of shareholders in the Colonial Bank of New Zealand was held in the bank, Princes Street, Dunedin, on Wednesday, the 26th September, 1894. The Hon. G. McLean, M.L.C, chairman of directors, presided; and there was an exceptionally large attendance of shareholders, about 120 being present, including the following directors : The Hon. R. Oliver, M.L.C, the Hon. W. Downie Stewart, M.L.C, Dr. Hislop, and P. C. Neill, Esq. The report and balance-sheet submitted to the meeting are as follows : — The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended 31st August last. The net profits for the halfyear, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debts, amount to £18,674 6s. 7d.; to this has to be added balance from last half-year, £5,791 14s. 4d.; total, £24,466 os. lid.; and there must be deducted tax on note-circulation and land- and incometax, £2,238 9s. 2d. ; leaving available £22,227 lis. 9d., which the directors recommend to be applied as follows : Payment of dividend at the rate of 7 per cent, per annum on the paid-up capital, £14,000 ; balance to be carried forward, £8,227 lis. 9d. A provisional arrangement for the amalgamation of the Bank of New Zealand and this bank is now before the Legislature, and should they approve of it resolutions for your approval will be submitted to you at the meeting. Balance-sheet as at 31st August, 1894. (Including London office at 31st May, 1894.) Dr. £ s. d. Capital—£2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 107,980 0 0 Bill payable and other liabilities .. .. .. .. .. .. 609,929 10 5 Deposits .. .. .. .. .. .. .. .. .. 1,958,959 13 4 Balances due to other banks .. .. .. .. .. .. 5,916 4 5 Reserve fund .. .. .. .. .. .. .. .. 65,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 22,227 11 9 £3,170,012 19 11 12—I. 6,
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Cr. £ s. d. Coin, bullion, and cash balances at banker's .. .. .. .. .. 415,796 2 2 Government securities, consols, &c. .. .. .. .. .. .. 170,408 19 9 Notes of and balances due by other banks .. .. .. .. .. 7,333 2 4 Remittances in transitu and awaiting maturity .. .. .. .. 523,616 9 1 Landed property and bank premises .. .. .. .. .. 123,872 15 3 Bank furniture and stationery .. .. .. .. .. .. 10,199 18 0 Bills discounted, and all other debts due to the bank .. .. .. .. 1,918,785 13 4 £3,170,012 19 11 Dr. Profit and Loss Account. £ s. dTransferred to reserve fund on 28th March, 1894 .. .. .. .. 5,000 0 0 Dividend at 7 per cent, per annum at 28th February, 1894 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty-one branches and ten agencies .. .. .. .. .. .. .. .. 24,806 1 0 Tax on note-circulation .. .. .. .. .. .. .. 1,183 6 1 Land-and income-tax .. .. .. .. .. .. .. 1,055 3 1 Proposed dividend at the rate of 7 per cent, per annum on the paid-up capital .. 14,000 0 0 Balance .. .. .. .. .. .. .. .. .. 8,227 11 9 £68,272 1 11 Cr. — a. Balance, profit and loss at 28th February, 1894 .. .. .. .. 24,791 14 4 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 43,480 7 7 £68,272 1 11 Dr. Reserve Fund. £ s. d. Balance .. .. .. .. .. .. .. .. £65,000 0 0 Cr. Balance, 28th February, 1894 .. .. .. .. .. .. £60,000 0 0 Transfer from profit and loss, 28th March, 1894 .. .. .. .. 5,000 0 0 £65,000 0 0 The Chairman said : Gentlemen, —The report and balance-sheet having been circulated amongst you for some time, I propose, with your leave as usual, to take it as read. I have again to congratulate you on the balance-sheet the directors are able to place before the shareholders. Although the future does not look quite so promising as we could wish for good banking profits, it has not been considered necessary on the present occasion to curtail the usual dividend of 7 per cent, that has been paid for the last thirteen years; but when one thinks of what has occurred to other banking institutions during the same period, whose dividends have fallen from 18 per- cent, to 6 per cent., a note of warning for the future is hardly necessary. The transactions in the balance-sheet itself do not call for any special remarks, our volume of business having been fairly well maintained. I now come to the question that must have been uppermost in your minds—that of amalgamation with the Bank of New Zealand ; and I will endeavour to explain the circumstances that led up to the production of the scheme which was to have been placed before you. I am aware that there are amongst our shareholders a considerable number opposed to amalgamation, and with that opposition the directors have great sympathy, their only desire being to do what is best in the interests of the shareholders, and there is no circumstance connected with this bank that makes the adoption of the scheme in any way a necessity. I will, however, proceed with my explanation. A grave crisis in the affairs of the Bank of New Zealand suddenly appeared, a crisis not unforseen by some people, but which apparently came on the Government as a surprise, and had to be promptly dealt with. The reports of the debates in Parliament show that, while many members entertained grave doubts as to the propriety of the step proposed by the Government, no one ventured to oppose it strenuously. It was felt that the Government were in a difficult position, and must, under the circumstances, be trusted. At the same time, it was thought that a cruel blow was being delivered at a local institution, like ours, by providing the Bank of New Zealand with money at a cheaper rate than that at which we might expect to get it. You are aware of our policy of limiting the amount of money we take on deposit in London. Owing to the previous difficulties and writingsdown in the Bank of New Zealand, followed by the great Australian banking crisis, our deposits, in like manner to those in other banks, were to some extent withdrawn. When confidence was restored we, as a strengthening measure, issued instructions to our London office further reducing the limit up to which we would take deposits, and now hold there only some £350,000, the due dates of which extend over a period of five years. At the time the Bank of New Zealand guarantee was given here, we in London were, owing to a variety of reasons, in an exceptionally strong financial position, having funds far in excess of any drain that could possibly come on us. In the colony we had ample funds for our requirements, and the Government having re-enacted the law of the previous year empowering them under certain conditions to legalise the note-issue, could easily have allayed any panic in connection with a bank in this colony. Having thus shown you how any difficulty could be effectually met, I will now tell you what action we took to strengthen our position and credit. You know we have for some time past had a third share of the Government remittances to London, and that, although we were not parading it lately, we were losing no opportunity of urging on the Government our claims for a portion of their operative accounts, and I cannot do better than read the letter we addressed to the Premier on this subject on 20th July last, as it contains much information interesting to shareholders :—
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" Wellington, 20th July, 1894. " The Hon. R. J. Seddon, Premier of New Zealand. " Sib, —I have the honour to bring before you the following remarks in connection with this bank :— "1. The shareholders number about 1,350. The capital is £1,000,000, of which £400,000 is paid up, and, with the exception of some £25,000 to £30,000 held by persons who in Australia and Great Britain are still connected with the colony, the whole of the capital is owned by shareholders resident in New Zealand. "There are forty-two branches and agencies spread over the most important industrial, agricultural, and mining portions of the colony, and, with the exception of our London office, we have no branches outside the colony. " The depositors and current-account holders number about 15,000. The business is particularly well spread, and the deposits themselves almost entirely come from the earnings of the industrialand working-classes. "2. Our- aim has been to encourage and support the trade and industries of the colony, in support of which I would mention the important dairying industry of the South Island, which since its inception has been fostered and brought to its present state of usefulness chiefly through the instrumentality of this bank. " Our efforts have, however, been greatly thwarted, not specially in respect of the industry mentioned, but with regard to our own well-doing, by the competition we have had to deal with— competition which is now shown to have been very unfair. Notwithstanding this, however, we have managed to pay our shareholders a return for the past twelve years of 7 per cent, per annum, augment our reserves, and maintain our business and capital intact. " 3. Two years ago the late Colonial Treasurer, under the following circumstances, gave us onethird of the London remittances of the Government: When the Atkinson Ministry came into power in 1887 the necessity was apparent of having a considerable amount of money at once found in London. The Government bankers were unable to provide this. Application was then made to a foreign bank, later to an insurance company—in each case without success—and then to us. Within a week we supplied the Government with the necessary funds, to the amount of £700,000, and saved the colony from making default in paying its interest due in London. "The circumstances in connection with this formed the basis of a Parliamentary inquiry in 1892, and all the particulars are in the records of the House of Representatives. The committee that examined our petition recommended that we be granted a portion of the Government's London remittances, and this was agreed to. " While we are grateful for what Parliament then gave us, I would with deference bring to your notice that it is difficult to profitably transact this particular branch of the Government business by itself until the remittances are made to some extent regularly. ' "Bills drawn against colonial produce shipped to London have by us to be purchased in anticipation of the issue of drafts to the Government. If, after provision has been made to meet such drafts, later on the Government find they do not require to remit, the bank's money that meantime might have been profitably employed in the colony remains unproductive in London. Such lately has been the case, apparently in consequence of circumstances connected with the Bank of New Zealand. We estimated having to provide for the sale to Government of £600,000 per annum, spread over the twelve months. We have, apparently owing to the above circumstances, in four months and a half sold only £35,000. I feel certain Parliament intended we should have some lasting benefit in return for the assistance we gave the colony, and I consequently venture to explain to you that this particular business, under exceptional circumstances, for which we are not responsible, can only with difficulty be carried on properly. "4. The tendency of the late legislation, as far as the Bank of New Zealand is concerned, must have a detrimental effect on us. Naturally—though not at all truly—the public, seeing the revelation of losses periodically made by that institution, think that we in our business must be to some extent on all fours with it. The effect of this is that our shares—though never better property than they are now —have become greatly depressed, and shareholders obliged from any cause to realise their holdings can only do so at a very heavy loss on the real value. " 5. Under the circumstances, I think you will entertain no doubt we have as strong a claim as any bank can have for the consideration of the Government for a share of the Government account, and I accordingly beg your favourable consideration for one-third of the operative accounts in the colony —such as it may suit your pleasure to give us, and such as was yesterday urged on you by the representative of the Bank of New Zealand to give us. "We have the requisite machinery for carrying it on, and as a banker of thirty-three years' standing I venture to predict that in the future such a connection would prove of considerable value to the colony, the more so as it is recognised in financial circles that the Bank of New Zealand is even yet far from strong, and our active co-operation with them would give enhanced stability to both institutions. " 6. In a recent Act you have arranged that the Government appoint an auditor for the Bank of New Zealand. We should have no objection to your adopting the same course with us, and appoint an auditor to examine and report from time to time to the Government on the condition of this bank. On the contrary, we should be glad if such an appointment were made, and in connection with it would merely ask in the interests of our business that such officer or officers as you may so appoint be sworn to secrecy. I have, &c, " (Signed) H. Mackenzie, "General Manager." This letter puts our position fairly before the Government, and you will observe by the last paragraph that we courted, before they dealt further with us, a searching inquiry by them into our
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affairs. As a matter of fact, we feel that an inquiry by a competent officer could only have the effect of materially strengthening our position with the public. I arrive now at the period when the Bank of New Zealand and our representatives came together to see whether a scheme of amalgamation satisfactory to all could be arrived at. At first the difficulties seemed insurmountable, and I here wish to state that no representatives ever met together with a more earnest desire to produce a scheme that would be fair to both parties and at the same time conserve the interests of the colony. In producing this scheme we were quite aware that it had to run the gauntlet of jealousy, party tactics, and other influences, which as they are apparent I need not mention. On the whole we are not disappointed at the result. The scheme has generally been accepted as giving the colony some guidance as to how the difficult position in which late events have placed the Government might be turned to account, by placing banking in New Zealand on a substantial foundation, by giving the colony relief through the properties in the Assets Company being taken in hand with a view to judicious liquidation, and by giving the shareholders of the Bank of New Zealand an opportunity of putting their institutions on a sound footing —those shareholders giving the Government in return all the security they have to offer. The main objection taken to the scheme is that the colony, having guaranteed the Bank of New Zealand two millions, is now asked to guarantee the Assets Company, but as a matter of fact the Bank of New Zealand are the only shareholders in that company, and consequently the two-million guarantee applies to both concerns. What this scheme designed to effect was the building up of a strong bank, and the separating of the dead assets, so that they could be handled without injuring the credit of the bank. On being satisfied that the Bank of New Zealand's capital was written down, and provision made to meet ascertained losses and for doubtful accounts, we proposed to put in our capital of £400,000, which would have added to the safeguards against loss to the colony through the guarantee of two millions. We then proposed to hand over all our assets, and the new bank was to have undertaken our liabilities, after an exhaustive examination and rejection of anything doubtful. The benefit you, gentlemen, were to have received in return would have been that you got shares in a strong institution starting with undoubted business on a new career possessing all the elements of success. Objection has been taken to the removal of the reserved liability from our shareholders, but it would have been manifestly unfair to have kept this liability hanging over your heads, while the reserved liability of the shareholders in the Bank of New Zealand was taken hold of by the Government to answer any deficiency in the realisation of the Assets Company. I will now review the success attending our institution—the Colonial Bank—in the shape of its earning-power, so that the public may see, if the proposed amalgamation had been carried out, the strength in this respect that we should have brought to the amalgamated institution. I propose to take a period of seven years from 30th June, 1887 —the date when the Bank of New Zealand difficulties first became apparent. You will at the same time, gentlemen, bear in mind how securities have depreciated, and the utter impossibility during the term I refer to, of conducting banking business without making losses. I therefore state that since the 35th June, 1887, we have, from profits, applied the sum of £165,836 17s. Bd. against depreciation in the value, of securities, in making provision for debts insufficiently secured, and in writing-off those that were bad. In addition to this we have, in the period to which I refer, been able to pay regularly a 7-per-cent. per annum dividend on our paid-up capital, augment the reserve fund by £17,000 (which now stands at £65,000), and to increase the sum carried forward by £4,265 Bs. 7d. I would like also to say that no return from rent or from any other source in connection with the properties which have come into the bank's hands and are unrealised, is ever taken into the bank's profit account. Every such source of revenue is applied to write down individually the amount the property stands at in the bank's books, until realisation or extinction of the debt.. The first list of such properties in the bank's hands sent in to the Tax Commissioner by us in accordance with the Act of 1891 amounted to £52,925. Our list up to Ist April of this year amounts to £45,418, and we are prepared to sell each and every one of these properties at the value set down in that list. Under the circumstances such results cannot but command your appreciation, but you may naturally ask in the face of them, why should this proposal to amalgamate have been made? The fact is that the late banking crisis in Australia, and the difficulties besetting the Bank of New Zealand, have thrown suspicion on all banks, and the most prudently conducted have had to suffer for faults not their own. It was forseen that the State assistance given to the Bank of New Zealand might detrimentally affect this bank, unless a portion of the Government operative accounts was given to us. Besides this, owing to the withdrawal of deposits, accommodation to customers has had to be curtailed, the earning-power of the bank thereby being lessened. No new business has been taken up for some considerable time—indeed, some hundreds of thousands of pounds of the best business in New Zealand has been offered to us and declined, simply because we have had to pursue a conservative course. It behoves the prudent to look beyond our own colony and forecast the possibilities in the financial world. There is no good disguising the fact that an augmentation of the bank's capital could now be most advantageously employed in increasing and consolidating our valuable business. While we were considering the state of affairs just referred to, it was suggested that an amalgamation of the two banks was possible and desirable. This proposal we, after serious and prolonged consideration, resolved to recommend to you in the form of the scheme submitted to the Government, in which we believed that our shareholders'interests were conserved in every possible way, and although the present attitude of the Government may prevent us from seeking to carry it out, it is now on record, and, seeing the position the Government occupies with the Bank of New Zealand, time will determine whether the proposals made were not only in the interests of the shareholders of both banks, but in those of the public, and were such as would have freed the colony from the position of embarassment which its recently-assumed responsibilities seem to be likely to entail upon it. The story is a long one, but I hope it has not wearied you. The attitude now taken by the Government in regard to the scheme renders it impossible for us to invite you to express your approval on this occasion. The following correspondence shows the position of
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matters at the present moment. I make no excuse for detaining you while the letters are read, for mutilations while being telegraphed occurred in those already printed. [The correspondence read by Mr. McLean will be found on another page. It comprises the letter of the Colonial Treasurer to Mr. John Murray and Mr. Geo. McLean, dated 22nd September, Mr. McLean's reply, dated 24th September, and the Colonial Treasurer's final communication of 24th September.—Ed. Banking Becord.] You will see that we have virtually withdrawn from the negotiations for two reasons —first, because we cannot permit our shareholders' interests in any way to be adversely affected by the liquidation of the Assets Company, and, secondly, because the Governmental influence already provided for in the suggested agreement, in the appointment of a president and auditors, ought not, in our opinion, to be increased by direct representation on the board, such direct interference with its ordinary business being likely to detrimentally affect the bank and lead to the withdrawal of many of its most valuable accounts. This latter point might possibly have been modified by negotiation— for example, by such Government nominee being sworn to secrecy—but the first stipulation was, in our opinion, fatal to the scheme. I shall be glad to reply to any questions that are asked me. With these remarks I beg to move the adoption of the report and balance-sheet. Mr. Keith Bamsay: Mr. Chairman and Gentlemen, —I have pleasure in seconding the motion for the adoption of the report and balance-sheet, and in again congratulating the shareholders on another prosperous half-year, and on the ability of the directors to declare once more a 7-per-cent. dividend. With regard to the amalgamation proposals, I think it will be generally admitted that the directors have taken the earliest opportunity of meeting the shareholders, and that in any action they have taken in this matter they have been actuated solely by the desire to benefit the Colonial Bank; and further, so far as the advantages are concerned, they are, as a matter of course, in a better position to judge than we are. At the same time, Sir, I must say, that I am altogether opposed to amalgamation. I came here to-day open to conviction, but I have not heard anything in the chairman's speech, though I listened to it carefully and attentively, that has in any way changed my opinion. In considering the question I think we may fairly confine ourselves to the two.points,.the need of the bank to amalgamate and its right to do so. In my opinion, Sir, neither exists, and I was very glad indeed to read in yesterday morning's paper that the bank had, in its ultimatum, effectually, so far as I could see at any rate, made it impossible for the amalgamation to take place. Sir, I look upon the whole proposal as politically bad and morally wrong. We have no right to ask the State to bear our burdens or take upon itself our responsibilities, and we have no need to do so. I am honestly convinced that the Colonial Bank to-day is in a strong financial position, in as strong a position as it has ever been in during its existence, and that it is quite able to go alone, and I think that all we require, Sir, is that the management should keep us strong, and at the same time take their fair share in the prudent development of the trade and commerce of the colony. Sentiment should not, perhaps, have an undue influence at any time in deciding a business matter, but the citizens of Dunedin, and the Dunedin shareholders, do no forget that the Colonial Bank of New Zealand owes its existence and chief habitation in this city to the enterprise of the Dunedin people, and I feel quite certain that they will not readily agree to it being absorbed by the Bank of New Zealand or any other bank unless far more convincing reasons are submitted to them than, with all due respect I say, have been submitted to the shareholders to-day. I have much pleasure in seconding the adoption of the report. Mr. Robert Watson made a few remarks about the scheme for amalgamation. Mr. J. Walker Bain (Invercargill) : Before addressing a few observations to the meeting, I wish you, Mr. Chairman, to answer a question. You have stated that there is an arrangement for deposits at Home covering a period of five years. Will you be good enough to tell the meeting what rates you are paying for these deposits at the present time ? The Chairman : That, I think, is a matter for the executive. We have various rates. None of them are very high, because when we have got more money than we wanted we have reduced the rate of interest. I think it is not desirable to say whit we are paying. We have never paid anything over 5 per cent., if that is what you mean. Mr. Bain : Well, Mr. Chairman and gentlemen, I came here to-day fully expecting a resolution to be brought before the meeting for the purpose of carrying out the amalgamation of the Colonial Bank with the Bank of New Zealand, as we had it placed before us some little time back. I was prepared to discuss the question of the terms of the amalgamation, but, as we have heard from the chairman's speech to-day, the matter has in a measure fallen through, so that there is really nothing before the meeting for us to discuss in that connection. I may state that lam here to represent a considerable number of shareholders in Southland who have asked me to attend the meeting to elicit as much information as possible before they were committed to the proposed amalgamation. I was prepared to discuss the question on its merits, and I should have gone into it most fully, but, as you have stated, Sir, there is no scheme before us, and I am debarred, therefore, from going over the whole ground covered by the agreement which has been published, and which was entered into by Mr. George McLean on the one part and Mr. John Murray on the other part. At the same time I should like to take the opportunity of stating that I think it is extremely unfortunate that any such scheme should have been listened to at all by the directors of the bank. Let the Bank of New Zealand be a State Bank if it will, but let the Colonial Bank be the people's bank. As the people's bank it has a future of great usefulness before it; a future that will carry out the terms of the prospectus issued some twenty years ago, a copy of which I hold in my hand, and which I was prepared to read to show the conditions upon which many of us took up our shares. I took up shares at first from a patriotic point of view, and I have never bought or sold or trafficked in shares in any way. I have always felt that the Colonial Bank has a sphere of usefulness, and, taking the reports which have been presented each half-year, I have felt fully satisfied that the affairs of the bank were carefully managed. I have felt further that we could not do better than re-elect the
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president and directors, and continue the good management which has existed so long. I may say that I have a feeling of great respect and sympathy for the Bank of New Zealand. I have been a customer of that bank ever since it started business in the colony, and if I could assist it in any way at all I should have great pleasure in doing so. Indeed, I go so far as to say that if it would help the Bank of New Zealand, I would, as a shareholder of the Colonial Bank, not object to the general manager, the inspector, and even our president going over to that bank. I should be very glad indeed, if it would relieve the Bank of New Zealand, to lend these gentlemen to it, as I have the greatest respect for the capacity, the energy, and the good faith which they have displayed in the management of the affairs of the Colonial Bank of New Zealand. But when we take into consideration that at each half-yearly meeting the president has told us that the bank is in a sound and healthy position, that its business is thoroughly good, and that the directors recommend a dividend of 7 per cent., which has been honestly earned, after ample provision has been made for all doubtful debts, the shareholders naturally ask: Why was this proposal made ? That is a question which shareholders have asked, and I subrnrt with a good deal of hesitation my, own opinion that it was a great mistake ever to have entered into any such negotiations. How 7 ever, that is done with, so far, and the directors had no doubt very ample reasons for their action. The president and others who know me are aware that lam a good deal connected with financial matters, and that is the reason I asked the question about the rates paid at Home for deposits. lam perfectly certain that if we take a stand to-day and say there must not be an amalgamation with the Bank of New Zealand there will be no difficulty in commanding a great deal of money. I believe that the bank is thoroughly sound and good, and that it is well managed, and I sincerely hope we will keep it so. I want to represent the number of shareholders who have deputed me to appear for them in this way : that they will not be prepared to listen to any proposals for amalgamation unless the Assets Company is completely severed at once from the amalgamated bank. But I sincerely hope, from the expressions of opinion we have heard to-day, that the shareholders will tell the directors that they are quite satisfied with the Colonial Bank of New Zealand as it is, that they have every faith in the directors, and that they wish them to go on pursuing the even tenor of their way, and conducting their business on similar lines to thdse'which have been adopted since the bank was established twenty years ago. Why, it is only twenty years ago on the 30th of this month, since the first meeting was held to elect the president and directors of the bank, and little did we think at that time that in twenty years we should be called upon to undo the good work which was then done. This is a local institution. The chairman has told us that there are 1,350 shareholders. I have gone through the share-list, and make the number 1,400; and of that number over 630—nearly one-half—are in Otago alone. It is a very safe position which the bank holds. The shares are well held, and there are 15,000 customers. I say there is every prospect of the bank continuing to do a good, sound, and safe business, and it would be an act of folly on our part if we did anything to bring to ari end an institution which is capable of doing so much good. I feel inclined to test the feeling of the meeting by proposing a motion to the effect that it is not in the interests of the bank to continue any further negotiations in the direction of amalgamating with the Bank of New Zealand. I am quite willing to bring my remarks to a conclusion by proposing that, if I thought such a motion as that would he acceptable to the shareholders. It is the furthest wish from my mind to do anything to injure the position of the Colonial Bank. I desire to help and strengthen and assist it in every way, and I think it would be a very good thing if the directors were to obtain an expression of opinion from such a meeting as this. lam informed that there has never before been such a meeting of shareholders as there is to-day, and the directors can see at once what a wide-spread interest is taken in this matter. I take a little blame to myself for not having previously attended meetings of the bank, because there are such things as loose control, indifference, and fatuity of confidence, all of which are dangerous, and it is well that those who are connected with an institution of this kind should be careful, and they should show their interest by attending the meetings, exchanging ideas, and strengthening the hands of the president and directors as much as they can by discussing at the meetings anything they think will be of advantage to the institution in which they are all interested. lam very glad that such an interest has been evoked by this action of the directors, and I shall be very pleased, so far as I can arrange it, to attend the meetings in the future, and I think that all those shareholders who are here to-day will hereafter consider it to be a duty to show by their attendance at the meetings, their interest in the proceedings of the bank, and that they will be quite prepared to show their confidence in the directors by coming to the meetings and passing the report after a fair discussion, for after all it is a great assistance to the directors to have a full and free discussion. I take it that my friends, Mr. McLean and Mr. Oliver, and the other directors, will be pleased to see the shareholders take an intelligent interest in the affairs of the bank, and will be prepared to listen to any suggestions which may come from any shareholders. I leave the matter entirely in the hands of the meeting as to whether I shall propose the motion I have thought of proposing—" That, in the opinion of this meeting, it is not desirable that any further negotiations should be prosecuted in the direction of amalgamation wrth the Bank of New Zealand." The Chairman : Do you propose that amendment ? Mr. Bain : I have not proposed it yet. The Chairman : There is a motion before the meeting. Mr. Bain : I admit it would have to be an amendment. If the shareholders do not wish to controvert the motion by an amendment, I should much like that some shareholder should take it up and propose such a motion as I have indicated. There are various other matters which might have been discussed, but what I wish to conclude by saying is, that I believe this bank to be thoroughly sound and good and well managed, and I repeat, therefore, it would be a mistake on our part if we sanctioned anything that would put an end to the existence of the Colonial Bank
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of New Zealand as it is now constituted. lam altogether opposed to anything of that kind. The bank has a useful purpose to serve in the community. It is a local institution—it has, as I have said, nearly half of its shareholders in Otage—and I feel there is every prospect of its continuing to do a sound business if we support it loyally and back up the directors, who, I believe, do the best they can. I am, at any rate, satisfied that they are both capable and willing to do the best they can in the interests of the bank. The motion for the adoption of the report and balance-sheet was then put and carried unanimously. A vote of thanks to, and confidence in, the directors and the officers and staff was moved by Mr. T. Brown, seconded by Mr. J. Arkle, and carried unanimously. The Chairman, in the course of his acknowledgement of the vote, remarked that, With regard to my friend Mr. Bain and the deposits, we want the people's deposits in this colony, and not in London, where, when there is a scare in the Australian and other banks, they come and take their money away. We want people to come and deposit —people who are here beside us, who look upon what we are doing, and whose confidence we can command. We have nowhere else to look for it but in London ; and here—if we take the deposits here—we know that the people who have deposits with us see what our management is, and we get their- confidence. So much for these London deposits. I would say this : I should not have said that we pay 5 per cent., as we do not pay anything near that, but I would rather- pay more here than I would pay less in London. Now, it is very well speaking, but you know what anxiety the directors of an institution like this must have had last year during that Australian crisis, and what care they took to strengthen their institution. People look at us as a small institution, but when you compare our position with that of the other banks in the colony as regards the proportion of capital and reserves to liabilities you will find we take a prominent place. I have just had the figures taken out to-day to let you see what that position is. Taking the last published balance-sheets, the Bank of New South Wales has a proportion per cent, of capital and reserve funds to liabilities of 13 - 48; the Union Bank, 12-18; the Australasia, 15-64 ; Bank of New Zealand, 9-43*; the Colonial Bank, 17-33; the National Bank, 12-31. If, therefore, you take our position as a matter of strength, we are the strongest bank in the Colony. ' . . . The shareholders need have no fear that any final arrangement will be come to in this or any other matter without full discussion being allowed them and their consent being received to the ratification. So long as we can carry our shareholders with us we are content.
1895. A special general meeting of the proprietors of the Colonial Bank of New Zealand was held at Dunedin on 14th December. The Hon. George McLean, M.L.C, the chairman of directors, presided, and there were present : The Hon. W. H. Reynolds, the Hon. W. D. Stewart, the Hon. W. J. M. Larnach, Dr. Hislop, Mr. H. Mackenzie (the general manager), and some twenty-five other shareholders. The Chairman said : Gentlemen, —We have called you together for the purpose of having our deed of settlement amended to conform with the Acts Nos. 4 and 6 of 1894 recently passed by the Legislature of this colony. It has been considered the more satisfactory course in the interests of the shareholders to thus make the alterations so that our deed of settlement should contain the actual laws governing the bank. We propose, therefore, to submit the resolutions I shall shortly read, and constitutionally have the alterations confirmed at the next general meeting which will take place on 27th March, 1895, so as to make the deed of settlement in accordance with the existing condition of the law. I would incidentally remark—although this is a special general meeting called solely for the purpose of altering the deed of settlement—that the circumstances of the colony at the time of our last meeting (26th September) were such as to call from me certain remarks foreshadowing a future policy which then appeared imminent. The remarks I then made may have had the effect of giving force and colour to the rumours which shortly afterwards became current outside to the effect that the directors had it in contemplation to make a call on the shareholders for the purpose of increasing the working capital of the bank. I have, however, the satisfaction to inform you that the directors do not consider a call necessary, as the capital and resources of the bank are ample for all its requirements. With these remarks, as Ido not wish to detain you, I will formally move the following resolutions : — " 1. That the deed of settlement of the Colonial Bank of New Zealand, and the existing laws, regulations, and provisions of the company as therein contained, be amended and altered as follows, viz. : (a.) By adding the following words at the end of clause 20 : ' Provided always that the board of directors may in their absolute discretion, and without assigning any reason, refuse to allow the completion of the transfer of any share or shares to any person of whom they do not approve as a transferee; and no deed or instrument of transfer of any share or shares shall be complete or operative to vest the share or shares therein mentioned or referred to in any person, or to relieve the intending transferor of such share or shares from liability in respect of such share or shares until such transfer shall be approved of in writing by the board of directors.' (b.) By inserting after the words 'That there shall be,' in the first line of clause 37, the words ' not less
* With regard to this statement, Mr. John Murray handed the following memorandum to the Press Association on 27th September: "Mr. McLean, at the Colonial Bank meeting yesterday, quoted from the last balance-sheets of certain banks' figures purporting to show the relative proportion of paid-up capital and reserves to liabilities, making out the Colonial Bank to be in that respect the strongest and the Bank of New Zealand the weakest bank in these colonies. Mr. McLean omitted to take into consideration the fact that, since the Bank of New Zealand's balancesheet was made up, two millions, which are in the strictest sense capital as liable for the debts of the bank, have been added, making the proportion of paid-up capital and reserves of the Bank of New Zealand to their liabilities 29-64 per cent., instead of 9-43 per cent, as he stated."—Ed. Banking Record.
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than five nor more than.' (c.) By adding the following words at the end of said clause 37 : ' The board of directors shall from time to time fix the number of directors, but until otherwise determined by the board of directors the number of directors shall be seven, and whenever the board of directors shall by resolution determine that the number of directors shall be reduced to any number less than seven, then and in such case the reduction shall be effected by not filling up any vacancy or vacancies in the office of director which shall have occurred or which shall occur until after the number of directors shall be reduced to less than the number for the time being fixed by the board of directors as the full number of the board.' " Mr. H. Mackenzie read the short Act passed last session of Parliament, to conform with which it was now proposed to amend the deed of settlement. The Hon. W. J. M. Larnach seconded the adoption of the resolutions proposed, and they were carried unanimously. This concluded the business.
The forty-first half-yearly meeting of the proprietors of the Colonial Bank of New Zealand was held in the bank, Princes Street, Dunedin, on the 27th March, 1895. The Hon. G. McLean, M.L.C, President of the bank, occupied the chair, and the other directors present were : The Hon. W. Downie Stewart, M.L.C, the Hon. W. H. Reynolds, M.L.C, the Hon. W. J. M. Larnach, C.M.G., M.H.R., Dr. Hislop, and Mr. P. C. Neill There were about thirty shareholders present. The report submitted to the meeting was as follows:— The directors have pleasure in submitting to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended the 28th February last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under- discount, and charging all expenses of management, rent, &c, and duly providing for bad and doubtful debt, amount to £13,664 7s. Id.; to this has to be added balance from last half-year, £8,227 lis. 9d ; total, £21,891 18s. lOd.; and there must be deducted land-, income-, and note-tax, £1,191 3s. 4d.; leaving .available £20,700 15s. 6d., which the directors recommend to be applied as follows: To payment of dividend at the rate of 6 per cent, per annum on the paid up capital, £12,000 ; to balance to be carried forward, £8,700 15s. 6d. : total, £20,700 15s. 6d. Upon confirmation by the proprietors of the foregoing appropriations, the dividend will be payable at the head office on and after the 28th March next, and at the branches on receipt of the warrants. The Hon. Richard Oliver, M.L.C, is the director who retires at this meeting, but as it is not at present the intention of the board to increase the number of directors beyond six, there is no vacancy to fill. Both the auditors retire from office; only one, Henry Rose, Esq., is eligible for re-election, and he offers himself accordingly. The Whangarei branch was closed on the 31st December, 1894. Balance-sheet as at 28th February, 1895. (Including London office at 30th November, 1894.) Dr. £ s. d. Capital—£2 paid up on £200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 107,556 0 0 Bills payable and other liabilities .. .. .. .. .. .. 531,310 2 4 Deposits .. .. .. .. .. .. .. .. 2,094,864 11 4 Balances due to other banks .. .. .. .. .. .. 470 6 4 Reserve fund .. .. .. .. .. .. .. 65,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 20,700 15 6 £3,219,901 15 6 Cr. — Coin, bullion, aud cash balances at banker's.. .. .. .. .. 447,477 6 6 Money with London brokers at call and abort notice .. .. .. .. 55,000 0 0 Notes of the balances due by other banks .. .. .. .. .. 24,714 110 Government securities, consols, &c. .. .. .. .. .. 170,407 4 8 Remittances in transitu and awaiting maturity .. .. .. .. 633,172 18 2 Landed property and bank premises .. .. .. .. .. 121,691 5 5 Bank furniture and stationery .. .. .. .. .. .. 9,834 15 3 Bills discounted and all other debts due to the bank .. .. .. .. 1,757,604 3 8 £3,219,901 15 6 Dr. Profit and Loss Account. £ s. d. Dividend at 7 per cent, per annum at 31st August, 1894 .. .. .. 14,000 0 0 Charges for the half-year, including rent, taxes, salary, remuneration to directors and auditors, and all other expenses at head office, thirty branches, and ten agencies .. .. .. .. .. .. .. .. 23,652 9 8 Land-, income-, and note-tax .. .. .. .. .. .. 1,191 3 4 Proposed dividend at the rate of 6 per cent, per annum on the paid-up capital .. 12,000 0 0 Balance .. .. .. .. .. .. .. .. 8,700 15 6 £59,544 8 6 Balance, profit and loss at 31st August, 1894.. .. .. .. .. 22,227 11 9 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. .. 37,316 16 9 £59,544 8 6 Reserve Fund. £ s. d. Balance, 31st August, 1894 .. .. .. .. .. .. .. 65,000 0 0
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The Chairman said : Gentlemen, —If you will take the report and balance-sheet as read, I shall exercise my privilege in moving their adoption, and of briefly comparing some of the principal items with those of the previous half-year. The note-circulation differs only by some £400, bills payable and other liabilities are less by £78,000, deposits have increased by £136,000, coin and bullion by £86,000, and remittances in transitu by £109,000; while advances have decreased by £161,000. I fancy; gentlemen, these figures ought to satisfy the most exacting as to the strong position of the bank, both in the colony and in London. The stagnation of the trade generally, in consequence of which customers require less accommodation than formerly from financial institutions, is the cause of the reduction in our advances to which I have referred, for we have called up no sound advances ; on the contrary, we are neglecting no opportunity of securing desirable business. Although the business of this bank applies almost entirely to this colony, yet as your directors could not without anxiety view the probable outcome of financial matters throughout the world, they decided for the present to maintain this bank in an exceptionally strong position. It will not be forgotten that in carrying out this determination the large amounts of coin and bullion held by this bank here meantime earn nothing, while in London our floating money earns at the present time comparatively little; still, as the maintenance of an extra strong position is, in the directors' opinion, paramount, they are determined, until financial matters assume a more settled aspect, to continue the policy indicated. Memory will hardly carry us back to a time when our principal products were lower in price than now. All the same, we must take heart. Bad times hitherto have not been unknown to us; the colony went through them, and was able to reap the benefit of the wave of prosperity that followed—and so, no doubt, it will again. Encouraging news comes to us of an improved demand and a hardening of prices for wool. The markets for wheat and kauri-gum also appear improving, while an opening seems likely to arise for our timber in the Home market. The frozen mutton, butter, and cheese trades are not as good as we should like to see them; but doubtless energetic colonists will find some means to overcome the momentary difficulty. We may not possibly be able to command the high prices hitherto obtained, but if regular markets with fairly payable prices be found it will speedily put an entirely different aspect on the trade of this colony. Indeed, it is not out of the range of possibilities that we may reap some benefit on the termination of the war between China and Japan, as new markets in those countries may eventually be opened for our products. With increased confidence and revival of trade an increased demand. for money will come and better rates for advances, for when people are prosperous they are able and willing to pay a fair rate for financial accommodation. With reserves so far unremunerative, which every hank has to hold, and of which, as I have explained, an exceptionally large amount is held by us, it is more than ever necessary, for the sake of profit, that a fair margin between lending and borrowing rates for money be obtained. Consequently it is evident that, as advance rates come down, so the rate which we pay depositors has also to be reduced. The lowering of this latter rate was, however, not decided upon until after careful consideration had been given to the subject,, as the reduction must necessarily affect a large number of thrifty people who supplement their incomes from interest on their small deposits placed with us, and to whom a curtailment of 1 per cent, on their investments is a matter of some importance. Gentlemen, with these remarks, I beg to move the adoption of the report and balance-sheet. Mr. Alexander Bathgate : Mr. Chairman and Gentlemen, —I rise to second the adoption of the report, and, in doing so, I think I may congratulate shareholders on the successful steering of the bank through another financial period. It is true that the dividend has been curtailed, but that was expected, and I think probably some shareholders will be gratified that the amount of dividend which is to be paid has been earned. It is also gratifying to learn from the balance-sheet, and from the comparative figures which the chairman has given us, that the board have been successful in their efforts to strengthen the bank's position; but there is one aspect of those figures which, I think, call for special notice, and that is that the deposits have increased by £136,000, because that indicates that the general public have every confidence in the bank, and rightly so. You referred, Sir, to some matters which seemed to indicate a coming improvement in things generally, and I hope the rise in wool and other matters may be the silver lining to the cloud; but, personally, lam afraid that we shall have rather hard times before us before the cloud of depression is lifted from the colony. Still I have no doubt the board will continue to pursue the cautious policy they have pursued in the past, and that all will be well. I have much pleasure in seconding the adoption of the report. Captain J. Stewart: Before you put the motion, Mr. Chairman, I might be allowed to express an opinion in reference to the future of this bank. There are a good many small shareholders who are very uneasy as to the danger- of a call, and a call similar to what was made by the Bank of New Zealand would be simply ruination—at least it would mean forfeiture of the shares. Now, Mr. Chairman, I would like to ask the question, whether it would not be better- to give smaller dividends, and thus do away to a considerable extent with the danger of a call? That, I think, would tend to increase the confidence of the public in the bank, and also add to your reserve fund. I might, even though I do not wish to be impertinent, ask the reason why, when the bank is in the very best position, with £65,000 of a reserve fund to a small capital of £400,000, the shares on the open market are at half-price ? I think it becomes the directors to do what they can to induce the confidence of the public in the bank. I would rather take no dividend for a number of years than have a call coming on me, and I imagine a good many of the shareholders would rather have that also. I would suggest that a smaller dividend and an increased reserve fund would go a long way to induce public confidence in the bank. The Chairman : I should, before putting the question, like to say, in reply to Captain Stewart, that our shares have certainly not fallen so much as other shares have. I think it is almost unnecessary to answer the question about a call, because we cannot employ the money we have at the present time. We are keeping strong, but we could even let out a lot more money and still be 13—1. 6.
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strong. What would we do with the money if we made a call ? That is the question. So far as I can see, there is not the slightest necessity for a call at the present moment. I never dreamt that any one looking at the balance-sheet would think of such a thing. The motion for the adoption of the report and balance-sheet was put and carried unanimously. The meeting then proceeded to elect Messrs. Henry Rose and Walter Hislop as auditors. Mr. Robert Watson proposed, and Mr. P. G. Pryde seconded, a vote of thanks to the directors and staff, which was carried unanimously. The Chairman : Gentlemen, —Speaking on behalf of the directors and staff, I feel much obliged to you for the vote you have passed. I would like particularly to say that the staff has been most energetic, for, as you know, these are not very easy to get through. The duties to perform are difficult, and with the condition of affairs throughout the colony and elsewhere just now it would require management more than mortal to avoid altogether steering clear of some bad debts. You will recognise also that the directors have a great deal to consider in connection with the working of the finances of the bank in these troublous times. We have to keep a large amount of coin idle in case of emergency, and the fact that so much coin is lying unproductive must have some effect on the dividend. lam sorry, gentlemen, that we have to pay you a less dividend. I am very grateful, on behalf of the directors and staff, for the vote you have passed. I may say that the staff, from the chief to the humblest official, are very energetic in the interests of the bank, and well deserve the vote.
Forty-second report of the directors to the half-yearly meeting of the proprietors, held at the bank, Dunedin, on the 25th September, 1895 : — The directors beg to submit to the proprietors the accompanying balance-sheet and statement of accounts for the half-year ended the 31st August last. The net profits for the half-year, after deducting interest paid and accrued on fixed deposits, rebating bills under discount, and charging all expenses of management, rent, &c, amount to £12,935 lis. 2d. ; to this has to be added balance from last half-year, £8,700 15s. 6d. : £21,636 6s. Bd. ; and there must be deducted land-, income- and note-tax, £1,656 3s. lOd. ; leaving available £19,980 2s. lOd. Pending the result of negotiations opened by the Bank of New Zealand for the purchase of this bank, as and from the 31st August, 1895, it is not the intention of the directors at present to deal with the balance, but to adjourn the general meeting on the 25th September until a date in October, by which time the wishes of shareholders, as expressed at an emergency meeting (shortly to be called, and of which due notice will be given), will be known. The directors regret to announce the death, since the last report, of Mr. Henry Rose, M.1.A., N.Z., one of the bank's auditors. To fill the vacancy until this meeting, they (under clause 100 of the deed of settlement) appointed by Mr. G. L. Denniston. The Pleasant Point agency was closed on the 27th March, 1895. Balance-sheet as at 31st August, 1895, including London Office at 31st May, 1895. Dr. £ s. d. Capital, £2 paid up on 200,000 shares .. .. .. .. .. 400,000 0 0 Notes in circulation .. .. .. .. .. .. .. 107,367 0 0 Bills payable and other liabilities .. .. .. .. .. .. 457,887 14 7 Deposits .. .. .. .. .. .. .. .. .. 1,947,921 13 5 Balances due to other banks .. .. .. .. .. .. 3,080 1 7 Reserve fund .. .. .. .. .. .. .. .. 65,000 0 0 Profit and loss .. .. .. .. .. .. .. .. 19,980 210 £3,001,236 12 5 Cr. £ s. d. Coin, bullion, and cash balances at banker's .. .. .. .. .. 363,087 7 2 Money with London brokers at call and short notice .. .. .. .. 45,000 0 0 Notes of and balances due by other banks .. .. .. .. .. 9,589 14 7 Government securities, Consols, &c. .. .. .. .. .. .. 168,131 1 5 Remittances in transitu and awaiting maturity .. .. .. .. 548,762 4 4 Landed property and bank premises .. .. .. ~ .. .. 125,399 15 2 Bank furniture and stationery .. .. .. .. .. .. 9,717 1 2 Bills discounted, and ali other debts due to the bank .. .. .. .. 1,731,549 8 7 £3,001,236 12 5 Dr. Profit and Loss Account. £ s. d. Dividend at 6 per cent, per annum at 28th February, 1895 .. .. .. 12,000 0 0 Charges for the half-year, including rent, taxes, salaries, remuneration to directors and auditors, and all other expenses at head office, thirty branches, and nine agencies .. .. .. .. .. .. .. .. 22,837 14 4 Land-, income, and note-tax .. .. .. .. .. .. 1,656 3 10 Balance .. .. .. .. .. .. .. .. .. 19,980 210 £56,474 1 0 Cr. £ s. d. I balance, profit and loss at 28th February, 1895 .. .. .. .. 20,700 15 6 Gross profit for half-year (after making provision for bad and doubtful debts, interest paid and accrued on fixed deposits, and rebate on bills current) amounts to .. .. .. .. .. .. .. 35,773 5 6 £56,474 1 0 Reserve Fund. £ s. d. Balance, 28th February, 1895 .. .. .. .. .. .. 65,000 0 0
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At the meeting, the Hon. G. McLean, M.L.C, president of the bank, occupied the chair, and there were about one hundred shareholders present, including the following directors : The Hon. W. Downie Stewart, M.L.C, Dr. Hislop, and Mr. P. C. Neill. The Chairman said : Gentlemen, —It so happens that the deed of settlement of the bank requires us to hold a half-yearly general meeting at a time when negotiations are pending for the purchase of its business by the Bank of New Zealand. Last year, as you will remember, negotiations took place between the representatives of both institutions for the amalgamation of the two banks, one of the conditions being that the Estates Company should be entirely separated from the Bank of New Zealand. These negotiations, for reasons which were explained to you at the time, we felt it necessary in the interests of our shareholders to break off. If the conditions on which this bank then insisted had been agreed to, the difficulties which afterwards arose, and which have been dealt with during the present session of Parliament, would have been avoided. Both parties, during the present negotiations, have, I believe, been anxious to come to a fair and equitable arrangement, but no agreement has been arrived at. It is not, at the present time at all events, desirable that the details of these negotiations should be made public. The provisions of " The Bank of New Zealand and Banking Act, 1895," have so far prevented such an agreement being come to between the two banks as we, in your interests, could agree to. Whilst the directors of this bank and the Bank of New Zealand may enter into a preliminary contract for sale and purchase, the validity of such a contract rests upon its subsequent ratification by the shareholders. Whatever your directors may agree to in the meantime will therefore be of no validity unless approved of by you. At present, your directors think that further consideration of the report and the position of the bank should be postponed to a convenient date, by which time we hope to be in a position to state definitely what course we shall recommend the shareholders to adopt. I beg, therefore, to move the adjournment -of this meeting until Wednesday, the 30th October, at 3 p.m. Mr. P. C Neill: I beg to second the adjournment of the meeting. The Chairman : Has any one anything to say to the adjournment of the meeting ? Mr. J. Walker Bain (Invercargill) : A motion for adjournment cannot be debated? . The Chairman : Only reasons for or against adjournment can be stated. Mr. Bain : In connection with the matter of adjournment I would like to say that I hope that the directors will give ample time to the shareholders to consider any proposal they may wish to submit for consideration. The matter is a very serious one and a very important one so far as the shareholders are concerned. I think that, instead of calling an emergency meeting, as stated in the report (which can be convened at seven days' notice), it is as well that the meeting should be adjourned to the 30th October, and I only ask, in the interests of the shareholders, that you put before them, as early as possible, the terms of the agreement. I simply wish to say this, that, so far as the shareholders I represent down in Southland are concerned, they have no objection to a sale to the Bank of New Zealand so long as the sale is for cash, definite—so long as we are relieved from further liability. That is what they asked me to state here to-day, and I take the responsibility of saying that. Speaking for myself, my own private opinion is that the bank should go on. From the statements you have made and from the reports that have been issued to shareholders, I am perfectly satisfied that the bank can continue to do a good and useful work in the community, but, if the directors think fit to bring about a sale and transfer, that is a matter for the consideration of the shareholders. The Chairman : I think, Mr. Bain, you should confine yourself to the question. Mr. Bain : It is a very important matter, Mr. Chairman, to 1,400 shareholders of this bank to know the terms of the sale and transfer. Just a few minutes ago I got the terms from the Act, which has been passed this session, and you will not object to my reading them for the information of shareholders. I know that the directors are anxious to carry the shareholders along with them, and that they will do their best in the interests of the shareholders, as they have done all along, so I am sure my friend the president will be glad that the greatest amount of information •should he given to the shareholders. This is what the Act says, and it is as well that the shareholders should understand it: "It shall be lawful and competent for the Bank of New Zealand to purchase and take over any other bank carrying on business in the colony, and for such other bank to sell and make over to the Bank of New Zealand the business and assets of such other bank, excepting such portions of the assets of the selling bank as the directors of the Bank of New Zealand and the auditor appointed by the Governor under ' The Bank of New Zealand Share Guarantee Act, 1894,' shall certify in writing to be in their opinion bad, doubtful, or valueless, and the directors of the Bank of New Zealand and the selling bank are hereby empowered to enter into a contract for such sale and purchase accordingly." So that the shareholders will have an opportunity of knowing the terms upon which this transfer is likely to be made—that is to say, that a winnowing process is to be gone through, and the good business is to be taken over and the bad is to be left. Mr. Arkle (Palmerston) : Allow me to say this, that, while it may be very desirable to sell to the Bank of New Zealand under certain conditions, as one of the original shareholders and one of the oldest customers of this bank, I should distinctly state that we are not prepared to chuck our business away. I believe we have a good, sound business, and I would not be prepared to sell it at a sacrifice. I think we have thorough confidence in our directors, and believe they will do their best in our interests, and it is not advisable at the present state of the negotiations to say much, but we leave the matter entirely in their hands. The Chairman: Just one word before I put the motion. Gentlemen, I would like to disabuse the minds of all the shareholders that there is to be anything else than a sale for cash. It- is a question of purchase, and for cash. I allowed Mr. Bain some latitude which probably I should not have allowed. He has stated the terms of the Act. It is those very terms of the Act that have precluded the two sets of directors from coming to an agreement, and some way has to be seen out of this difficulty before we can come to terms. I am sorry that any action of our own
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shareholders should have led to the appearance in the London Times of a cablegram to the effect that the shareholders of the Colonial Bank had determined to sell the institution. This is. evidence of the harm that can be done by the indiscretion of shareholders at this special time. The directors are doing the best they can in the interests of the institution and of everybody concerned. The motion is for an adjournment until the 30th October, by which time the directors hope to be in a position to lay something before you. As regards an emergency meeting, the directors have no idea of stealing a march upon the shareholders. We are going to have a deliberate vote of the shareholders. You need not be at all afraid of that. The motion for the adjournment of the meeting was then put and carried.
A special general meeting of the proprietors of the Colonial Bank of New Zealand was held in Dunedin on Bth November for the purpose of considering, ratifying, or rejecting the proposals contained in the conditional agreement for the transfer of the business and assets of the bank to the Bank of New Zealand. There was a large attendance of shareholders. Mr. George McLean,. M.L.C, president of the bank, occupied the chair, and the other directors—the Hon. W. H. Reynolds, M.L.C, the Hon. W. Downie Stewart, M.L.C, the Hon. W. J. M. Larnach, M.H.R., Dr. Hislop, and Mr. P. C Neill—were all present. The Chairman: Gentlemen, —We have called you together on this occasion to take into consideration an agreement entered into with the Bank of New Zealand for the sale of this bank's business to that institution, which agreement has received the sanction of Parliament. I will later on propose a resolution to the effect that it be ratified and given effect to. The contract is one that does not give unmixed satisfaction to your directors, but it is the result of long, anxious, and tedious negotiations, and embodies the best terms they could procure for you. It only remains for you now to say whether you will accept or reject it. One of the main conditions that your directors had in view throughout the negotiations was that shareholders should be released from all further liability on their shares. On reference to the agreement you will see that, with the exception of the " C " list of accounts, which have very liberal reserves by way of security placed against them —consequently no great liability should attach to them—and the ordinary drafts and remittances, which have to run off, and on which the risk of any liability is remote, the purchasing bank guarantees to pay all deposits and other liabilities, so that practically shareholders are released from all further liability. The agreement embodying the terms of the sale of this bank has been open for inspection at the several branches for some time, and has also been published in full in the principal newspapers throughout the colony, so that most of you have doubtless become acquainted with itsterms. For the benefit of those who have not had an opportunity of doing so, I shall here briefly state the leading features. The sale is to be based upon our balance-sheet as at 31st August last,. and is to date from that period. As you are aware, that balance-sheet shows the assets to be £3,001,236, while the liabilities amount to £2,516,256, the difference being £484,980, representing capital, reserve fund, and undivided profits. The Bank of New Zealand is to take over the assets comprised in the first six items in the balance-sheet as they stand in our books, subject to a reduction in the value of furniture and stationery, the amount of which has been agreed upon. The general advances have been subjected to the most searching investigation possible. Every advance account in our books has been thoroughly overhauled, from the largest to the smallest, first by the inspecting officers of the Bank of New Zealand ; subsequently by the directors of that bank ; and finally by the Government Auditor. The result of this investigation was that the accounts were classified under four headings. Those in the "A" schedule, amounting to £927,197, were taken over unreservedly. Those in "B " and "G " schedules, amounting to £703,077, the directors of the Bank of New Zealand wished to further investigate, and, pending more experience of their working, insist upon retaining the sum of £327,305 in reserve by way of security. Here I may say that many of these accounts have not given us anxiety, while some of them are as operative and profitable as any in the books of the bank. The assets comprised in the "D " schedule include certain inoperative accounts, and amount nominally to £102,274, which assets are retained by this bank for realisation. It will be seen, therefore, that the Bank of New Zealand is to take over as good— inclusive of the "A " schedule —assets amounting to £2,195,884, less allowance on furniture and stationery, and further has agreed to take over those in " B " and " C " schedules, amounting tO--£703,077, subject to realisation, against which it is to hold in hand £327,305 of the purchase-money. The total amount to be paid to you in the meantime by the Bank of New Zealand will be £2,643,190, less liabilities which they take over amounting to £2,509,284, the difference between these amounts, £133,906, being available in cash. In due course we shall also receive such portion of the £327,305 as may not be required for deficiencies in accounts in the " B " and " C " schedules ; and we shall also receive whatever amount is realised from the assets comprised in the "D " schedule. From these several sources we hope for a substantial sum per share yet to be realised for distribution amongst shareholders, the amount of which will depend on the realisation of these accounts and the state of business in the colony until this has been done. During the investigation, while we cannot complain of the Bank of New Zealand directors exercising every care to protect their own institution, yet from our own point of view we think that they have kept in hand more money than is necessary. They said in effect—" If you insist on freeing your shareholders from all liability, we must make ourselves absolutely safe." Doubtless you will all realise what a wide divergence of opinion there usually exists in the valuation of securities pending an investigation as between buyer and seller. In fact, it is often impossible to say, short of realisation, what the values of certain securities are. After discussion and very close investigation of some of these securities, it may be that our officers have taken a too sanguine view of the values of such securities, considering the protracted depression and the general shrinkage which consequently has taken place in values of all properties. On the other hand we think the views held by the other side were to a large extent extreme in the opposite direction..
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As to the acquisition of our business, we have no doubt that its value to the Bank of New Zealand will be more than its directors estimate. They secure, next to their own, the largest exchange business in the colony and the excellent advance business which they much require, and which, in no other manner, could they obtain in the present condition of the money-market, except by cutting rates and taking accounts from other banks. This, for them, would have been a suicidal policy, for, in lowering rates to customers of other banks, they would be bound to lower their own also, consequently their earning-power would be considerably lessened, and this would lead to a very undesirable state of things, and good for no institution in the end ; lastly, they get their most formidable rival out of the way. With the acquisition of this bank's business and the assistance they have received from the colony, the position of the Bank of New Zealand will thus be remarkably advantageous. There are obvious reasons which have influenced your directors in adopting the course which they have. As indicating the radical changes which have recently taken place in banking in the colonies, it may be stated that the dividends of other banks, some of them the oldest in Australasia; have during the past few years gone down to fully one-third of what they were, and the shares of those banks have been selling at considerably less than one-half of the prices ruling a few years ago. But for the intervention of the Government of New South Wales, the Australian banking crisis would have extended to New Zealand, in which event it is difficult to conjecture what the consequences all round would have been. During that period some of our shareholders, seeing the calls on shares that were being made on financial institutions in Australia and here, and fearful of a like trouble coming to them, began pressing their shares on the market to such an extent that sales were made as low as 13s. 6d., a circumstance that adversely affected our credit. This unsettled state of business, coupled with the withdrawal of deposits, occasioned great anxiety to your directors. As a consequence of that crisis we have had deposits withdrawn from us to no less an amount than £522,000, which naturally necessitated the restricting of our advance business, and compelled us to keep ourselves in a stronger position than we previously had considered it necessary to do. This, you must remember, was indicated by me to you at the time, and I also sounded a note of warning as to how these changes were likely to affect our future position and profits* Were it necessary to do so now, the fact of withdrawing advances would cause little inconvenience, as plenty of money is available in other banks to take up accounts, and we should be affected only in the loss of earning-power; but at that time every bank was looking to its own protection, and calling in advances to meet withdrawals of deposits which were going on all round, and so strengthening their position. Under these circumstances, pressing customers for money and calling it in from them weakened many accounts which otherwise would have been considered good, in addition to which the extraordinarily low price of all New Zealand produce prevailing at the same time placed some constituents in embarrassed circumstances who had hitherto been in satisfactory positions, and freedom from bad debts and depreciation in our securities was impossible. I would like to remind you here that such a curtailment of business as I have mentioned means a serious blow to the earning-powers of the bank, and that accounts which, when surplus profits are good, may rank in the doubtful list —for ample provision can be made for them—fall into a lower grade when the surplus profits do not come up to the necessary amount of provision required. Were it therefore not for the complete change that since the Australian crisis or within the last few years has come over the system of banking, making it necessary to rely more on paid-up capital than on deposits, the directors would not have considered it desirable to pursue the course they have done in entering into the negotiations now under consideration. I have now placed the whole matter before you. In order to prevent proxies being used contrary to the instructions or intentions of the shareholder giving them, special proxy-forms were prepared and sent to every shareholder in the colony, and plenty of time has been allowed for their return. On these forms shareholders have been specially asked to vote for or against the approval of the agreement, and it is entirely for the shareholders to decide whether or not they will ratify the contract. Should the result of the voting be to approve of the contract, the directors —and I am sure most of you —will part with the property with great regret, and with a feeling that, being the only colonial banking institution whose entire interests were centred in New Zealand, it has not, from its beginning, received that general support—especially from the Government of the colony—which it had a right to expect. The outcry against parting with the institution I find chiefly traceable to those who have hitherto shown no sympathy with, and have little or no interest in, the Colonial Bank of New Zealand. With these remarks, gentlemen, I beg to move the following resolution : "That the contract of sale and purchase, bearing date the 18th day of October, 1895, executed by and between the Colonial Bank of New Zealand as the selling bank, and the bank of New Zealand as the purchasing bank, and laid upon the table of each House of the General Assembly on the 18th clay of October, 1895, and the sale and purchase thereby contracted for be and the same are hereby ratified and confirmed." Mr. J. Arkle, Palmerston, seconded the resolution. After a long discussion, the resolution was put to the vote, and on a show of hands there was an overwhelming majority in favour of it. A ballot was suggested, and voting-papers were distributed to the shareholders. The auditors of the bank, Messrs. Walter Hislop and G. L. Denniston, acted as scrutineers of the ballot, which resulted as follows : For the motion, 134,551 votes; against, 6,215 votes. Share- Representing holders. Shares. Votes - For the motion ... ... ... 719 134,551 5,995 Against ... ... ... ... 43 6,215 271 Informal ... ... ... .... 9 1,855 90 771 142,621 6,356 14—1. 6.
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The Adjoukned Half-yearly Meeting. The adjourned half-yearly meeting of the Colonial Bank of New Zealand was held on 20th November. The Hon. Geo. McLean, M.L.C, presided, and the following directors (in addition to twentyfive shareholders) were also present : The Hons. W. D. Stewart, W. J. M. Larnach, and W. H. Reynolds, and Mr. P. C Neill. The Chairman said: Gentlemen, —This meeting, as you are aware, is a further continuation of the half-yearly meeting of the 25th September, which was first adjourned to the 30th October and then to this day, in order to allow the special or extraordinary general meeting called for the Bth November to be held and the contract for the sale of the business of this bank to the Bank of New Zealand tobe considered and discussed, and the sale either ratified or rejected. As the result of that meeting was the almost unanimous ratification of that contract by the proprietors of this bank, and as the effect of that contract is to dispose of our business as it stood on the 31st August last, there is no business now to be brought before this meeting save and except the formal adoption of the report and balance-sheet for the half-year ending 31st August, 1895, which were laid before you on the 25th September last, and Ido not know that even that is essential to be done. I have to inform you that the business of this bank was taken over by the Bank of New Zealand on Monday last, the 18th instant, and that this bank is now only carrying on such business as is necessary for the liquidation of its affairs. There is one other circumstance I would like to mention to you—viz., that a large number of the staff of this bank throughout the colony has been taken over by the Bank of New Zealand. This will relieve the bank at once of a heavy expenditure, and there are ; indications that others of our staff will be required later on. I therefore beg to move that the report and balance-sheet be taken as read, and that they be adopted. The Hon. Mr. Larnach seconded the motion. Mr. Keith Ramsay asked if there was anything to inform the shareholders with regard to the liquidation of the bank. The Chairman replied that the matter was engaging the serious and most anxious attention of the directors at the present moment. They were very anxious that it should be done expeditiously and well. They had not come to any decision yet as to who was to liquidate, but they were giving the matter their very earnest consideration. Mr. Ramsay asked if the shareholders were to have no voice in the liquidation of their property. The Chairman said that the directors would submit the matter to the Supreme Court, and it would be for the Judge to say whether he approved of the liquidator recommended by them or not. Captain Stewart asked if it would not look a little more fair if the directors nominated one and allowed the shareholders to nominate one before the matter came before the Judge. The Chairman replied that it was for the Judge to say who was to be the liquidator, no matter who the shareholders or the directors said it was to be. The responsibility rested upon the directors now, and, as he had already said, they were giving the matter their anxious consideration. Evidently the shareholders were not taking a very active interest in the matter, as only a very few were present that day. Mr. Ramsay said the explanation was that no notice of the meeting had been given in the newspapers. The Chairman said that circular-notices had been in the usual manner sent to each shareholder. The motion was put and carried without dissent. The Chairman said the only other business was the appointment of auditor. He proposed Mr. G. L. Denniston. Mr. Ramsay seconded the motion, which was carried. COLONIAL BANK OF NEW ZEALAND (IN LIQUIDATION). A meeting of the shareholders of the Colonial Bank (in liquidation), to make a recommendation as to the appointment of liquidators, was held at Dunedin on 22nd January. The late directors, the provisional liquidators, and about seventy shareholders attended. Mr. K. Ramsay, chairman of the provisional liquidators, presided, and explained that the delay in the distribution of the first £100,000 was due to him. Messrs. Larnach and Vigers were acquainted with the bank's affairs, but he had to thoroughly inquire and investigate before he could sign an affidavit applying to the Judge. Progress had been made despite the holidays, and they had been able to arrange with the Bank of New Zealand to take over several of the accounts, and to relieve several thousands held in reserve a.gainst them as security. Negotiations were going forward concerning a considerable number of securities. In reply to a question, the chairman said the hank register closed when the bank went into liquidation. By 33 to 31 it was decided not to allow those who were not shareholders to remain in the room. This applied to Mr. V. M. Braund, of Wellington, and Mr. A. C Begg, who had been suggested as liquidators, and Mr. W. C Macgregor, who had been acting as solicitor for some shareholders. The Hon. Mr. Larnach, Mr. Keith Ramsay, and Mr. W. B. Vigers were proposed as liquidators by Mr. R. Watson. Mr. J. W. Bain, of Invercargill, proposed Mr. W. Brown. In reply to a question, Mr. Bain said he would not take office himself. Messrs. W. L. Simpson and A. C Begg were also proposed. Three scrutineers were appointed. Mr. Bain asked: Do the provisional liquidators say, from their own knowledge, that the balance-sheets recently placed before shareholders were correct? If not, who are responsible for . these balance-sheets being incorreot ?
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Mr. Ramsay answered that the provisional liquidators had nothing to do with that matter at all. If the balance-sheets were incorrect the directors were responsible, not the liquidators. Mr. Bain asked if the provisional liquidators have had a proposal submitted to them to sell the securities of the bank at a discount to the Bank of New Zealand, which would mean a release to the Colonial of some thousands of pounds. Mr. Ramsay thought the question a most improper one, but he would answer it by a direct negative. Mr. Bain also asked, whether it was not desirable that the meeting should limit the power of compromise, or make a recommendation to that effect ? Mr. Ramsay replied that no such power was yet given, and it rested with the Judge to give or refuse such power. Mr. Bain : But he will be guided by expressions of opinion from the shareholders. Mr. Ramsay: Mr. Haggett tells me that such power cannot be given without the sanction of the Court; that each individual case will require to be brought before the Judge. Mr. G. McLean, late chairman of the board of directors, spoke as follows: Gentlemen, —I may ask your indulgence, I think, as the best-abused man in the place, while I address a few words to you. I think there has been much misrepresentation in this canvassing business for the position of liquidators, but I certainly need not pay much heed to it, because I am perfectly satisfied that those gentlemen who are putting up for liquidators would not sanction the misrepresentation that has appeared in the papers throughout New Zealand. I feel certain that they would be no parties to it, and lam quite sure that the great bodies of the shareholders have no sympathy with it. The directors, in the course of their duty, had to nominate three provisional liquidators. I suppose, gentlemen, that had they nominated three angels from heaven there are some who would have found objection to them. Well, the responsibility rested on us to nominate them, and I believe myself that in the gentlemen named we have a combination of qualifications such as must produce the best results for the bank—that is, for you, gentlemen, the shareholders. That was, and is, my firm conviction, and in saying it I do not wish to cast any discredit on those other gentlemen who are putting up for this position, and who are well-known and valued citizens. This meeting is called by the liquidators. The directors have no share in it. It is the liquidators who are in possession now. The Judge remarked when the application was made that the nomination of liquidators was left over till the last moment. Gentlemen, when is the last moment? We had no idea that the Judge was going away for a holiday, but as soon as w 7 e found that he was going away the directors felt that the responsibilities were such that they should not keep the position vacant until he came back. Besides that, they were very anxious that this money should be distributed, and there were reasons given them why the directors should not distribute it. Of course, on Mr. Ramsay coming in it could not be expected that he would make the declaration before the Judge that was necessary for the distribution of the money without first carefully looking into the affairs of the bank, and I say that he did investigate its affairs as quickly as any man could do. Now, I will show how the newspapers misrepresented matters. In the newspapers it was stated that there was nothing coming to the shareholders, and that probably there would be a call. Another misrepresentation was that the directors and officers of the bank had been selling their shares. Another was that the directors owed the bank money ; and it was claimed as a great thing that the getting of power to compromise had been frustrated. Well, he would have something to say about that by-and-by. Then paragraph after paragraph was set forth from the chairman's speeches. A whole list of quotations was given frOm what he had said at different times. Now, I desire to say that the circumstances and conditions warranted every statement I have made, and that the statements were perfectly correct. I say that positively ; and I say that I was perfectly justified in saying all that my speeches contained, taking them all through. But it is most unfair to take pieces out of a man's speeches—a little bit here and a little bit there—and not to put in the qualifications that appeared in the speeches. Take what was said in March, 1893. Surely one is not to be held responsible for the condition of things in future years, but I am supposed to be responsible for years ahead, and to predict everything for the bank in these statements. I am now going back to the year 1893—the time just before the great banking crisis—which, I suppose, all these people have forgotten all about. In March, 1893, I then spoke of shares being thrown on the market; in September I spoke of the panic and of banks shutting their doors, and I gave a note of warning to shareholders. They do not quote these things in the extracts they make from the speeches. In February, 1894, I spoke of the low price of products affecting the country; and in September, 1894, I expressly gave a severe warnrng as to the future outlook. I said words of encouragement and hope, which are taken up and reprinted, but no mention is made of the warnings which I gave. They are not set out at all. At the September meeting I spoke strongly of the amalgamation scheme with the Bank of New Zealand ; and I said then, and say now positively, that it would have been a good thing for the bank and for the Bank of New Zealand, and a good thing for the country, had that scheme been carried out. I say that perfectly plainly and distinctly. In March, 1895, in addition to the words of encouragement I gave you, I told you that the outlook for profits was not good, and that the dividend must be reduced, and you were paid a less dividend. In November, 1895, there were negotiations for the sale of the bank, and no dividend was declared. Have you all forgotten the terrible panic of 1893, in which numerous banks shut their doors, and when it was only by the good grace of the Government of New South Wales that every bank in the place did not shut its doors, and yours amongst the number ? Do you think that the directors had not great responsibilities on their shoulders then? I say, and say it advisedly, that there was then a danger in every word that proceeded from the mouth of the chairman at this table. There was a feverish state amongst the depositors, who were getting anxious about their money in all the banks. You all know the saying that misfortunes never come alone, and have all probably had proof of that. You have all had knowledge of men who were very prosperous in business—extraordi-
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narily so—and yet, through no fault of their own, through bad debts coming upon them from one day to the other, their estates have gone to the bad, and, from being wealthy, they have been unable to pay 20s. in the pound. Gentlemen, I mean to say that I made no statement which could not he verified, but there was a danger in every statement I made. Suppose I had come and said with a poor mouth, " The capital must be written down." Then, I venture to say, the probability is that the doors of the bank would not have been open for three days. And where would the shareholders have been then ? Instead of receiving a good amount for your shares, the probability is you would all have been paying calls. Then, as you know, we lost a large amount of deposits, and that was a loss of earning-power. If you lose £500,000 of deposits you lose so much earning-power, because your expenses are the same. Then, since the panic we have been obliged to double the amount of money we kept in hand. If you have £300,000 both here and in London and a large amount of money lying in the coffers and are receiving nothing for it, that, of course, interferes very much with your dividend or profits; but you could not in these ticklish times lay out your money—you had to keep it. You see now all the banks declare 35 per cent, liquid assets, but I say the banks will not do very much so long as they keep that amount of liquid assets, especially at the present time. We had a very large amount in London, and I venture to say we did not get over -J- per cent, per annum for it. Then, we had the Legislature taking the Bank of New Zealand in hand. That was a bad blow to this institution. It gave the Bank of New Zealand considerable strength in competing, and I can assure you that, when in connection with that legislation we got into Committee and saw the large amount (£2,350,000) that had to be written off that institution, I began to get afraid as to what would probably take place respecting our own institution. A feverish state of excitement prevailed, and there was a terrible load on the shoulders of the directors. During that panic in Melbourne there was no sleep for your directors because of the fear that any day might bring the crisis to New Zealand, and it was only through the Government taking the matter in hand that a crisis was prevented. Whether it was good judgment to take it up or not is another question. The Government were responsible to the country, and the country approved of every action that they took at that time, and, although it was not done the way I proposed to do it, they had the responsibility, and they may have been right and I probably wrong. Then, to avoid a panic in New Zealand last year the Legislature further strengthened the Bank of New Zealand, and would you like yourselves to go on and fight a battle against an institution backed up and made strong by the colony ? Our difficulties at the time these panics were going on were exceptionally great. Shares were being forced into the market at any price they could get, and this was ruining our credit. They went down to 135., and that completely damaged your credit, and during these negotiations for the sale of the bank I had large numbers of people pleading with me, and pleading no doubt with my colleagues. They said they did not mind what they got for their shares so long as they got clear of the reserve liability on them. Gentlemen, it is said we might have written down our capital and have made a call; but what would have been the effect of that policy? Your shares would have gone down to nothing, and we did not require a call, because we had too much of other people's money ; but had we written down our capital we would have had to make a call in order to show the public that there was something between them and loss, That is the use of a call. Although you do not require the money and cannot make use of it, it has to be called up. Then, suppose you had made a call, the shares would have gone down to nothing. The history of that I will show you presently from the experience of other banks. During this time, when the panic took place in Melbourne, we know that a lot of banks that were thriving, paying good dividends, and making good reports, in a few days through runs upon them had to shut their doors. Mr. Barron : I do not like to interrupt, but really a good many who are present would like to get away. The Hon. G. McLean : I will not be two minutes. Probably Mr. Barron does not want to hear, although others will give me the justice of a hearing. There have been misleading statements made, and probably my friend himself has circulated them and does not like to hear them refuted. I will show how it is you have reason to be thankful: Banks that shut their doors made satisfactory statements of their positions, though shareholders are now paying calls and most of them getting no dividends. Still they did not abuse their directors. Had the Government of New South Wales not come to the rescue, no doubt the same panic would have shut the doors of all the banks, and probably yours, for no bank in the world could long stand a run in such a panic as took place in 1893. In the beginning of that year, taking the published list of prices, the shares of banks doing business in this colony, the Bank of Australasia were quoted at £90, New South Wales £61, Union Bank £54, while now they are quoted at £60, £29 10s., and £28 respectively; the fall in the value of each share being—Bank of Australasia, £30; New South Wales, £31 10s.; and Union, £26. I wonder how many of you could stand such a fall in shares as that ? The National Bank wrote off their capital some time ago to the tune of £250,000, and their shares have never got above the value of the last call of 30s. made on their shareholders, and it is only lately this bank has begun to recover its lost prestige. The Bank of New Zealand has altogether written off £3,600,000, and its shares are w T orth nothing, while its shareholders are now finding more capital. You have sold your business to them, whereby they greatly strengthen their position, and by calmly and quietly liquidating you will be likely to get a fair amount for your shares—you are practically clear of liability and in a haven of safety. The colony has taken the Bank of New Zealand in hand, putting it in a strong position to compete with others, and you cannot be shutting your eyes to the war of rates going on in connection with the acquisition of business. Indeed, if you were in the fight at the present time lam sure you would not feel very comfortable. The Bank of New Zealand can show £3,000,000 standing between their depositors and loss, and backed up by the colony. I am sure you would all think seriously before entering into competition with euch a powerful com-
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petitor. These are reasons for the sale of the bank. They drove a hard bargain, and with prudent management they should succeed, but they would have to endure much jealousy and ill-will, and statements such as that Ministers will have access to customers' accounts are and will be made for political purposes, even though such statements are a delusion ; but they will likely die at the close of the next general election. Such matters and all uncharitableness the Bank of New Zealand will have to live down, and can do so with such a powerful backing as they have, and certainly the colony is better with one strong institution than two weak ones. Now, gentlemen, I will come to the next matter. A great amount of credit is taken for frustrating the application to get power to compromise. It seems to me there is some introduction of the political element into this matter, which should certainly be kept out of all financial transactions. I venture to tell you candidly that unless there is power of compromising without appealing to the Judge your shares will not realise what they ought to do, aud that if any shareholders are taking credit to themselves over this matter they are taking credit for having done a very bad thing for the bank. When we put liquidators there we ought to trust them, and if the bank had been wound up under its own constitution, as it ought to have been, then the liquidators would have had power to compromise. I hate to have political matters brought into bank business. It is one of those things that should never be done. Then, what do we find stated ? That the directors are selling their shares. Gentlemen, the directors have never sold a share for the last eighteen months, nor for a longer period. For myself I never deal in shares—l hold what I have got to the end. The directors are large shareholders, and have not sold their shares, neither have the officers of the bank sold shares. Officers of the bank have acquired shares lately, and that shows that they, at all events, do not agree with these statements about the directors issuing false balance-sheets. As to owing money to the bank, not one of the directors owes the bank a shilling ; and it should go forth to the public that these slanderous statements, made for the purpose of affecting the selection of liquidators, are baseless. Then, it was stated in the circular that Mr. Ramsay was an auditor of the bank. Mr. Ramsay left the bank as auditor in February, 1892, and has never been auditor since, so that cannot be brought against his being a liquidator. I say, gentlemen, that whatever the result of your voting may be, and I say it emphatically, proxies have been got by misrepresentations all over the colony. We have seen that meetings of small knots of shareholders have been held, and it has been telegraphed all over the colony that such-and-such shareholders have unanimously decided to support certain candidates as liquidators. Why was that done ? No doubt it had its effect all through New Zealand; but is that fair? I advised everybody to allow the shareholders to take their own way. lam certain there is a large body of shareholders who are quite satisfied with what the directors have done, and who never wanted to be troubled to vote on this question at all. I say the directors have had a hard time of it, and have done everything it was possible to do for the interests of this institution. I have myself worked for it night and day. I could not have been induced to leave the bank on any consideration. I never would leave a thing in difficulties, and all the directors agreed with me to see it out of its difficulties. I am sorry, gentlemen, to have to keep you waiting so long, but in justice to the directors, who have fought a very hard fight, I do not think the hard words should have been said about them that have been said. A ballot was then taken. The result of the voting is that the provisional liquidators will be recommended to the Judge for the position of permanent liquidators. The voting was as follows : Vigers, 4,089 votes, 95,856 shares ; Ramsay, 3,914 and 9,228; Larnach, 3,327 and 77,627; Simpson, 2,687 and 59,912 ; Begg, 2,341 and 48,468 ; Brown, 2,023 and 42,404.
15—1. 6.
EXHIBITS.
BANKING COMMITTEE, HOUSE OF EEPEESENTATIVES.
ERRATA. Exhibit No. 15. Beerescourt Estate. —Balance-sheet, 31st March, 1895 (page 140): Erase "Estates Company," and insert "Capital." Beerescourt Estate. —Profit and Loss Account, 31st March, 1895 (page 140) : Erase " 7d.," and insert " 9d." Lockerbie Estate. —Profit and Loss Account, 31st March, 1895 (page 141) : Insert "By " before " Sheep £2,504 lis. sd. " ; insert " To " before " Balance," and read " £1,098 12s. Id." as in first column. Matamata Estate. —Profit and Loss Account, 31st March, 1895 (page 142): Read "£4,944 lis. 6d." as in first column. Rangiuru and Ohauiti Estates. —Profit and Loss Account, 31st March, 1895 (page 144) : Read " £713 os. 3d." as in first column. Auckland Agricultural Company. —Profit and Loss Account, 31st March, 1895 (page 145) : Add following note after statement: " Loss as above, £4,974 19s. 6d.; amount written down on account of sheep not reinstated, £6,030 65.; actual profit earned, £1,055 6s. 6d." Albury Estate. —Balance-sheet, 31st March, 1895 (page 145) : Under item " Bank of New Zealand Estates Company, &0.," erase " with," and insert " to." Awatere Estate. —Profit and Loss Account, 31st March, 1895 (page 146): Add following note after statement: " Loss as above, £5,603 13s. 4d. ; amount written down on account of sheep not reinstated, £4,629; actual loss, £974 13 4d." Eskbank Estate. —Balance-sheet, 31st March, 1895 (page 147) : Under " Petty cash," erase " 9d.," and insert ■' 7d." Exhibit No. 16. Statement of Receipts and Expenditure, &c, 31st March, 1895, to 31st March, 1896 (page 150): Under " Expenditure—Lands purchased, £5,542 lis. 0d.," erase " lis. 0d.," and insert " Is. Id."; under " Rent, £2,642 2s. 10d.," erase " £2,642 2s. 10d.," and insert " £3,642 2s. lOd." Station Properties transferred to Assets Realisation Board, as at 31st March, 1895 (page 151): Under " Riverslea," erase "£2,144 os. 0d.," and insert " £2,111 os. Od."
HOUSE OF REPRESENTATIVES. Banking Committee.—Register of Exhibits.
ixhibit. lescripi lion o) lit. ian< in. By whom handed in. Remarks. [0. 1 to. 2 fo. 3 fo. 4 fo. 5 fo. 6 fo. 7 <o. 8 fo. 9 fo. 9a fo. 10 Balance-sheets, Bank of New Zealand, from 1888 Statement, legal expenses, banking legislation Amount of money paid to Mr. John Murray Circulars to shareholders (3) Hean's message to London Board Statement, furniture, &c. Amount received, first call of £500,000 Amount received, second call of £500,000 Details of administration Details of administration Balance-sheet, Bank of New Zealand Estates Companv (Limited), 31st March, 1896 Amount written off, Bank of New Zealand, New Zealand, Australia, and Fiji Transfer of shares, Bank of New Zealand, since beginning of year 1893 Issue £2,000,000 guaranteed stock Combined balance-sheets, Bank of New Zealand Estates Company and Auckland Agricultural Company (Limited), including Matamata, at 31st March, 1895 Stations balance-sheet and profit and loss for year ending 31st March, 1895* Estates and Realisation Board Adjustment Accounts .. Bank of New Zealand Estates Company (Limited), Auckland Agricultural Company (Limited), properties as at 31st March, 1896 Assets Realisation Board, properties purchased Bank of New Zealand Estates Company and Auckland Agricultural Company, properties retained by bank at 31st March, 1895 Realisations for year ending 31st March, 1896 Auckland Agricultural Company (Limited), statement, assets and liabilities as at 31st March, 1895 Report and audit of adjustment, Messrs. Kember and Smithf Mr. Butt's rejoinderf Mr. Cuff's explanation to Mr. Buttf Messrs. Kember and Smith's rejoinder to Mr. Buttf .. Reference to Solicitor-General, and his replyt Mr. Butt to the Treasurer, covering Mr. Poster's letter to him|Assets Realisation Board, three balance-sheets Letter, bank directors to Banking Committee, 1895 Particulars, Colonial Bank landed property Particulars, writings-off, 1895-96, Bank of New Zealand Recoveries Writings-ofi, 1888-96, private accounts Private Bill, Bank of New Zealand Estates Company, assets special realisation Notice of call, dated 6th December, 1894 (circular letter) Details, expenses paid to Mr. John Murray Memorandum, Articles of Association of the New Zealand Estates Company (Limited) Balance-sheets to 31st March, 1896, Bank of New Zealand Estates Company (Limited) Governor's warrant of appointment of President Letter from Colonial Treasurer to President of Bank of New Zealand Estimate of value of Colonial Bank business to Bank of New Zealand Percentage of cost of management to gross earnings for half-years 1895-96 Balance-sheets of stations and Profit and .Loss Accounts to 1896 Memorandum of counsel's fee, Validation Court proceedings, Gisborne{ Further memorandum of counsel's fee, Validation Court proceedings, Gisborne Payment to directors of Bank of New Zealand during year ended 31st March, 1896 Memorandum of balances of Profit and Loss Accounts, as shown in balance-sheets of Bank of New Zealand Estates Company for years ending 31st March, 1891-96, inclusive Bank of New Zealand, analysis of deposits on 31st March, 1896 Transfers registered since 30th June, 1894, on the colonial share-registers of the Bank of New Zealand, with calls due on shares transferred paid at date of instrument of transfer List of persons who became shareholders in the Bank of New Zealand since 30th June, 1894, and who have not paid calls 16th July 31st July Mr. Watson Mr. Booth Printed. Not printed. Printed. Not printed. Printed. fo. 11 fo. 12 3rd August .. fo. 13 fo. 14 Mr. Poster r o. 15 r o. 16 r o. 17a fo. 17b o. 17c o.-18 ' o. 19 fo. 20a Hon. Mr. Seddon .. ? o. 20b o. 20c o. 20d fo. 20e o. 20f o. 20g o. 21 "o. 22 o. 23 o. 24 fo. 25 "o. 26 7th August .. Mr. Booth Not printed. Printed. 8th August .. 12th August .. Mr. Hutchison 'o. 27 o. 28 o. 29 14th August .. Mr. Booth Not printed. " fo. 30 15th August .. Printed. 'o. 31 o. 32 20th August .. 21st August .. Mr. Watson fo. 33 fo. 34 fo. 35 17th August .. Mr. Poster fo. 36 24th August .. Mr. Watson fo. 37 25th August .. fo. 38 fo. 39 27th August .. o. 40 0.41 0. 42 * Further returns in Exhibit No. 35 -\ Included in Exhibit No. 52. I Printed in No. 37.
Register of Exhibits— continued.
Description of Exhibit. ;ani in. iy wl Lorn lani in. Lemarl ;s. No. 43 Correspondence re appointments of Inspectors Buller and Litchfield Combined statement of position of Australian branches of the Bank of New Zealand, 29th June, 1896 Memorandum of trading concerns held by the Bank of New Zealand Estates Company at 28th August, 1896 Transfer of Bank of New Zealand shares, London register Staff-officers retired Statement of assets and liabilities of Bank of New Zealand, 25th June, 1894, in New Zealand and Australia, with covering-letter from Mr. John Murray* Confidential papers relating to the proposed amalgamation of the Colonial Bank of New Zealand with the Bank of New Zealand in 1894 Correspondence between the President of the Bank of New Zealand and the Government, re legislation of 1895 Agreement, Colonial Bank of New Zealand with Bank of New Zealand (B 27/95) Further papers relating to the purchase of the Colonial Bank of New Zealand by the Bank of New Zealand Further papers relating to the banking legislation Correspondence relating to the issue of section 20, of " The Bank of New Zealand and Banking Act, 1895," of Auditor's certificate List of General Managers and Inspectors, 1890-94, 1894-96 Combined statement of assets and liabilities of the Bank of New Zealand, 25th June, 1894 Confidential papers relating to the Bank of New Zealand reserves in 1893 Papers relating to the banking legislation of 1894 Amounts of dividends and dates of payments since 1st January, 1888 Statement of assets and liabilities of London Office, 25th June, 1894 Combined statement of assets and liabilities of Bank of New Zealand, 25th June, 1894 Writings-off, 1888-96, approximately distributed as follows Memorandum showing how figures of the contract for the sale and purchase of the business and assets of the Colonial Bank of New Zealand have been arrived at Letter from President, Bank of New Zealand, to Colonial Treasurer Summary of Lists 1, 2, 3, and 4, and other assets Deed between Thomas Russell and Bank of New Zea- - land, dated 30th August, 1887 Letter to President, Board of Directors, Bank of New Zealand, from Messrs. Tolhurst, Buller, and Andrews, dated 9th March, 1889 Stations statement, showing area, value, &c, Profit and Loss Accounts, 1895-96 Statement, New Zealand Thames Valley Land Company, incorporated 6th July, 1882 Letter from Mr. W. G. Foster, dated 14th July, 1896, to the Chairman Banking Committee Minutes of meeting, valuations of live-stock, extracts and circulars Confidential papers relating to the legislation in 1895 on behalf of Bank of New Zealand C orrespondence between Colonial Treasurer and AgentGeneral re appointment of President, Bank of New Zealand Report by Mr. J. C. Hanna re estates, dated Auckland, 28th September, 1896 Memorandum by Mr. J. C. Hanna .. Amounts written-off, Bank of New Zealand, 1888-96 .. Pro forma balance-sheet Realisations from 18th July to 18th September, 1896 .. 27th August .. Mr. Watson Printed. No. 44 No. 45 31st August .. No. 46 No. 47 No. 48 Hon. Mr. Seddon .. No. 48a 1st September No. 49 No. 49a 16th September No. 50 No. 51 No. 52 No. 53 2nd September Mr. Watson No. 54 No. 55 Hon. Mr. Seddon .. No. 56 No.:57 9th September Mr. Watson No. 58 No. 59 No. 60 No. 61 Hon. Mr. Seddon .. 1st September v No. 62 No. 63 No. 64 15th September 16th September Mr. Butt Mr. Hutchison No. 65 No. 66 17th September Mr. Poster No. 67 18th September No. 68 No. 69 No. 70 19th September Hon. Mr. Seddon .. No. 71 No. 72 28th September Mr. Montgomery .. No. 72a No. 73 No. 74 No. 75 30th September Mr. Hanna Mr. Butt.. Not printed Printed. 1st October .. Mr. Poster ♦Included in Exhibit No. 56.
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E X HIE ITS.
EXHIBIT No. 1. [Handed in by Mr. Watson, 16th July, 1896.] Aggregate Balance-sheet of the Bank of New Zealand at 31st March, 1888 (including London Office at 31st January, 1888).
Profit and Loss Account.
Reserve Fund.
We hereby certify that we have examined the accounts of the Bank of New Zealand for the half-year ended 31st March, 1888, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of the branches with the statements in the foregoing balance-sheet, and have found the same to be correct. G. P. Pierce, 1 . ~, J. L. Wilson, [ Audltors -
Aggregate Balance-Sheet of the Bank of New Zealand at 29th September, 1888 (including London Office at 31st July, 1888).
Profit and Loss Account.
Reserve Fund.
We hereby certify that we have examined the accounts of the Bank of New Zealand for the half-year ended 29th September, 1888, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of the branches with the statements in the foregoing balance-sheet, and have found the same to be correct. G. P. Pierce, ) . ~. J. L. Wilson, f Audltors ' 16—1. 6.
Dr. Liabilities. Assets. Cr. lapital paid up teserve Fund Totes in circulation Sills payable in circulation .. )eposits and other liabilities Salance of profit and loss £ s. d. .. 1,000,000 0 0 500,000 0 0 494,178 0 0 .. 1,308,800 1 10 .. 11,156,607 18 1 60,861 8 3 £ a. d. Coin and cash balances at banker's .. 2,274,014 0 7 Money on short call in London .. 185,400 0 0 Bullion on hand and in transit .. 179,752 11 0 Government securities .. .. 11,470 2 6 Bills ceceivable and securities in London 1,424,488 6 2 Bills discounted, and other debts due to the bank.. .. .. .. 10,071,527 6 8 Landed property, premises, &o. .. 373,795 1 3 £14,520,447 8 2 £14,520,447 8 2
£ s. d. £ s. d. 'o Dividend on 100,000 shares of £10 each, at the rate of 7 per cent, per annum 35,000 0 0 Balance carried forward .. .. 25,861 8 3 By Balance from half-year ended 30th September, 1887 .. .. .. 6,106 8 2 Profit for half-year ended 31st March, 1888 .. .. .. .. 54,755 0 1 £60,861 8 3 £60,861 8 3
'o Balance .. £500,000 0 0 By Balance from last half-year £500,000 0
Dr. Liabilities. Assets. Cr. £ s. d. lapital paid up ..£1,000,000 0 0 jess amount written off toBad and Doubtful Debt Account .. 300,000 0 0 700,000 0 0 fotes in circulation .. .. .. 479,510 0 0 Jills payable in circulation .. .. 1,262,647 1 8 leposits and other liabilities .. 10,719,653 18 3 Salance of profit and loss .. .. 58,468 10 8 £ s. d. Coin and cash balances at banker's .. 2,303,213 5 6 Money on short call in London .. 461,228 17 9 Bullion on hand and in transit .. 353,093 15 11 Government securities .. .. 19,377 9 0 Bills receivable and securities in London .. .. .. .. 640,593 4 11 Bills discounted, and other debts due to the bank.. .. .. ., 9,069,390 1 2 Landed property, bank premises, &c. .. 373,382 16 4 £13,220,279 10 7 £13,220,279 10 7
£ s. d. £ s. d. 'o Dividend on 100,000 shares of £7 each, at the rate of 7 per cent, per annum 24,500 0 0 Balance carried forward .. .. 33,968 10 8 By Balance from half-year ended 31st March, 1888 .. .. .. 25,861 8 3 Net profit for half-year ended 29th September, 1888 .. .. .. 32,607 2 5 £58,468 10 8 £58,468 10 8
'o Amount transferred to Bad and Doubtful Debt Account .. .. £500,000 0 0 By Balance from last half-year £500,000 0 0
1.—6
108
Aggregate Balance-Sheet of the Bank of New Zealand at 30th March, 1889 (including London Office at 31st January, 1889).
Profit and Loss Account.
We hereby certify that we have examined the accounts of the Bank of New Zealand for the half-year ended 30th March, 1889, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of the branches with the statements in the foregoing balance-sheet, and have found the same to be correct. J. L. Wilson, ) . ~, R. McDonald Scott,) Auctltors '
Aggregate Balance-Sheet of the Bank of New Zealand at 30th September, 1889 (including London Office at 31st July, 1889).
Profit and Loss Account.
We hereby certify that we have examined the accounts of the Bank of New Zealand for the half-year ended the 30th September, 1889, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of the branches with the statements in the foregoing balance-sheet, and have found the same to be correct. J. L. Wilson, ) . ~ R. McDonald Scott,} Audltors -
Dr. Liabilities. £ s. d. Capital paid up, — 100,000 shares of £7 each .. .. 700,000 0 0 25,000 shares of £10 each — £10 paid up .. .. .. 250,000 0 0 25,000 shares of £10 each—£7 paid up £175,000 0 0 Less calls unpaid.. 176 0 0 174,824 0 0 Notes in circulation .. .. 478,154 0 0 Bills payable in circulation .. .. 2,015,266 17 0 Deposits and other liabilities ..10,088,293 10 1 Balance of profit and loss .. .. 88,449 12 7 £13,794,987 19 8 Assets. Cr. £ s. d. Coin and cash balances at banker's .. 2,287,367 17 11 Money on short call in London .. 164,952 4 0 Bullion on hand and in transit .. 198,043 6 6 Government securities .. .. 37,521 7 9 Bills receivable and securities in London 2,253,722 8 9 Bills discounted, and other debts due to the bank .. .. .. 8,480,768 6 3 Landed property, bank premises, &c... 372,612 8 5 £13,794,987 19 8
£ s. d. £ s. d. 'o Dividend at the rate of 7 per cent, per annum.. .. .. .. 33,063 0 0 Balance carried forward .. .. 55,386 12 7 By Balance from half-year ended 29th September, 1888 .. .. .. 33,968 10 8 Net profit for half-year ended 30th March, 1889 .. .. .. 43,360 1 11 Premium on new shares allotted above par, less charges and costs .. 11,121 0 0 . . . £88,449 12 7 £88,449 12 7
Dr. Liabilities. Assets. Cr. £ a. d. Coin and cash balances at banker's .. 2,056,690 2 0 Bullion on hand and in transit .. 149,127 4 7 Bills receivable and securities in London 359,209 2 4 Bills discounted, and other debts due to the bank .. .. • • .. 9,040,611 3 3 Landed property, bank premises, &c. .. 372,299 19 8 £ s. d. lapital paid up, — 100,000 shares of £7 each .. .. £700,000 0 0 25,000 shares of £10 each—£10 paid up 250,000 0 0 25,000 shares of £10 each—£7 paid up 175,000 0 0 1,125,000 0 0 Jotes in circulation .. .. .. 451,636 0 0 tills payable in circulation .. .. 1,585,319 11 5 )eposits and other liabilities .. .. 8,719,634 3 1 ialance of profit and loss .. .. 96,347 17 4 £11,977,937 11 10 £11,977,937 11 10
£ s. d. £ s. d. 'o Dividend at the rate of 7 per cent, per annum .. .. .. .. 39,375 0 0 Balance carried forward .. .. 56,972 17 4 By Balance from half-year ended 30th March, 1889 .. .. .. 55,386 12 7 Net profit for half-year ended 30th September, 1889.. .. .. 4.0,961 4 9 £96,347 17 4 £96,347 17 4
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Aggregate Balance-sheet of the Bank of New Zealand at 31st March, 1890 (including London Office at 31st January, 1890).
Profit and Loss Account.
We hereby certify that we have examined the accounts of the Bank of New Zealand for the half-year ended the 31st March, 1890, and that we have counted the cash balances and examined the bills and other securities held at the head office, and compared the returns of the branches with the statements in the foregoing balance-sheet, and have found the same to be correct. R. W. Donald Scott,}. -~, Auckland, 26th April, 1890. John Brown, } AUCMors -
Balance-sheet of the Bank of New Zealand at 31st March, 1891.
Profit and Loss Account.
Reserve Fund.
We have examined the books and accounts, cash and securities, of the London office, and the certified returns from the several branches and agencies, and find the above balance-sheet, which has been compiled therefrom, correct. Edwin Waterhouse,) . -,-, „ G. Sneath, '[Auditors. 44, Gresham Street, London, E.C., 23rd July, 1891.
Dr. Liabilities. Assets. Cr. £ s. d. Coin and cash balances at banker's .. 1,469,642 13 2 Bullion on hand and in transit .. 102,664 12 8 Bills receivable, and securities in London .. .. .. 1,437,666 18 0 Bills discounted, and other debts due to the bank .. .. .. 8,092,757 11 8 Landed property, bank premises,&c. .. 373,441 3 6 £ s. d. Capital,— 100,000shares,£7 each £700,000 0 0 25,000 shares, £10 each—£10 paid up 250,000 0 0 25,000 shares, £10 each—£7 paid up .. 175,000 0 0 1,125,000 0 0 Notes in circulation .. .. .. 453,295 0 0 Bills payable in circulation .. .. 1,707,441 3 1 Deposits and other liabilities .. .. 8,090,653 4 6 Balance of profit and loss .. .. 99,783 11 5 £11,476,172 19 0 £11,476,172 19 0
Balance forward £ s. d. 99,783 11 5 Balance from last half-year Profit for this half-year, without appropriation for bad and doubtful debts .. £99,783 11 5 £ s. d. 53,972 17 4 42,810 14 1 £99,783 11 5
Dr. Liabilities. Capital,— £ S. d. 100,000 shares of £5 5s. each .. .. £525,000 0 0 50,000 shares of *£7 10s. each .. £375,000 Less calls in arrear .. 2,167 Assets. Cr. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. 1,503,493 6 4 Bullion on hand and in transit .. 138,530 19 11 Bills receivable .. .. .. 1,672,840 17 7 Bills discounted .. .. .. 630,377 2 1 Advances and other debts due to the bank .. .. .. .. 3,791,276 17 9 Bank of New Zealand Estates Company (Limited) shares, par value .. 1,850,000 0 0 Landed property, bank premises, &c. .. 374,163 2 2 372,833 0 0 897,833 0 0 Notes in circulation.. .. .. 483,064 0 0 Bills payable in circulation .. ..1,083,486 13 0 Deposits and other liabilities .. 7,436,776 11 7 Balance of profit and loss .. .. 59,522 1 3 £9,960,682 5 10 £9,960,682 5 10
£ s. d. 'o Amount carried to Reserve Fund .. 20,000 0 0 Dividend at rate of 5 per cent, per annum for half-year ended 31stMarch, 1891.. 21,250 0 0 Balance carried forward .. .. 18,272 1 3 £ s. d. By Net profit for year ended 31st March, 1891 .. .. .. .. 59,522 1 8 £59,522 1 3 £59,522 1 3
..£20,000 0 0 By Transfer from Profit and Loss 'o Balance .. £20,000 0 0
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110
Balance-sheet of the Bank of New Zealand at 31st March, 1892.
Profit and Loss Account.
Reserve Fund.
We have examined the books and accounts, cash and securities, at the London office, and the certified returns from the several branches and agencies, and find the above balance-sheet, which has been compiled therefrom, correct. hidwin Waterhouse,] . ~.. G. Sneath, '[Auditors. 44, Gresham Street, London, E.C., 28th July, 1892.
Balance-sheet of the Bank of New Zealand at 31st March, 1893.
Dr. Liabilities. iapital,— £ s. d. 100,000 shares of £5 5s. each .. £525,000 0 0 50,000 shares of £7 10s. each .. 375,000 0 0 Assets. Cr. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. 1,288,947 2 1 Bullion on hand and in transit .. 90,617 15 0 Bills receivable and bills discounted .. 2,397,002 5 8 Advances and other debts due to the bank .. .. .. .. 4,092,730 1 11 Investments in Government and other stocks .. .. .. .. 36,287 3 11 Bank of New Zealand Estates Company (Limited) shares (par value) .. 1,850,000 0 0 Landed property, bank premises, &c. .. 376,803 9 11 900,000 0 0 teserve fund (invested in Consols) .. 20,000 0 0 Totes in circulation .. .. 479,260 0 0 Jills payable in circulation .. .. 1,314,25114 5 )eposits and other liabilities .. 7,363,045 5 8 >rofit and loss ..£78,330 18 5 Less interim dividend for half-year ended 30th September, 1891 .. .. 22,500 0 0 55,830 18 5 ■ £10,132,387 18 6 £10,132,387 18 6
£ s. d. £ s. d. By Balance from last year .. .. 18,272 1 3 Net profit for year ended 31st March, 1892 .. .. .. .. 60,058 17 2 To Interim dividend at rate of 5 per cent. per annum for half-year ended 30th September, 1891 .. .. .. 22,500 0 0 Amount carried to reserve fund .. ..£15,000 0 0 Dividend at rate of 5 per cent, per annum for rialf - year ended 31st March, 1892 ..22,500 0 0 Balance carried forward 18,330 18 5 55,830 18 5 £78,330 18 5 £78,330 18 5
To Balance (invested in Consols) £ s. d. 35,000 0 0 By Balance from last year Transfer from Profit and Loss £35,000 0 0 £ s. d. 20,000 0 0 15,000 0 0 £35,000 0 0 £35,000 0 0
Dr. Liabilities. Capital— £ s. d. 100,000 shares of £5 5s. each .. £525,000 0 0 50,000 shares of £7 10s. each .. 375,000 0 0 900,000 0 0 Reserve Fund (invested in Consols) .. 35,000 0 0 Notes in circulation .. .. .. 520,323 0 0 Bills payable 1,343,699 0 2 Deposits and other liabilities .. .. 8,071,783 6 8 Profit and loss .. £74,161 0 0 Less interim dividend at 5 per cent, per annum for half-year ended 30th September, 1892 22,500 0 0 Assets. Coin, cash balances with bankers, and money at call and short notice Bullion on hand and in transit Bills receivable and bills discounted .. Advances and other debts due to the bank Investments in Government and other stocks Bank of New Zealand Estates Company (Limited) shares (par value) Landed property, bank premises, &c. .. Cr. £ a. d. 1,366,919 16 0 117,536 15 5 2,301,824 8 7 4,825,830 12 10 50,840 17 11 1,850,000 0 0 409,513 16 1 51,661 0 0 £10,922,466 6 10 £10,922,466 6 10
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Profit and Loss Account.
Reserve Fund.
We have examined the books and accounts, cash and securities, at the London office, and the certified returns from the several branches and agencies, and find the above balance-sheet, which has been compiled therefrom, correct Edwin Waterhouse,) . ~, G. Sneath, '[Auditors. 44, Gresham Street, London, E.C., 21st July, 1893.
Balance-sheet of Bank of New Zealand at 31st March, 1894.
Profit and Loss Account.
Reserve Fund.
We have examined the books and accounts, cash and securities, at the London office, and the certified returns from the several branches and agencies, and find the above balance-sheet, which has been compiled therefrom, correct. Edwin Waterhouse,] . ~ G. Sneath, [Auditors. 44, Gresham Street, London, 8.C., 14th August, 1894,
£ s. d. To Interim dividend at rate of 5 per cent, per annum for half-year ended Sep- ' tember, 1892 .. .. .. 22,500 0 0 Amount carried to reserve fund .. .. £10,000 0 0 Dividend at rate of 5 per cent, per annum for half-year ended 31st March, 1893 .. .. 22,500 0 0 Balance carried forward 19,161 0 0 By Balance from last year Net profit for year ended 31st March, 1893 .. £ s. d. 18,330 18 5 55,830 1 7 - 51,661 0 0 £74,161 0 0 £74,161 0 0
'o Balance £ s. d. 45,000 0 0 By Balance from last year Transferred from Profit and Loss £45,000 0 0 £ s. d. 35,000 0 0 10,000 0 0 £45,000 0 0
Dr. Liabilities. Capital— 100,000 shares at £5 5s. each .. £525,000 0 0 50,000 shares at £7 10s. each .. 375,000 0 0 £ s. d. Assets. Cr. £ s. d. Coin, cash balances with bankers, and money at call and short notice .. 1,463,364 3 0 Bullion on hand and in transit .. 98,655 9 0 Bills receivable and bills discounted .. 2,383,072 14 9 Advances and other debts due to the bank „ .. .. .. 4,855,569 0 8 Investments in Consols and other stocks 61,523 15 5 Bank of New Zealand Estates Company (Limited) shares (par value) .. 1,850,000 0 0 Landed property, bank premises, &c. .. 413,319 4 8 Reserve funds (invested in Consols) Notes in circulation Bills payable Deposits and other liabilities.. Profit and loss .. £60,239 17 1 Less interim dividend at 5 per cent, per annum for half-year ended 30th September, 1893 .. .. 22,500 0 0 900,000 0 0 45,000 0 0 515,568 0 0 1,413,996 15 4 8,213,199 14 8 37,739 17 1 £11,125,504 7 1 £11,125,504 7
'o Interim dividend at rate of 5 per cent, per annum for half-year ended 30th September, 1893 .. Balance carried forward £ s. d. By Balance from last year Net profit for year ended 31st 22,500 0 0 March, 1894 .. 37,739 17 1 £60,239 17 1 £ s. d. 19,161 0 0 41,078 17 1 £60,239 17 1
'o Balance £45,000 0 0 By Balance from last year .. £45,000 0 Q
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Balance-sheet of the Bank of New Zealand at 31st March, 1895.
Profit and Loss Account.
Reserve Fund.
Richard W. Gibbs, Acting Accountant. C. G. Andrews, Acting General Manager. I have examined the books and accounts, cash and securities, at the Wellington office, and the certified returns from the several branches and agencies, and find that the above balance-sheet has been correctly compiled therefrom. J. M. Butt, Government Auditor.
Aggregate Balance-sheet of the Bank of New Zealand, 31st March, 1896.
(a) Bank of New Zealand Estates Company (Limited) Share Account, £1,089,812 17s. 7d.— This is book-value. The Estates Company include in their balance-sheet assets a sum of £46,000, being balance of cost of conversions of debentures which is being gradually written off; also the debt of the Assets Realisation Board, to be covered by debentures not yet issued, the value of which is subject to the approval by the Colonial Treasurer of the adjustment between the Estates Company and the Assets Realisation Board. (i)) Colonial Bank Landed Property and Premises, £128,138 12s. 2d.— This is also book-value; not ascertained value.
Dr. Liabilities. Capital,— £ s. d. 4% Guaranteed Stock £2,000,000 0 0 100,000 shares of £5 5s. each .. 525,000 0 0 50,000 shares at £7 10s. 375,000 0 0 Call of 1895 Account 159,745 9 2 Assets. Coin and cash balances at banker's .. Bullion on band and in transitu Investments Bills receivable and bills discounted .. Other advances and securities, and debts due to the bank Bank of New Zealand Estates Company (Limited) shares (par value as per statute) Landed property, bank premises, &c. Bad and doubtful debts .. 1 Deduct Reserve Fund £45,000, and profit L and loss balance £383 lis. Id., leaving net amount £376,807 8s. lid. > Cr. £ s. d. 1,302,009 5 10 92,185 3 11 880,213 0 4 2,112,347 13 0 5,203,449 13 10 1,850,000 0 0 419,931 2 10 422,281 0 0 3,059,745 9 2 Reserve Fund .. .. .. 45,000 0 0 Notes in circulation .. .. .. 468,195 0 0 Bills payable in circulation .. .. 1,486,891 3 5 Deposits and other liabilities .. .. 7,222,20116 1 Balance, Profit and Loss Account .. 383 11 1 £12,282,416 19 9 £12,282,416 19 9
£ s. d. £ s. d. 'o Loss for year ending 31st March, 1895 37,356 6 0 By Balance from year ending 31st March, Balance .. .. .. .. 383 11 1 1894 .. .. .. .. 37,739 17 1 £37,739 17 1 £37,739 17 1
'o Balance ..£45,000 0 0 By Balance from year ending 31st Mar.,'94 £45,000 0 0
Dr. Liabilities. Capital;— 4 per cent, guaranteed stock Preference shares subscribed for by Government of Now Zealand .. Capital called up under " The Bank of New Zealand and Banking Act, 1895" .. £500,000 0 0 Less amount paid in advance .. 47,423 6 8 £ s. d. 2,000,000 0 0 500,000 0 0 47,423 6 8 Assets. Coin and cash balances at banker's Bullion on hand and in transit Investments— Consols (Imperial) £54,868 16 0 Colonial Government securities.. 627,431 0 9 Municipal securities 8,827 12 6 Other securities .. 378,061 12 5 Bills receivable and bills discounted Other advances and securities and debts due to the bank Bank of New Zealand Estates Company (Limited), Share Accountf") Landed property, premises, &c. Colonial Bank landed property and premises( b ) Colonial Bank Purchase Goodwill Account Cr. £ s. d. 1,630,914 0 4 115,792 11 9 1,069,189 1 8 2,521,652 13 1 7,282,525 17 10 1,089,822 17 7 423,533 19 2 125,138 12 2 75,000 0 0 Balance of call, payable in instalments, 30th June, 1896; 31st December, 1896; 30th June, 1897 ; and 31st December, 1897 452,576 13 4 .eserve liability .. 500,000 0 0 teserve Fund Totes in circulation Sills payable in circulation leposits ither liabilities .. .. ialance, Profit and Loss Account .. 23,418 4 11 533,229 0 0 673,232 0 0 9,894,778 13 7 608,912 6 4 52,576 2 1 £14,333,569 13 7 £14,333,569 13 7
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Profit and Loss.
Reserve Fund.
I, John Marten Butt, the Auditor appointed by the Governor in Council under "The Bank of New Zealand Share Guarantee Act, 1894," do hereby certify — 1. That, having carefully examined the foregoing balance-sheet and statements, I am satisfied that they have been correctly compiled from the hooks and accounts of the bank. - 2.- That I am also satisfied that the said balance-sheet is a full and fair balance-sheet, properly drawn up, and, with notes ( a ) and ( b ), exhibits a true and correct view of the state of the bank's affairs at the date thereof. 3. That I have verified so much of the cash, investments, securities, and assets of the bank as at the date of the said balance-sheet were held at the head office in Wellington, and have had access to certified returns of so much thereof as were then held at the various branches and agencies of the bank or were then in transit. Dated this 18th day of June, 1896. J. M. Butt, Colonial Auditor. We hereby certify that, having carefully examined the foregoing balance-sheet and statements, we are satisfied that they have been correctly compiled from the books and accounts of the bank, and that the balance-sheet is a full and fair balance-sheet, properly drawn up, and exhibits a true and correct view of the state of the bank's affairs at the date thereof. Dated this 18th day of June, 1896. H. Mackenzie, General Manager. Richard W. Gibbs, Accountant.
lalance for year ended 31st March, 1896.. £ s. d. 52,576 2 1 £ s. d. Balance from year ending 31st March, 1895 383 11 1 Net profit for year ended 31st March, 1896, including recoveries, and after provision for ascertained bad debts and making what is considered ample provision for possible losses on doubtful debts, but contingent upon the approval by the Colonial Treasurer of the above adjustment— note («) .. .. .. 52,192 11 0 £52,576 2 1 £52,576 2 1
Reserve Fund written off ialance £ s. d. 45,000 0 0 23,418 4 11 £ s. d. Balance from year ending 31st March, 1895 45,000 0 0 Reserve Fund created in terms of " Bank of New Zealand and Banking Act, 1895," clause 7 .. ... .. .. 23,418 4 11 £68,418 4 11 £68,418 4 11
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EXHIBIT No. 2. [Handed in by Mr. Booth, 31st July, 1896.] Bank of New Zealand, Head Office, Wellington, 27th July, 1896. Statement of Amounts paid for Legal Expenses, Bill Drafting, &c., in connection with the Banking Legislation prior to and since 1894, showing Names of Firms or Companies who received the same.
EXHIBIT No. 3. [Handed in by Mr. Booth, 31st July, 1896.J Statement showing Amount of Money paid by the Bank of New Zealand to Mr. John Murray for his Services in connection with the Banking Legislation of 1893-94-95. £ s. d. In connection with legislation of 1893 ... ... ... Nil. In connection with legislation of 1894 — Amount voted in recognition of services ... ... ... 500 0 0 Amount paid in reimbursement of Mr. Murray's expenses, which included costly London cablegrams ... ... 531 1 11 In connection with legislation of 1895 — Expenses of visiting Wellington at request of Directors ... 25 0 0 £1,056 1 11
Date. an iicul iars. moun 5 Sept., 1889 Fees in connection with Bills. Messrs. Buckley, Stafford, and Treadwell — In re " Bank Amendment Act, 1889," and notarial charges In re " Bank Act 1861 Amendment Act, 1889 " In re " Bank of New Zealand Act Amendment Act, 1891" ... ... ... ... ... In re Bill to amend " Bank-note Issue Act, 1893," and to prevent amalgamation with any other bank before 1896 session In re " Bank of New Zealand and Banking Act, 1895" £ s. d. 86 10 0 94 16 3 £ s. d. 13 Sept., 1889 10 Nov., 1891 15 Mar., 1895 177 16 8 416 17 11 28 Sept., 1895 5 5 0 52 10 0 13 Sept., 1889 10 Nov., 1891 Messrs. Bell, Gully, and Izard— In re " Bank Act, 1861," and Amendment Act, 1889 In re "Bank of New Zealand Act Amendment Act, 1891" 102 6 1 253 16 3 151 10 2 13 Sept., 1889 25 Mar., 1891 Mr. C. E. Button— In re "Bank Act, 1861," and Amendment Act, 1889... In connection with Bill validating the reduction of capital lately made in London ... In re "Bank of New Zealand Act Amendment Act, 1891" 140 12 81 13 8 8 299 12 6 10 Nov., 1891 77 6 2 28 Sept., 1893 9 Oct., 1894 29 Mar., 1895 Messrs. Buddie, Button, and Co, late Messrs. Whitaker and Bussell — In re amendment of Bank Act In connection with banking legislation, 1894 session ... In re Bill to amend " Bank-note Issue Act, 1893," and to prohibit amalgamation with any other bank before 1896 session ... In re Bank of New Zealand and Banking Act In re banking legislation, Colonial Bank contract 19 1 127 3 6 6 504 0 0 28 Sept, 1895 25 April, 1896 10 10 105 0 242 5 0 0 0 10 Nov, 1891 Messrs. Garrick, Cowlishaw, and Co.— In re " Bank of New Zealand Act Amendment Act, 1891" 8 1 3 30 Sept, 1895 10 Mar, 1896 Messrs. Kenyon and Hosking — [ In re " Bank of New Zealand and Banking Act, 1895 " | 200 432 0 3 0 2 632 3 2 24 July, 1894 Amount paid under authority of Mr. John Murray, for legal expenses, of which we have no details 52 10 0 2,167 1 1 28th July, 1896. Bichd. W Gibbs, Acc< luntant.
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EXHIBIT No. 4. [Handed in by Mr. Booth, 31st July, 1896.] Sir,— Bank of New Zealand, Auckland, 27th April, 1888. In case our appointment should create uneasiness in the mind of any shareholder, we think it well to state, without delay, that carefully compiled and certified returns prepared by the bank staff, supported where necessary by independent valuations, and which we have examined, satisfy us as to the soundness and stability of the bank. It has ample cash resources at command for all probable requirements; and, though its earning-power is for the present curtailed by lock-up of much of its funds in assets which are for the time unproductive, these assets are mainly of a substantial character, and must, with the progress of the colony, soon recover the value which the prevailing depression has affected. We propose to examine the position more thoroughly, and to give mature consideration to such measures as may seem best calculated to enable the bank to utilise the whole of its resources in developing its excellent and valuable business. As this will involve communication with distant points, some time must elapse before we are prepared with our full report and recommendations. Thomas B. Gillies, John McLean, George Buckley, Walter W. Johnston, W. H. Colbeck, Committee appointed at meeting of shareholders on the 26th instant.
[Confidential Circular from Shareholders' Committee.] Sir, —. . Bank of New Zealand, Auckland, 9th August, 1888. Since we addressed to you our circular of 27th April, we have been engaged in the work to which the shareholders were pleased to nominate us. It has necessarily occupied considerable time, but we hope to report to you at a meeting to be called at an early date Upon conference with the directors, and consideration of the whole position, we are impressed with the conviction that the capital of the bank has not been increased in proportion to the great .expansion of its business in recent years ; and we are agreed with the directors that an increase of capital is necessary to maintain that public confidence in the bank which is essential to its prosperity. In view of this the directors have, with our approval, communicated with the London Board by means of a deputation—including Mr. Johnston, one of our number —which is now in London, and we have reason to believe that part or all of the capital which we think is needed will be readily taken up there. As the deed of settlement requires that at least half the existing capital be represented at any meeting creating new shares, and as many shareholders are resident in Europe or otherwise not readily accessible, it is of importance that you confide to us your proxy should it be doubtful or unlikely that you will be personally present at the meeting. As the names of shareholders who may be selected to hold proxies, as well as ths date of the meeting, cannot yet be determined, would you be good enough also to sign the authority to the committee to fill these in, and to forward the document to the care of the manager in your district, for which purpose an addressed and stamped envelope is enclosed. We are, &c, Thomas B. Gillies, Chairman. Geo. Buckley. W. H. Colbeck. John McLean.
Report of the Shareholders' Committee of the Bank of New Zealand, appointed 26th April, 1888. Gentlemen, — When at our last meeting you appointed us a committee of investigation into the affairs of the bank, we naturally felt that such an appointment implied a widespread anxiety on the part of shareholders to have independent assurances as to the bank's real position, an anxiety justified by recent circumstances in its history. Thanks to the prevision of the inspector and the efficiency of the bank staff, our work was facilitated, and we were soon able to assure ourselves of the soundness of the bank in respect of its ability to meet all its liabilities—a conviction which further examination confirmed; but we at the same time found the position of things such as must be eminently unsatisfactory to shareholders, and that we were face to face with circumstances which necessitated a somewhat enlarged interpretation of our commission, mature consideration, and comprehensive measures in your interests— hence unavoidable delay in the presentation of our report and recommendations. Our examination disclosed a mass of securities taken in support of weak accounts, the value of which had fallen greatly, and many accounts in liquidation, or which ought to be so, the cover for which had become obviously inadequate; altogether involving losses which the directors had not faced, but which, upon a rigorous examination, we feel convinced will absorb, not only the whole of the reserve fund, but also nearly one-third of the paid-up capital of the bank—say, £800,000 in all, 17—1. 6,
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The data supplied to us are of a clear- and exhaustive character, amply authenticated; and, after a minute and careful examination of the various accounts and assets, we are satisfied that, under good management and judicious realisation of securities, the amount named should cover all losses. You will naturally and properly expect from us something in elucidation of a state of things so startling, and which we had so little right to expect. It is obvious to us that for years past the bank has been paying a rate of dividend which ought not to have been paid. Securities have been held, and accounts kept going, in the vain hope of a recovery of the values placed upon them in what was, in fact, a period of inflation ; and supervening upon this, within the last two or three years, heavy losses in Australia brought matters to the climax which we are now under the unpleasant necessity of facing. The principal Australian losses have been made in Sydney and Adelaide, where the selection of managers was in each case, to say the least, unfortunate. In Sydney, after a gambling career long known to most people, the manager was convicted of embezzling the bank's funds; and, in Adelaide, money appears to have been advanced, or rather squandered, in a way which can only be characterized as reckless and disastrous. North Island, New Zealand. —ln Auckland we regret to find that, though the head office of the bank is there, and its affairs under the immediate eye of the directors, the general character of much of the business carried on has been most objectionable, and the policy pursued open to grave censure. Inflated schemes or proposals coming from, or influenced by, certain persons appear to have met with ready support, hy lavish advances to companies and individuals without adequate security or warrantable prospect of advantage, or even safety, to the bank. Such advances not only account for more than half the whole loss now disclosed, but the securities held, being more or less unproductive, curtail the earning-power of the bank pending their realisation. South Island, New Zealand. —ln the south of New Zealand heavy losses in the past, incurred to a large extent through rash or dishonest management, have been so far previously written off and provided for; but securities, in themselves of a sound enough character, have been held without adequate allowance for fall in values, and the deficiency has now to be recognised. And, finally, we find that advances have been made to some of the directors upon insufficient security, and from these advances heavy loss has arisen, estimated by us as over £160,000, while certain transactions have come under our notice calling for the gravest censure if not for more specific action. The connection between the bank and the New Zealand Loan and Mercantile Agency Company, by the chief and other officials of the bank acting for the Loan Company, and being interested in the working of both, has not, for many reasons, been advantageous to the bank, and should on no account be allowed to continue, as we consider the company has been unduly favoured by the bank. As regards the responsibility for this state of things, the directors, as your nominees, intrusted with full power over all the officials and affairs of the bank, are no doubt primarily responsible; and beyond remarking that the real control of the bank's policy appears to have been for many years in the hands of a limited circle, with which the late general manager was intimately associated, we should probably have said no more on this head but for the circumstance that on application to that gentleman for explanation of certain accounts he referred us to the inspector, who he alleged had been de facto general manager for five years— i.e., since 1883. We have been at some pains to clear up this question, and we are of opinion that Mr. Murdoch's allegation is not only unsupported by the bank records, but is distinctly negatived by the board minutes and other evidence. We find, further, that up to 1886, when the Holt frauds were brought to light by Mr. Murray, Mr. Murdoch was the only official from the head office of the bank who ever- inspected or reported upon the branches in Australia, and that the effective control of that business, as well as of the accounts in New Zealand which caused the bulk of the losses we now deplore, did not pass to Mr. Murray till the bank's money had been advanced, and the evil virtually done. We think it only due to him and the other senior officers to acknowledge their loyal adherence to the bank, and their efforts to conserve your interests under circumstances of very exceptional difficulty. Having now communicated to you the result of our investigations, we have next to explain the measures which, upon conference with the directors, we think should be adopted to rehabilitate the bank, Considering how much a bank's prosperity depends on its repute and on the confidence reposed in it by its shareholders and the public, the necessity for radical changes in the administration and for increase of the capital of our institution became immediately apparent to us. And we may here observe that, through deaths and retirements, the directorate and chief management have been virtually already reconstituted, and what we have further to say we ask you to regard as the jeint statement and recommendation of the directors and ourselves. So much of the capital having been lost, it must necessarily be written off, and the shares reduced from £10 to £7 paid up, otherwise no dividends could be paid till the amount lost had been replaced out of future profits. This would leave the paid-up capital £700,000, and the reserve liability £1,000,000. We have obtained the advice of London counsel that this writing-off can be legally done, and you will be asked to give the requisite authority. We shall, however, ask your authority to apply for statutory confirmation of the alteration, and for power to the directors at their discretion to accept at some future time from shareholders who may be willing to repay the £3 per share* written off, thus reinstating their shares at the original paid-up amount, without increase of the reserve liability already attaching to the shares. The expediency of increasing the capital is so obvious that we need not occupy your time in discussing that point further than to say that it is not due to financial need of the money, but to the necessity for an increased amount of capital sufficient to insure stability to the bank and confidence to its depositors. It is proposed to take authority to create 100,000 new shares, and to issue 50,000, which would make the paid-up capital £1,200,000, and the reserve liability £1,500,000; and we are pleased to be
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able to announce that applications have already been secured in London for 20,000 shares by firms and persons of the very highest financial standing, which not only insures the success of the operation, but gains for the bank new connections in the best financial circles, connections which the directors value highly, and will do their utmost to strengthen. Applications could have been secured for a larger number, if not, indeed, the whole issue, but it has been deemed better to reserve at least half for the colonies. Probably 25,000 will be offered in London at £1 premium, and 25,000 in the colonies at par. We may say that our conclusions as to what should be done, and how it should be done, have been arrived at after months of anxious consideration, and after consultation with the London directors of the bank, and with other persons there of high standing; and, in seeking your authority for what we propose, we ask you to bear in mind that we are shareholders like yourselves, that your interests are our interests, and that, while the circumstances of the bank require decided and well-considered action, it is not desirable to discuss publicly the details or the various considerations which have led us to the conclusions now laid before you. We will only add that, notwithstanding the character of our report, we see no occasion for despondency about the future of the bank, or to doubt that the shares you hold, or those you may take up, will be a good investment. Finally, as regards the bank, it should be borne in mind that the ordeal of such an investigation, at a time of depression so extreme, is one which would be trying to any institution. Other banks, now strong and prosperous, have had trying episodes in their history, and the trenchant character of our report may be taken as evidence that we have determined to face and disclose all the facts. The goodwill of the bank's business is of great value. It has in the past divided among shareholders, over and above 10 per cent, dividends, sums which aggregate nearly double the amount of the capital we now find to be lost, and, while desiring to guard against the creation of unduly inflated expectations, we are in a position to say, from the figures of the half-year just closed, that even now the bank's legitimate business is capable of yielding good dividends, notwithstanding the serious drawbacks under which it has of late been working. When time has been given to enable the directors to get rid of unproductive assets, and to develop the bank's legitimate operations, still better results may be confidently expected. On its merits, therefore, the investment is one which, it appears to us, may be expected to yield satisfactory returns, and within a short period to command a considerable premium. And it is to be observed that the bank's business is by no means confined to New Zealand. In London there is a large and valuable deposit connection and exchange business, from which virtually no losses are ever made. In Australia there is business of a strictly legitimate character, represented by assets and liabilities aggregating over £3,000,000 sterling, and contributing a material proportion of the available profits to which we have alluded. And even as regards New Zealand there is no inherent reason why it should not be as prosperous and wealthy as any other colony of the Australasian group. Is it inferior to any of them in climate, fertility, or natural resources ? In its borrowing proclivities, which have been the subject of so much adverse comment, it is not singular; and in so far as these have been excessively indulged in, that is but a passing incident in national history, the temporary consequences of which have been too sharply brought home to the people of the colony to permit of the lesson being soon forgotten. We are, &c, Thomas B. Gillies, Chairman. Geo. Buckley. W. H. Colbeck. Auckland, 3rd October, 1888. John McLean.
EXHIBIT No. 5. [Handed in by Mr. Booth, 31st July, 1896.] Mr. Hean's Message to the London Board. —12th May, 1890. I make net deficiency £165,000, —namely, additional loss on globo assets, December last, £349,000; loss in current business, mainly on old accounts, as at 24th February last, £54,000; Sydney defalcations, £28,000. Against which—surplus, bank premises, £150,000; at credit sundry suspense accounts, £16,000; and total undivided profit, including March half-yearly balance, £100,000. Fresh valuations have been obtained of all station properties by perfectly independent valuers, whose opinion will carry weight in colony. I have not ohtained outside valuations of New Zealand town and suburban properties, but I have personally examined many of them, and in all cases revised and, where necessary, modified 1888 valuations upon evidence of existing values. Australian properties have all been revalued by outside reliable valuers. These amounts have been arrived at after careful investigation, and represent, to the best of my belief, the true and actual position of the bank as far as it is possible to ascertain it. The current business is sound and good, and the connection most valuable, and capable of indefinite extension with sufficient resources and efficient management. As there is considerable uneasiness in colonies as to position of bank, I recommend immediate publicity this telegram England, and your authority local Board communicate same colonial shareholders, and complete preliminaries for transfer head office and calling meeting of shareholders London. Will leave for England on the next San Francisco mail with full details supporting above amounts, and immediately on arrival will have important and hopeful proposals to make for dealing with globo assets.
EXHIBIT No. 6. Statement of Furniture, &c, not printed.
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EXHIBIT No. 7. [Handed in by Mr. Booth, 31st July, 1896.] Bank of New Zealand, Head Office, Wellington, 13th July, 1896. Amount received to 13th July, 1896, on account of first call of £500,000 of reserve liability of shareholders, £441,206 ss. lid. (Four hundred and forty-one thousand two hundred and six pounds five shillings and eleven pence sterling). —D.M. Richd. W. Gibbs, Accountant.
EXHIBIT No. 8. [Handed in by Mr. Booth, 31st July, 1896.] Bank of New Zealand, Head Office, Wellington, 20th July, 1896. Amount of first instalment of second call, due 30th June ; 1896, and paid at Head Office at 20th July, 1896, £51,862 3s. 4d. (Fifty-one thousand eight hundred and sixty-two pounds three shillings and four pence sterling).—D.M. Richd. W. Gibbs, Accountant. Total amount of within-specified instalment receivable, £125,000.
EXHIBITS Nos. 9 and 9a. Details of Administration, not printed.
EXHIBIT No. 10. [Handed in by Mr. Booth, 31st July, 1896.] Bank of New Zealand Estates Company (Limited). Balance-sheet at 31st March, 1896.
Walter G. Foster, Colonial Manager. W. C. Cuff, for Accountant. This is to certify that we have examined the above balance-sheet and accounts and compared them with the relative books, returns, and vouchers, and have found the same to be correct, subject, however, to our special report of even date. Profit and Loss Account, marked "A," attached herewith.—J. B. Hobart, R. W. Gibbs, Auditors.—Wellington, 3rd July, 1896.
Liabilities. £ s. d. Assets. £ s. d. Properties Account .. .. .. 1,163,875 1111 Cost of debentures, Conversion Account 45,000 0 0 Realisation, Adjustment Account .. 11,672 8 1 Realisation, Expenses Account .. 102 1 0 Bank of New Zealand No. 1 realisations 79,795 8 4 London Account 2,620 4 2 „ Agencies Account 11,114 19 1 Adjusting account of revenues .. 5,011 10 0 New Zealand Loan and Mercantile Agency Company, on account Auckland Agricultural Company, debenture trust .. .. .. 112 12 6 Bills receivable .. .. .. 52,606 15 5 Cash Account .. .. .. 43 8 11 Petty Cash Account.. .. .. 10 6 6 Accident Insurance Account .. .. 158 17 11 Balance of sundry amounts held in susCapital,— Ordinary Preference Debentures outstanding Bank of New Zealand, — Ordinary Account.. Manager's Suspense Onehunga Ironworks Reserve Account Bills receivable for collection Debenture Interest Suspense Account Adjustment with Assets Realisation Board East Coast Lands Suspense Account .. Auckland Agricultural Company Profit and Loss (new account) 1,250,000 0 0 600,000 0 0 750,000 0 0 1,384,677 13 0 556 8 9 1,051 0 2 52,606 15 5 7,500 0 0 64,888 18 2 400 0 0 612,318 8 11 29,292 10 9 pense .. .. .. .. 28,583 18 1 Balance of Station Suspense Account .. 2,162 7 3 Simon Harvey Special Advance Account 1,000 0 0 Holmhurst Estate .. .. .. 227 3 10 Profit and Loss (old account) .. 467,077 0 5 Sum due by Assets Realisation Board for properties purchased in terms of " The Bank of New Zealand and Banking Act, 1895," as certified by Government Auditor .. .. .. .. 2,810,496 7 2 Station Adjustment Account, reclamations .. .. .. .. 2,893 4 1 Assets Realisation Board, cash settlement .. .. .. .. 68,727 10 6 £4,753,291 15 2 £4,753,291 15 2
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Auckland Agricultural Company (Limited). Balance-sheet at 31st March, 1896.
Audited and found correct, as far as extracts from the books of the company are concerned! but I can offer no opinion as to the value of the assets. —J. H. Mentiplay. —Wellington, 15th June, 1896. Walter G. Foster, Secretary. W T . C. Cuff, for Accountant.
EXHIBIT No. 11. [Handed in by Mr. Booth, 31st July, 1896.] Bank of New Zealand. Amounts written off, 1888-96, as below — as extracted from the Books of the Bank.
Richd. W. Gibbs, Accountant, 28th July, 1896,
Liabilities. Assets. £ s. d. Ordinary shares, — 80,000 shares at £10 (£4 3s. paid up).. Received in anticipation of Calls Preference shares (entitled to cumulative dividend at 5 per cent.), — 20,000 shares at £10, fully paid up .. Debentures, — Authorised .. £300,000 0 0 Outstanding Loans, — Bank of New Zealand Ordinary Account Bank of New Zealand No. 1 Account Debts due by the company, — Assets Realisation Board Interest on Trust Funds Suspense Account New Zealand Loan and Mercantile Agency Company Trust Suspense Account Accrued interest on debentures 332,000 0 0 1,940 0 0 200,000 0 0 274,180 0 0 109,827 1 9 93,998 14 9 112 12 6 63 13 2 327 16 0 4,500 0 0 £ s. d. £ s. d. Properties in New Zealand .. 75,713 0 0 Proceeds of sales of land in hands of Trustees for debenture-holders, — Debenture Trust Account 34,006 0 0 New Zealand Loan and Mercantile Agency Co, Trust Account .. 14,768 110 Surrey Hillsunpaid balances .. .. 2,455 0 0 Other properties and investments, — Bank of New Zealand Securities Suspense Account .. .. 3,375 15 4 Williamson's Assets Account .. .. 13,636 3 10 Williamson's Assets Revenue Account .. 15,089 1 4 83,330 2 4 Less — Bank New Z e al a n d Securities Account 2,134 13 3 Williamson's Assets Suspense Aocount ..10,913 0 0 Pah Mortgage Account ..28,490 0 0 41,537 13 3 41,792 9 1 Bank of New Zealand Estates Company .. ., 595,476 5 0 Profit and Loss Account (old account) .. .. 287,126 0 2 Interest Account .. .. 16,782 19 4 General Charges Account.. .. 53 4 7 £1,016,949 18 2 £1,016,949 18 2
Year. New Zealand. | Australia. FijiLondon. I Not specified. Total. 1888 ... 1889 ... 1890 ... £ 164,545 61,475 669,079 Mr. Hean's ac with by Londor able 13,326 9,234 9,656 2,526 244,771 To reduction of To Contingency 10,085 £ 51,455 45,652 140,897 tjustment o: i, detailed p £ £ 885 2,438 10,579 f deficiencies, dealt particulars not avail- £ £ 216,885 109,565 349,000 1,169,555 1891 ... 1892 ... 1893 ... 1894 •... 1895 ... 5,623 10,955 3,876 11,978 292,566 Estates Co Eund Acco 43,988 9 660 1,100 3,879 mpany Sh are Accou junt. Cr. 120 18,949 20,198 13,532 15,164 nt 764,306 171,136 1 1,477,758 1896 .. 54,193 1,184,697 606,990 15,671 3,999 1284,442 3,095,799
1.—6.
EXHIBIT No. 12. [Handed in by Mr. Booth, 3rd August, 1896.] Transfers on the Colonial Share Registers of the Bank of New Zealand registered since the Beginning of Year 1893.
120
Date of Deed. Date of Registration. Transferor. m 3 0Q Transferee. Consideration. 1892. Nov. 25 Dec. 8 23 Nov. 29 Dec. 23 „ 1 1893. Jan. 5 „ 7 „ 3 „ 6 1893. Jan. 6 „ 6 „ 6 „ 6 „ 6 „ 13 Spence, Alexander Wood, George ... Tomkins, A. H. Park, S. M. ... Kettlewell, George Clapham, G. J. 20 15 20 5 5 7 Mclver, John ... Hooper, Francis Tomkins, E. W. Allan, Bev. J. M. £ s. d. 98 10 0 75 0 0 98 10 0 33 17 6 34 0 0 47 15 6 Ii It ' ' ' „ 13 „ 13 „ 13 „ 24 Mason, T. G. ... Beddihough, John Hier (deceased), John ... Christian, John (White (deceased), Miss E. M. \ (White, „ Miss L. B. J 75 40 12 10 Mason, C. M. A. Neville, Mrs. J. W. Hier, Mrs. Elizabeth Jeffries, Edward 511 17 6 192 0 0 49 "l5 0 Feb. 10 „ 17 7 White, Theophilus 1892. Oct. 31 1893. Jan. 9 „ 9 „ 20 „ 20 „ 20 „ 19 Feb. 7 1892. Dec. 28 1893. Feb. 10 7 „ 17 6 „ 6 8 „ 22 „ 27 Mar. 3 Feb. 10 Willcox, E. D.... 7 Hilton, H. W 35 0 0 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 17 Clapham, G. J. 5 17 24 6 5 13 20 Jeffries, Edward 24 7 6 82 17 6 162 0 0 40 10 0 33 15 0 63 7 6 99 10 0 Smith, O.O. ... Christian, John Failone, Angelo Barr, John Clark, M. A. ... Ollivier" F. M. ... it Lees, Andrew ... Atterbury, Walter „ 17 Wood, George ... 35 Tanner, C. W.... 174 0 0 „ 24 „ 24 „. 24 „ 24 „ 24 „ 24 Mar. 3 „ 3 „ 10 Mackay, A. F.... Sutherland, Daniel Stone, J. W. ... Clark, J. M. ... Clark, M. A. ... Will, William ... Davis, J. C, and Wright, E. Blencoe, William Douglas (deceased), G. A. 10 20 25 15 6 17 16 10 60 Atterbury, Walter Doherty, John... Bichards, Eugene 48 10 0 99 10 0 125 0 0 73 17 6 29 11 0 84 0 0 77 18 0 50 0 0 // ' ' ' ' ' ' Jeffries, Edward Walker, William Borman, C. G. Douglas, Samuel; Douglas, B. T.; and Douglas, W. J. De Lauret, J. G. Boylan, Mrs. M. J. Jan. 20 Feb. 25 „ 10 „ 10 Arnold.W.M.M, and Simpson,E.P. Parker, Mrs. Catherine ... 13 10 45) 5f 30 9 10 10 40 10 8 20 17 9 20 20 20 20 20 75 0 5 0 48 5 0 Jan. 20 „ 10 Davis, Bev. Frederick ... Davis, C. F, and Davis, Miss H. L. 240 0 0 Feb. 28 Mar. 4 Feb. 20 Mar. 2 „ 9 9 „ 9 „ 14 Feb. 24 „ 28 „ 28 „ 28 „ 28 Mar. 1 Feb. 28 Mar. 15 1892. May 11 1893. Mar. 20 „ 20 „ 20 Feb. 28 „ 10 „ 10 „ 10 „ 10 „ 10 „ 16 „ 16 „ 16 „ 24 „ 24 „ 24 „ 24 „ 24 „ 24 „ 24 « 24 Dey (deceased), Peter ... Lewis (deceased), David Smith (deceased), J. B. ... Smith, Mrs. Jemima Beid, James Bassett, J. C. ... Short, H. E. ... Knowles, W. W. Smith, Mrs. Jemima Boss, Donald ... Blair, J. M. ... Good, Edward... 49 0 0 200 0 0 49 0 0 39 4 0 97 10 0 115 12 0 45 0 0 98 10 0 98 10 0 98 10 0 100 0 0 100 0 0 0 10 0 // Cherry, Francis Dixson, Hugh ... Wilson, W. H. Cornwell, Samuel, and Cornwell, J. Cherry, J. B. ... Boss, Donald ... Brassey, Mrs. Isabella ... ,/ '" II " ' ;/ " It ' * ' Beid, James Wilson, W. H. Cornwell, Samuel, and Cornwell, J. a ''' '' - Logan, John ... „ 24 Campbell, A. G. 6 Bourne, F. C. ... 62 0 0 „ 24 „ 24 „ 24 „ 24 Bourne, F. C. ... Cornwell, Samuel, and Cornwell, J. Brassey, Mrs. Isabella ... Wilson, W. H. 6 20 10 10 Dyson, Benjamin ... ... 40 10 0 97 10 0 48 15 0 49 5 0 Beynolds, W. H.
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
121
Date of Deed. Date of Registration. Transferor. m <D c3 A XfX Transferee. Consideration. 1893. Mar. 14 „ 14 „ 13 i, 11 „ 22 „ 16 Mar. 15 Feb. 16 Mar. 28 „ 28 Feb. 13 Mar. 15 Feb. 13 Mar. 29 „ 13 „ 13 „ 18 Feb. 23 1893. Mar. 24 „ 24 „ 24 ,t 30 „ 30 „ 30 Mar. 30 „ 30 April 7 i, 7 „ 7 „ 7 „ 7 „ 7 „ 7 i, 7 „ 11 i, 14 Bassett, J. C. ... Knowles, W. W. Browning, Mrs. Ellen ... Currie, Mrs. Elizabeth ... Jones, B. B. Metcalfe, C. J. Logan, John Sharp (deceased), B. J. ... Gibbons, B. P. 16 9 14 10 100 19 50 3 30 20 10 25 10 5 13 13 30 13 Ollivier, F. M. ... Burne, Mrs. Jessie Bussell, Mrs. Jane Dvson, Benjamin Ollivier, F. M.... Brabant, H. W. Sutherland, William Lang, Mrs. C, and Morley, J. J. ... Lamb, Mrs. L. M. £ s. d. 109 4 0 44 11 0 70 0 0 66 0 0 682 10 0 95 0 0 245 0 0 147 "O 0 98 0 0 a ... ... Wills (deceased), William Logan, John Wills, J. C Moorhouse, Miss A. J. ... Arnold, W. M. M, and Simpson, E. P. Wills, J."C. ... ... ... Maclatchey, Bobert Cressey, G. IT.... Ollivier, F. M.... De Lauret, A. G. Arnold, W. M. M, andBoydell, C.B. Ollivier, P. M. ... Arnold, W. M. M, and De Lauret, A. G. Lodder, Arthur Symington, J. S. 121 0 0 48 10 0 24 0 0 65 0 0 65 0 0 146 5 0 65 0 0 II If Wilson, Mrs. Elizabeth ... Arnold, W. M. M, and Simpson, E. P. Mar. 28 April 3 3 Mar. 29 Feb. 28 April 13 „ 13 „ 1 1 Mar. 29 ,, 29 April 11 Mar. 30 „ 28 „ 28 April 18 „ 24 „ 24 April 28 .„ 1.4 „ 14 „ 14 „ 14 „ 21 „ 21 „ 21 „ 21 i, 21 „ 21 „ 28 „ 28 28 „ 28 - „ 28 „ 28 May 5 „ 5 May 12 Moore, A. E. ... Gregson, Jesse... „ ... ... White, Theopilus Lang, Mrs. C, and Morley, J. J. ... Gregson, Jesse „ .. ... Kettlewell, George Arnold, W. M. M, and Simpson,E. P. Mills (deceased), John ... Fairclough, P. W. Moore, A. E. ... ' ... 100 10 10 7 3 10 10 10 10 31 13 32 12 20 30 20 5 10 25 McCulloch, Bobert Bichards, Eugene Murchie, Malcolm Scotland, Henry Ollivier, F. M.... Dalglish, John, and Simpson, E. P. Mills, Jane Hughes, Thomas 490 0 0 49 10 0 49 10 0 34 6 0 14 12 6 48 0 0 48 0 0 49 0 0 49 0 0 210 16 0 65 0 0 a • • • Bird, Mrs. Helen Friedlander, Waldemar ... „ ... ... ... Sutherland, William 58 10 0 98 10 0 147 0 0 98 0 0 24 15 0 49 5 0 May 3 April 24 Mav 3 April 20 „ 13 Mar. 21 May 12 „ 3 „ 3 „ 10 H 1 „ 2 „ 10 „ 16 „ 18 * 5 „ 17 ,, 17 8 ,, 15 „ 17 i, 17 April 7 „ 12 „ 12 „ 12 ,, 12 i, 12 „ 12 • „ 19 „ 19 ,, 19 „ 19 „ 26 „ 26 „ 26 „ 26 a 26 „ 26 „ 26 „ 26 „ 26 June 2 , 2 „ 2 „- 3 Belcher (deceased), Thomas Harrison (deceased), H. S. Friedlander, Waldemar ... Thurburn, Charles Binney, F. W. ... Collings, Mrs. A. B. Jones (deceased), Miss Ursula Vines, W. E. ... Thomson, Mrs. Catherine Johnston, Mrs. A. C. Thomson, Mrs. Catherine De Lauret, J. G. Bagot, John Thomson, Mrs. Catherine Andrew (deceased), James Nilsson, Mrs. Charlotte ... Johnston, Mrs. A. C. Thomson, Mrs. Catherine 180 2 100 100 50 55 70 30 30 12 13 22 88 23 6 20 40 20 69 30 20 20 45 Jackson, George Harris, William Belcher, Mrs. M, Symon, B. B, and Newell, James Campbell, E. A, and Harrison, H. N. Good, Edward... Haynes, Daniel Hughes, Thomas 9 18 0 490 0 0 490 0 0 343 15 0 it • • > George, Mrs. A. M. Leighton, J. F. Herbert, Edward Keating, John Haynes, Daniel Fitzgerald, B. M. 474 5 0 202 10 0 144 0 0 57 12 0 63 1 0 106 14 0 426 16 0 Herbert, Edward Bose, Thomas ,., - ... Jackson, George McKay, William Haynes, Daniel 28 4 0 96 10 0 190 0 0 95 0 0 a • • • *** Blair (deceased), Bobert Vines, W. B. Thomson, Mrs. Catherine Blair, Mrs. Margaret Ollivier, F. M.... McKinley, Archibald 204 0 0 97 0 0 97 0 0 Walker (deceased), Mrs. C. J, and Emslie, Mrs. Helen Burnet, James... Burnet, James, and Burnet, Alex. Gregson, Jesse ... Kingdon, W, H. Emslie, Mrs. Helen May 1 „ 1 April 2 May 4 „ 2 „ 2 „ 2 » 2 20 55 10 10 Burnet, Miss E. S. „ ... ... Kingdon, W. H. Blyth, A. T. ... 98 0 0 257 10 0 48 15 0 48 0 0
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
122
Date of Deed. Date of Registration. Transferor. H2 O) U CD Transferee. Consideration. 1893. May 15 8 „ 30 June 1 May 25 June 2 „ 1 May 16 „ 23 June 5 5 „ 5 „ 6 May 4 „ 30 „ 31 „ 16 June 15 „ 1 i, 3 „ 7 May 25 „ 17 June 6 „ 12 „ 13 „ 13 May 10 „ 17 June 3 5 „ T . 1 „ 2 3 . 3 „ 10 „ 15 „ 9 Mar. 11 1893. June 2 „ 2 „ 2 „ 2 „ 2 „ 9 „ 9 „ 9 „ 9 „ 9 „ 9 „ 9 i, 9 „ 9 „ 9 „ 9 „ 9 „ 9 „ 9 „ 16 ; i6 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 7, 23 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 Eobjohns, F. W. Johnston, Mrs. A. C. Gamble, W. N. Baker, Bev. S. W. Vines, W. B. ... Hanna, J. C. ... Lusk, Archibald Poulson, Mrs. Anna Baker, Bev. S. W. 5 30 20 12 6 25 33 30 25 50 5 9 16 20 27 27 6 11 12 14 5 10 10 25 16 8 15 12 7 118 28 10 18 30 5 15 50 6 5 47 Blyth, A. T. ... McKay, William Buttle, G. A. ... Whewell, Mrs. Sarah Goodacre, James Gold water, Nathan Telford, P. W. ... McKinlay, Archibald Dakin, Mrs. Amy Bell, W. G Taylor, John ... Croker, S. B. ... Johnston, Bobert Skene (No. 2 account), Leslie Kerr, Mrs. J. T. Borthwick, J. B. Blower, Benjamin Boylan, Mrs. M. J. Hart, George ... Taylor, John ... Cumming, D. C. £ s. d. 24 .0 0 144 15 0 94 0 0 56 8 0 28 10 0 166 5 0 180 9 0 204 0 0 118 15 0 236 5 0 23 10 0 42 6 0 Croker (deceased), S. J. ... Campbell, E. A, and Harrison, H.N. Kerr, Thomas ... Skene (No. 2 "account), Leslie Paap, J. J. C. ...' Baker, Bev. S. W. 136"o 0 0 f0 0 28 10 0 51 14 0 56 8 0 64 15 0 23 15 0 48 10 0 48 10 0 165 12 6 108 0 0 54 0 0 99 7 6 78 0 0 33 5 0 0 10 0 131 12 0 66 10 0 119 5 0 94 10 0 23 5 0 70 10 0 336 5 0 41 5 0 24 7 6 Friedlander, Waldemar Baker, Bev. S. W. Lamb, Mrs. L. M. Corden, H. J. ... Vrnes, W. B. ... Ollivier, F. M. ... Taylor, John ... Boss, Donald ... Beid, John Hill, S. G. Brown, John ... Bussell, P. B, and Jones, J. B. ... Gibbs, Miss B. L. Steevens, J. H. Herbert, Edward Haynes, Daniel ... Jones, L. C. B, and Jones, J. B. ... Taylor, John ... Bennett, Thomas Ollivier, F. M.,.. Hart, George ... Good, A. T. ... Lynd, Andrew ... Taylor, George O. Caitcheon, Mrs. E. J. ... Lewis, Miss Elizabeth ... MacGibbon, Thomas, MacGibbon, John, and MacGibbon, Colin Beddihough, John Allen, George, and Boyd, William Leijon, C. J. V. Burgess, Mrs. Amelia ... McKinley, Archibald Allan, Bobert ... Frater, William Hawkins, B. T. it Heron, Mrs. Elizabeth ... Brown, T. L. ... a • •' ''' Corden, H. J. ... Beid, John Lewis, Benjamin MacGibbon (deceased), John „ 7 June 5 May 25 June 1 May 23 „ 29 June 26 „ 10 „ 10 „ 26 May 30 June 9 „ 27 „ 26 „ 29 „ 28 May 23 July 6 June 27 April 13 June 13 „ 27 „ 27 „ 27 „ 27 „ 23 „ 23 „ 23 „ 30 „ 30 „ 30 „ 30 t, 30 „ 30 „ 30 „ 30 „ 30 „ 30 July 7 ,, 7 ,, 7 „ 7 „ 14 i, 14 July 14 „ 14 „ 14 „ 14 i, 14 „ 14 Kettlewell, George George, Mrs. A. M. Baker, Bev. S. W.. Walker, J. T. ... Dawson, William Brewster, John Howard, W. B. Howard, W. B, and Simons, W. H. Brewster, John Fenn, B. J. Jacombs, J. E. Smyth (deceased), W. D. Brewster, John Norman (deceased), William Davis, F. W, and Charlton, J. E. Lamb, B. S. Newbigin (deceased), Mrs. Kate ... Prater, William Gibson, Miss J. G. Beid, John Brewster, John Frater, William 98 55 50 30 12 40 100 6 10 15 20 10 39 100 53 4 25 24 15 20 10 30 10 5 10 a •'' ''' Bailey, Benjamin Keating, John ... Bennett, Thomas Davis, F. W, and Charlton, J. E. Barclay, T. H. Gibbs, Isaac, and Coup, Bobert ... Whewell, Miss Sarah Hudson, James Brown, Henry ... Laird, William... Gibson, Miss E.J. Fenwicke, Minden ., N ... Donald, Y.W.J Byley, John 0 10 0 258 10 0 238 15 0 143 5 0 . 77 2 0 190 0 0 0 10 0 28 4 0 47 0 0 73 2 6 96 5 0 66 5 0 480'"0 0 19 8 0 120 0 0 73 2 6 100 0 0 67 10 0 147 10 0 49 0 0 24 10 0 49 0 0 it •' • a ' •' " • a '•< "• "'
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
18—1. 6.
123
Date of Deed. Date of Registration. Transferor. OS h cS CO Transferee. Consideration. 1893. July 7 7 i, 3 4 ■ 1 June 27 „ 27 „ 21 „ 27 July 8 „ 18 „ 13 i, 21 1 „ 18 June 8 „ 8 „ 12 July 4 „ 22 „ 24. „ 24 „ 24 June 21 July 1 . 1 1 „ 20 „ 7 „ 28 „ 14 Juno 29 July 19 ; 22 Aug. 2 July 25 „ 25 „ 27 Aug. 11 July 27 „ 27 Aug. 11 i, 4 July 28 „ 31 „ 28 „ 24 „ 28 „ 28 Aug. 5 „ 14 . 2 i, 15 July 31 Aug. 15 „ 15 July 28 Aug. 3 „ 3 5 „ 11 July 29 „ 29 Aug. 7 June 14 July 4 1893. July 21 „ 21 „ 21 » 21 „ 21 „ 21 „ 21 „ 21 „ 21 „ 21 „ 21 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 .„ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 „ 28 Aug. 18 „ 18 „ 18 „ 18 • „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 „ 25 Davis, F. W, and Charlton, J. E. Toomev, John ... Moore, T. C. ... Gray, W. G. ... Bloomfield, J. L. B. Frater, William Bloomfield, J. F. B. Jenkins, B. W. Paterson, J. B. Young, Andrew Bloomfield, J. L. B. Bloomfield, J. L. B. Croker, S. B. ... Joyce, J. J. Smith, Bobert ... Smith, E. B. ... Doherty, John... Bain, Mrs. Jane 35 15 50 50 40 35 25 20 5 22 16 5 5 10 16 41 14 50 30 50 13 19 58 20 10 5 10 12 7 113 23 31 15 25 10 10 5 25 125 11 10 20 30 20 10 20 50 20 30 10 10 40 15 70 23 28 30 15 15 20 25 10 15 5 45 20 Toomey, John ... Keating, John ... Gray, W. G. ... McCulloch, William Keating, John ... Byley, Mrs. Jane it Palmer, A. J. ... Cressey, G. H. Paterson, Mrs. Sarah Mcintosh, A. J. Dakin, Mrs. Amy „ ... Joyce, Mrs. Emily Smith, E. B. ... Parker, Mrs. Elizabeth ... Darrow, James Shrewsbury, Alfred Dakin, Mrs. Amy Patterson, Mrs. Annie ... Hooper, Francis Hooper, James £ s. d. 169 15 0 72 15 0 0 10 0 242 10 0 194 0 0 171 10 0 122 10 0 100 0 0 25 1 3 105 12 0 100 0 0 25 0 0 22 10 0 45 0 0 72 0 0 184 0 0 91 0 0 0 10 0 205 10 0 220 0 0 56 17 6 85 10 0 0 10 0 97 0 0 48 0 0 25 0 0 48 0 0 0 10 0 48 9 6 474 12 0 109 5 0 150 0 0 103 7 6 11Q 12 6 42 10 0 45 0 0 22 10 0 116 0 0 „ ... Patterson, William Bloomfield, G. F. B. ... Bloomfield, J. L. B. a ''' a it ' ' ' ■ - * Hutcheson, William H.... Gibbons, H. F. White, Miss Janet Bose, Thomas ... Merfield, J. W. Doherty, John Hutcheson, Mrs. Juliana Fenwicke, Minden White, Bobert... Smylie, Archibald Ferguson, J. L. Fenwicke, Minden Macbean, Daniel Mandeno, J. H. Mclvor, John ... Hally, J. A. ... Bishworth, Bev. J. S. Byan, W. A. B. Lamb, J. K. Lamb, Miss A. J. Frater, William Boss, Donald ... Lodder, Arthur Tovey',' A. C. H. Thomson, Miss C. J. Forbes, Mrs. Margaret J. T. Sadleir (deceased), Mrs. Abigl. Doherty, John 48 15 0 42 10 0 90 1 8 125 5 0 87 0 0 43 10 0 89 15 0 225 0 0 89 0 0 133 10 0 41 5 0 43 15 0 170 15 0 64 10 0 397 10 0 97 15 0 121 2 0 134 12 6 66 15 0 66 15 0 83 10 0 107 6 10 45 0 0 68 5 0 22 15 6 217 2 0 137 0 0 Colville, F. M. Sommerville, Bev. Bobert Garseds, Joshua Beid, James Thomson, Miss C. J. Bain, Mrs. Jane Garseds, Joshua Taylor, Mrs. Catherine ... Tovey, A. C. H. Frater, William Mollet, Thomas Byan, W. A. B. Beynolds, H. W. Byan, W. A. B. McKay, William Herbert, Edward Blacker, C. E.... Beid, James Hawkins, B. T. Burnside, J. A. Hill, Bev. James Beid, James Taylor, George B. Brown, James ... McKay, William Patterson, Adam it • • • ' • ' Taylor, Mrs. Catherine ... a • •' ''' White, Miss Janet Sommerville, Bev. Bobert Fen wick, Percival Phillips, L, and Cohen, A. S. „ ... ... Jones, Frederick Skinner, Bev. James Skinner, Alexander Forbes, Mrs. M. J. T.' ... Emslie, Helen ... Smith, E. B. ... Hutton.F. W. II * • " * ■ "
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
124
Date of Deed. Date of Registration. Transferor. CD U CO Transferee. Consideration. 1893. June 19 Aug. 21 2 „ 18 July 29 „ 31 Aug. 16 „ 15 „ 17 25 July 19 1893. „ 25 „ 25 Sept. 1 „ 1 . 1 „ 1 „ 1 „ 1 „ 1 „ 1 „ 1 Collings, Mrs. A. B. Hoult (deceased), William Beid, Mrs. J. C. S. Murray, G. A. ... White, Miss Janet Beid, James Flemming, Alexander Byan, W. A. B. 50 30 10 75 75 20 23 7 52 3 50 Hutton, F. W. Hoult, Mrs. A. A, and Hoult, E. S. Burnside, J. A. Byley, John £ s. d. 338 0 0 a • • • • • • a • • • • • • • • • 42 13 9 330 0 0 330 0 0 86 0 0 98 18 0 30 16 0 340 12 0 15 0 0 220 0 0 Croft, W. J. ... Murray, Mrs. Louisa, Murray, B. W, and Shaw, Thomas Wingfield (deceased), J. B. Wingfield, Mrs. F. J. ... New Zealand Insurance Company Frater, William Abel, H. J. ..'.' ... .'.'. Taylor, B. B. ... Herbert, Edward Aug. 2 2 Sept. 1 2 „ 1 Aug. 18 Sept. 1 Aug. 26 i, 30 July 29 „ 8 i, 8 ;, s „ 8 ;, s „ 8 Sept. 8 „ 8 „ 8 ,; s Baker, Mrs. E. H. Winks, Jonathan, and Winks, John Good, Edward ... Sommerville, Bobert Murray, Mrs. Louisa, Murray, B. W, and Shaw, Thomas Ditto 15 15 134 85 20 13 27 12 14 6 Wingfield, Mrs. F. J. ... Kilgour, M. J. ... Frater, William New Zealand Insurance Company Dilworth, James Abel, H. J. Greig, Mrs. I. J. Lamb, A. S. J. ... Dilworth, James Thompson, John 72 0 0 0 10 0 0 10 0 84 0 0 85 3 0 182 5 0 51 18 0 58 15 0 39 0 0 „ 29 „ 29 „ 17 Aug. 31 ■ 30 „ 8 „ 8 ;, 8 „ 8 „ 8 // Leahy, Thomas Bull, Arthur ... Wood, sen, Mrs. Phillipa, Wood, jun, Phillipa, and Wood, H. T. Bollerson, Elijah Sommerville, Mrs. I. Law (deceased), T. C. Bull, Arthur ... Crawford, A. J. Sommerville, Mrs. Isabella Chandler, George Sommerville, Mrs. Isabella Snell, Mrs. Annie Buddie, Thomas Sommerville, Mrs. I. Buddie, Thomas Arrowsmith, William Moore, T. C, and Moore, Miss E. ... Gray, John Murray (deceased), Stewart 8 20 8 20 75 Jolly, Bev. Isaac Hutton, F. W. ... ..'. Paltridge, W. H. Wood, sen, Mrs. Phillipa 52 0 0 130 0 0 38 0 0 84 0 0 215 0 0 Sept. 4 Aug. 30 Sept. 13 Aug. 29 Sept. * 1 Aug. 25 Sept. 11 „ 5 „ 15 „ 15 Aug. 23 Sept. 20 „ 15 „ 5 5 5 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 22 „ 22 „ 22 . 22 „ 22 „ 22 „ 22 „ 29 „ 29 „ 29 17 20 112 15 10 25 9 3 5 15 50 97 16 51 51 52 Paltridge, Henry Blanchard, A. W. Buddie, Thomas Black, Alexander Crawford, M. McK. Kilroy, Mark ... Paltridge, W. H. McMahon, John 72 5 0 86 0 0 99 0 0 75 0 0 100 0 0 41 6 0 12 6 0 20 15 0 62 5 0 225 0 0 392 17 0 66 8 0 0 10 0 216 15 0 Alexander, A. W. Dilworth, James Boylan, Mrs. M. J. Gray, John Abel, H. J. Murray, Mrs. L, Murray, B. W, and Shaw, Thomas Auld, Mrs. Elizabeth ... Abel, H. J. Smith, E. B. ... Aug. 22 Sept. 5 „ 9 9 Aug. 22 Sept. 14 „ 14 „ 27 Aug. 26 Oct. 11 Sept. 28 Aug. 18 Sept. 25 „ 25 „ 30 „ 30 „ 28 1892. Jan. 28 „ 29 „ 29 „ 29 „ 29 „ 29 Oct. 6 „ 6 „ 6 „ 6 „ 13 „ 13 i, 13 „ 13 „ 13 „ 20 „ 20 „ 20 Toomath, Mrs. Elizabeth Diddams, W. H. Allan, E.J. ... Toomath, Mrs. E. J. Smith, E. B. ... De Bachoue, F. J. de L. Good, Ernest ... Nathan, A. II.... De Bachoue, F. J. de L. Baker, Mrs. E. H. Frater, William Carrick, Aitken Arrowsmith, William 10 5 8 12 25 12 8 20 10 25 35 39 10 1 9 50 20 Kilroy, Mark ... Jolly, Isaac Skinner, James Lean, A. E. Dalrymple, Mrs. M. E. ... Smith, William Gardner, M. E. Baine, Thomas 45 7 6 21 5 0 33 4 0 49 16 0 100 0 0 52 1 0 34 14 0 81 0 0 45 10 0 100 0 0 143 10 0 162 6 9 41 12 6 4 3 3 37 7 0 210 0 0 82 0 0 McCulloch, Bobert Wratt, Mrs. Eliza Gardner, M. E. Cherry, J. B. ... „ 27 Alexander, G. M, Cohen, V, and Levy, Mrs. C. 80 Cohen. V, Levy, Mrs. C, and Goldring, E. A. 0 10 0
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
125
Date of Deed. Date of Registration. Transferor. w A Transferee. Consideration. 1892. July 16 1893. Oct. 5 Sept. 18 Oct. 10 „ 17 Sept. 14 2 "„ 1 1 9 Oct. 9 „ 13 „ 28 „ 10 1893. Oct. 27 Cohen, V, Levey, Mrs. C, Goldring, E. A. W T ebb, E. B, and Webb, S. W. ... Moore (deceased), J. H. . Waite, Edward Curtis, Oswald Seddon, Mrs. B. J. Brassey, Mrs. J. Frater, William Sommerville, Mrs. J. Allen, E.J. ... Dixon, W. B. ... Moir, James Beich, B. A. McKelvie (deceased), John 80 Cohen, V, Levey, Mrs. C, Hayman, L. H, and Cohen, H. E. Webb, Miss A. A. L. ... Moore, Mrs. M. A. Waite, Mrs. Mary Allan, Bobert ... Davidson, Bobert Davidson, William £ s. d. 0 10 0 „ 27 „ 27 „ 27 „ . 27 „ 27 „ 27 „ 27 „ 27 „ 27 Nov. 3 „ 3 „ 10 „ 10 16 20 20 48 20 59 29 16 15 10 15 10 223 0 10 0 5 0 0 192 0 0 83 0 0 242 17 0 123 5 0 68 8 0 91 10 0 41 15 0 61 10 0 40 0 0 a • • • • • ■ Mollet, Thomas Wilson, B. H. Wilson, F. J. ... Amon, A, Hammond, J, and McKelvie, J. F. Nixon, Miss M. H. Boskell, Bichard „ 26 „ 30 „ 30 „ 17 „ 17 „ 27 Nov. 4 i, 15 „ 10 „ 17 „ 17 „ 17 „' 17' „ 17 „ 24 „ 24 Nixon, Thomas Kennedy, Mrs. Mary Nathan, A. H. Hart, George ... Kennedy, Mrs. Mary Good, Edward... Amon, A, Hammond, J, and McKelvie, J. F. Martin, Mrs. E. C. Good, Edward ... Forbes, Mrs. M. J. T. ... Downes, W. G. 11 20 50 16 34 45 18 30 Wright, Bev. A. C. ... ... 71 10 0 123 0 0 308 2 6 67 0 0 140 0 0 186 0 0 75 3 0 123 0 0 rr ■ • • Mollett, Thomas Bourne, Mrs. Jessie Oct. 18 Nov. 4 6 „ 6 „ 6 8 „ 17 „ 13 „ 17 „ 15 Dec. 4 „ 2 2 „ 1 Oct. 6 Sept. 19 Dec. 1 9 it ~* „ 12 ,; 9 „ 9 „ 12 „ 12 „ 19 „ 13 „ 14 „ 1 „ 12 8 „ 24 „ 24 „ 24 „ 24 „ 24 Dec. 1 „ 1 „ 1 r, 8 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 22 „ 22 „ 22 „ 22 „ 22 „ 29 „ 29 „ 29 1894. Jan. 5 5 5 „ 12 „ 12 „ 19 „ 19 Bussell, Mrs. Jane Willcox, Henry, and Willcox, E. D. Kennedy, Martin Graham, J. J. ... Kennedy, Mrs. Mary Norwood, S. P. Kennedy, Mrs. Mary Buttle, G. A. ... Lean, A. E. Medland, Mrs. Grace Kennedy, Mrs. Mary Lyell, J. A. ... '.'.'. '.'.'. Oldham, William Smith (deceased), Thomas Lyell, J. A. ... 10 6 10 5 15 14 7 40 10 5 10 2 12 32 10 10 50 50 5 51 31 25 29 11 10 26 36 12 52 Wright, A. C. ... Boskell, Bichard Thompson, John Herbert, Edward Dalrymple, Bev. A. M. ... Smith, C. W. ... Boskell, Bichard Dakin, Mrs. Amy Boskell, Bichard Mollett, Thomas Packer, Miss Hannah ... Woods, Samuel Aickin, W. S. Medland, B. H. Shrimpton, Harry Good, A" T. ... ... .'.'. Byley, W. C. ... Smith, Mrs. Susan McCoy, Thomas Parker, William 40 0 0 36 0 0 60 0 0 30 0 0 60 0 0 57 8 0 0 10 0 241, 0 0 39 10 0 30 0 0 39 10 0 7 18 0 48 0 0 126 10 0 41 0 0 55 0 0 195 0 0 192 10 0 19 0 0 199 0 0 Bain, Mrs. Jane Graham, J. J.... Whewell, Mrs. Sarah Giblin, N. F.. and Smith, Mrs. J. C. Lyell, J. A. ... Murray, Mrs. Louisa, Murray, B. W, and Shaw, Thomas Lyell, J. A. ... Clark, M. A. ... Beid, James Dome, Pierre ... Bankin, Bichard Brown, Hy. Bain, Mrs. Jane 96 17 6 108 15 0 40 14 0 38 0 0 18 16 0 140 8 0 46 10 0 197 12 0 Woods, Samuel ... .... McCreery, Nathaniel Shrimpton, Harry „ 12 „ 13 „ 13 „ 21 „ 20 „ 20 „ 22 1894. 15 5 10 25 75 24 50 Borthwick, J. B. Thompson, John Scott, George ... Burra, Bobert... Shrimpton, Harry 58 10 0 27 0 0 58 0 0 92 10 0 281 5 0 89 8 0 190 0 0 Stenhouse, John Jan. 4 . 5 „ 15 „ 19 „ 19 „ 19 Turnbull (deceased), Mrs. E. Public Trustee of New Zealand ... Scott, B. McD. 1 1 200 Public Trustee of New Zealand ... Turnbull, Frederick Frater, William 5 0 0 0 10 0
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
126
Date of Deed. Date of Registration. Transferor. CQ u C3 A w Transferee. Consideration. 1893. Dec. 20 1894. 1894. Jan. 19 Bankin, Bichard 35 Herbert, Edward £ s. d. 131 5 0 Jan. 4 1893. Dec. 30 „ 30 1894. Jan. 25 „ 24 „ 25 „ 20 „ 27 „ 27 4 „ 27 „ 15 „ 15 „ 13 „ -24 „ 31 „ 31 „ 30 „ 30 „ 30 1893. Dec. 11 1894. Jan. 12 „ 16 „ 16 „ 15 „ 29 „ 30 „ 26 Feb. 1 Jan. 29 25 Feb. 16 1 6 Jan. 25 4 Feb. 2 7 Jan. 18 Feb. 2 „ 12 9 8 „ 12 8 6 Jan. 23 „ 26 Public Trustee of New Zealand ... 17 Smyth, Thomas F. „ 26 ,, 26 Porteous, John 6 20 Porteous, Mrs. A. A. 34 0 0 74 0 0 „ ... — „ 26 „ 31 „ 31 „ 31 , 31 „ 31 „ 31 „ 31 „ 31 „ 31 „ 31 „ 31 ,, 31 „ 31 „ 31 v 31 „ 31 Scott, Mrs. Jessie Johnston, A. C. Lusher, B. A. ... Frater, William George, F. N. ... 10 20 6 114 5 20 40 10 20 10 10 66 192 192 17 20 20 Scott, Thomas... Pulford, Edward Ollivier,"F. M.... Shrewsbury, Alfred Pulford, Edward Public Trustee of New Zealand ... Beid, James Shrimpton, Harry 35 0 0 70 0 0 28 10 0 570 0 0 23 15 0 95 0 0 Campbell (deceased), Thomas George, F. N. Frater, William ... Duncan, P. A. Mourant, J. E. Frater, William Mulock (deceased), T. E. Mulock, Mrs. J. F. Nicholson, James ir •• • "• a ■ ■ • Haynes, Daniel Mulock, Mrs. Julia F. ... Buttle, G. A. ... Frater, William 47 10 0 72 0 0 36 0 0 36 0 0 239 5 0 0 10 0 60 15 6 71 10 0 71 10 0 a • - - II " " ' * * * Feb. 16 Matthews (deceased), Charles 70 Matthews, Alfred „ 16 „ 16 „ 16 » 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 16 , 16 „ 16 „ 16 „ 16 „ 16 „ 16 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 Garland, II. N. Lusher, B. A. ... Bichards, Eugene Duncan, P. A. ... Lyell, J. A. Dee, Lucy Baker, T.N. ... Kennedy, Mrs. Mary it Gards, Louis ... Buttle, G. A. ... Frater, William Public Trustee of New Zealand ... 30 23 24 28 50 10 18 50 20 5 20 17 10 25 15 30 30 25 283 100 35 20 30 46 4 6 Gards, Louis ... it • • • • • • a ••• • • ' n • • • ■ • ■ Haynes, Daniel Byrne, Patrick... Haynes, Daniel Allan, Thomas Shrimpton, Harry a • • • • • • Cosgrove, P. T. Jackson, George ... Middleton, Thomas Frater, William Herbert, Edward Sutherland, Mrs. Elizabeth Isaacs, John Dalgleish, Mrs. C. Buttle, G. A. ... Nearing, John ... Taylor, J. A. ... Hunt, John Taylor, John ... Shrimpton, Harry Hindmarsh, W. M. 111 0 0 85 2 0 88 16 0 103 12 0 181 5 0 35 0 0 90 0 0 180 0 0 72 0 0 18 0 0 71 0 0 62 9 6 36 15 0 118 15 0 55 10 0 108 0 0 105 0 0 125 0 0 0 10 0 367 10 0 126 2 3 97 0 0 140 12 6 166 15 0 14 8 0 21 12 0 Kennedy, Mrs. Mary Buttle, G. A. ... Dalgleish, David Taylor, William, and Taylor James Buttle, G. A. ... ii II ' ' ' " ' ' ' ' Allan, Thomas... Pel). 13 1 1 1 i, 12 „■■ 15 8 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 „ 23 Gilfillan, J. B, Bice, V. 1, and Gilfillan, jun, Hy. H. Lush (deceased), J. H. M. Buttle, G. A. ... 8 20 33 2 64 32 28 // ... ... Lush, Mrs. M. E. Isaacs, John Shrimpton, Harry 20 0 0 118 16 0 7 4 0 312 0 0 100 0 0 99 8 0 Bensusan, S. L. Pearce, Edward, and Boyd, William Goutenoire, Bev. J. A, and Martin, Bev. P. A. Frater, William Buttle, G. A. ... McKay, Andrew Haynes, Daniel Weir, William... Pestre, Bev. J. F, and Martin, Bev. P. A. Jackson, George Barstow, A. E. Lawson, John ... Haynes, Daniel 17 0 0 73 17 6 485 0 0 241 5 0 „ 16 „ 12 8 6 „ 23 „ 23 Mar. 2 „ 2 5 15 100 30
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
127
Date of Deed. Date of Registration. Transferor. co CO u c3 A W Transferee. Consideration. 1894. Feb. 13 „ 13 1894. Mar. 2 „ 2 Howard (deceased), Jos. Ho ward, Mrs. Isabella... 26 26 Howard, Mrs. Isabella .. Bank of New Zealand Estates Company Buttle, G. A. ... Ollivier, F. M. ... Sutherland, William McCulloch, Bobert £ s. d. 0 10 0 „ 23 „ 20 „ 16 8 „ 2 „ 2 „ 2 „ 2 Taylor, William and James Frater, William 134 25 5 10 0 10 0 125 0 0 18 0 0 35 10 0 „ 22 „ 12 „ 14 „ 19 „ 27 „ 26 8 8 „ 16 „ 13 Jan., 11 Feb. 16 „ 2 „ 2 „ 2 „ 2 . 2 „ 2 „ 9 „ 9 „ 9 i, 9 „ 9 „ 9 a • • • Ewington, F. G, and Matthews, S. H. Bankin, Bichard McKay, Andrew Buttle, G. A. ... Kennedy, Martin Magee, James ... Bankin, Bichard Grigg, John 100 50 54 30 5 40 20 30 3 9 187 300 McDonnell, Edward Allan, Bobert ... Shrimpton, Harry Waite, William Magee, Bobert McDonnell, Edward Sutherland, William Sutherland, Mrs. Elizabeth Turnbull, Frederick Thompson, John Green, George ... Haynes, Daniel 340 0 0 242 10 0 194 8 0 105 0 0 20 0 0 134 0 0 72 0 0 108 0 0 17 10 0 45 0 0 800 0 0 900 0 0 „ 26 „ 22 Mar. 10 „ 14 Feb. 19 Mar. 13 „ 14 Feb. 13 Mar. 15 „ 19 „ 19 Feb. 28 „ 28 Mar. 20 Aprrl 3 Mar. 22 „ 16 „ 28 Feb. 28 „ 28 Mar. 7 „ 15 April 5 Mar. 24 „ 15 April 6 „ 11 Mar. 20 „ 20 5 „ 14 „ 28 April 6 Mar. 28 „ 28 „ 19 „ 19 5 April 2 . 16 „ 16 „ 16 „ 16 „ 16 „ 22 „ 30 „ 30 „ 30 „ 30 „ 30 April 6 „ 6 „ 6 „ 6 „ 6 „ 6 i, 6 „ 13 „ 13 „ 13 . 13 „ 13 „ 13 „ 13 „ 13 „ 13 „ 13 . 13 i, 20 „ 20 „ 20 „ 20 „ 20 „ 20 „ 20 „ 20 „ 20 „ 20 Mcintosh, A. J. Buttle, G. A. ... Green, Henry ... Bhodes,Mrs. S. A, Studholme, John, Pharazyn, C. J, and Pearce, Edward Mackay, Andrew Buttle, G. A. ... Hill, James White, Bobert... Bitchie, John ... Telford, P. W.... Frater, William Buttle, G. A. ... Grigg, John 5 20 15 15 132 30 15 20 50 40 10 17 12 50 30 11 25 20 20 20 20 55 40 150 50 10 25 25 40 100 36 20 30 27 100 20 6 15 168 Allan, Bobert ... Newbould, W. H. Kilgour, James Frater, William Byley, John Telford, John ... Clarke, W. H Byrne, Christopher Kettlewell, George Sutherland, William Hindmarsh, W. M. Pardy, W. S. ... ... . Wilkinson, Frank Sutton, William Good, Mrs. H. F. Mclver, John ... Waymouth, Frederick ... 24 15 0 95 0 0 45 0 0 45 0 0 475 4 0 135 0 0 47 5 0 100 0 0 150 0 0 120 0 0 30 0 0 64 12 0 37 16 0 150 0 0 90 0 0 33 0 0 110 0 0 60 0 0 70 14 0 59 0 0 67 10 0 194 15 0 115 0 0 442 10 0 150 0 0 0 10 0 73 15 0 75 0 0 120 0 0 „ ... ... ... Alison, William Troup, Bobert ... Grigg, John Good, A. T Dickson, Mrs. Mary McKay, Andrew Grigg, John Chilman, Edward Fenwick, A. G. Fair, J. W. Ledingham, William Grigg, John Hunter, James Fenwick, A. G. Jeffries, Edward Hall, Bev. John Hyams, Mrs. Miriam Coup, George ... Harland, Thomas Bailey, Mrs. Charlotte ... Bailey, Christopher Ledingham, William White, Bobert Taylor, J. A. ... Turnbull (deceased), Mrs. E. M. ... Skene, Leslie ... White, "Bobert... Grigg, John MacLaurin, Peter Kilgour, James Skinner, Bev. James Pitcher, Mrs. Elizabeth Gardner, M. E. Shepherd, Bobert Sutherland, Mrs. Elizabeth Chalmers, James 108 0 0 61 0 0 88 10 0 82 7 0 305 0 0 61 0 0 18 6 0 45 15 0 „ ... ... ... Sandford, William Garvin, Thomas Pearson (deceased), William, and Pearson, Mrs. E. L. McKay, Andrew Green, F. A. Pearson, Mrs. E. L. „ 5 Mar. 31 „ 31 Feb. 18 „ 20 „ 20 „ 20 „ 27 25 20 30 9 Haynes, Daniel Herbert, Edward 100 0 0 85 0 0 88 10 0 32 8 0 Sayer, J. W, and Batiste, A. J. ... Sutherland, William
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
128
Date of Deed. Date of Registration. Transferor. CO a Transferee. Consideration. 1894. Feb. 18 Mar. 28 „ 30 April 25 „ 24 „ 30 „ 4 „ 18 „ 24 „ 24 „ 30 „ 30 May 4 „ 4 „ 14 Feb. 24 Mar. 13 May 1 „ • 4 April 17 May 21 „ 15 April 20 May 16 „ 16 „ 11 „ 11 „ 23 4 „ 1 „ 4 i, 17 „ 29 „ 19 Mar. 28 May 16 June 4 „ 1 5 Mav 30 April 27 Mar. 30 May 12 „ 2 „ 2 April 27 May 30 April 20 May 18 „ 18 „ 18 5 „ 30 „ 30 „ 30 June 11 „ 11 May 11 „ 31 „ 30 „ 30 April 9 1894. April 27 „ 27 „ 27. „ 27 May 4 „ " 11 „ 11 „ 11 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 18 „ 25 „ 25 „ ' 25 „ 25 „ 25 „ 25 „ 25 June 1 1 1 1 1 1 i, 1 May 11 „ 18 June 1 „ 1 ,; 1 „ 8 „ 8 „ 8 „ 8 „ 8 „ 8 „ 8 i, 8 i, 8 „ 8 i, 8 „ 8 „ 8 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 15 „ 22 Sayer, J. W, and Batiste, A. J. ... Lovell, B. H. ... Skene, Leslie ... Lean, A. E. Haynes, Daniel Lane, George, and Armstrong, D. H. Albery, Mark Lindsay (deceased), David Haynes, Daniel 5 Sutherland, William 20 Fogo, Andrew 3 Blair, John 10 Chappell, George 20 Coluinb, Charles 16 Stables, J A. 50 Logan, John 20 Lindsay, Mrs. Jane 10 Cohmrb, Miss M. H. 20 Columb, jun, Charles 166 Byley, John 48 25 Taylor, John 12 Peat, Mrs. Jane 6 Wells, Mrs. E. G. 3 Beid, James 17 30 Tavlor, William 10 Pardy, W. S. ... 100 Haynes, Daniel 3 Jackson, George 4 Nixon, Miss M. H. 68 Fenwick, A. G. 15 Thompson, John 38 Byley, John ... 25 Cogan, E. A. ... 50 Herdman, A. L. 10 Middleton, Thomas 72 Beit, Mrs. E. F. 16 Shrimpton, Harry 3 20 Soutar, William 20 Brophy, Patrick 10 23 Gardner, M. E. 15 Palmer, A. J. ... 40 Frater, William 10 Blanchard, A. W. 40 Browne, Michael 70 Bevnolds, A. J. 50 Young, B. F. .. s . 50 Allan, Thomas 10 Hilton, H. W. ... 6 Howatt, Miss M. M. 10 Howatt, Miss C. P. 10 Gards, Louis ... 12 Cogan, E. A. ... 45 Byley, Mrs. Jane 50 Allan, Thomas... 50 39 70 Kennedy, James 5 Jackson, George 10 Lynd, Andrew ... 75 Odium, J. I. 50 Browne, Michael 50 25 Harland, Thomas 40 Sanderson, Bobert 5 Scott, George ... 4 Howatt, Miss M. M. 200 Haynes, Daniel / £ s. d. 25 0 0 63 0 0 9 0 0 28 0 0 56 0 0 44 8 0 140 0 0 „ ... ... Turrell, Thomas Jones, Mrs. J. W. Logan, John a - - - ■ - - - • • Wells, C A Buttle, G. A. ... Sanford, William Mollet, Thomas Logan, John ... Pearson, Mrs. E. L. White, Bobert ... Ledingham, William Pearson, Mrs. E. L. Fenwick, A. G. 28 0 0 56 0 0 466 17 6 135 0 0 65 12 6 34 10 0 16 10 0 10 10 0 60 0 0 123 15 0 28 0 0 250 0 0 8 8 0 16 16 0 0 10 0 39 0 0 106 0 0 7.1 17 6 133 15 0 28 15 0 Greenwell, Walpole Kensington, W. C. Beit (deceased), J. H. 0. Stables, J. A. Logan, John Dawson, John ... Soutar, William Cross, Mrs. Eliza Sanford, William Fenwick, A. G. Gibson, George Chapman, Martin Frater, William Beid, James O'Neill, Henry 45 12 0 8 11 0 54 10 0 58 0 0 29 0 0 67 17 0 40 0 0 113 0 0 29 0 0 115 0 0 260 0 0 143 15 0 145 0 0 29 0 0 24 15 0 41 5 0 28 10 0 30 10 0 128 5 0 200 0 0 200 0 0 156 0 0 100 0 0 20 0 0 42 0 0 313 2 6 147 10 0 147 10 0 67 10 0 160 0 0 20 13 6 16 10 0 560 0 0 II • ■ • ' * * Allan, Thomas... Butement, Miss E. C. ... Frater, William Moir, James Thomas, W. D. O'Neill, Henry u ' • • " * • McConnochie, William ... Allan, Thom as ... Cohen, G. J. Greenwell, Walter Allan, Thomas... Pearson, Mrs. E. L, Pearson, W, Hamilton, J. F, Farrar, C. F. F. Ditto... „ 7 „ 13 „ 25 „ 22 „ 22 „ 22 Fenwick, A. G. .... 62 Fenwick, A. G. 50 Lewis, Mrs. Fanny 12 Bellamy, Mrs. M. G. 0 10 0 143 15 0 34 4 0
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
129
Date of T ? a * e t of Deed. Septration. Transferor. CO t* c3 A co Transferee. Consideration. 1894. April 25 „ 25 „ 31 June 7 „ 12 May 31 June 8 „ 12 May 29 June 13 1894. June 22 „ 22 „ 22 „ 22 ,, 22 ,, 22 „ 22 „ 22 „ 22 „ 22 Fenwick, A. G. Wade, '6. G. "... Chesney, James Harkness, John Bohrs, Mrs. Elizabeth ... Leary, B. H. ... Harkness, John Bewes, Mrs. M. B. Mandelson, Mrs. S, Cohen, Beresford S, and Cohen, G. J. Arnold, W. M. M, and Simpson, E. P. Campbell, J. L. Chesney, James Mollet, Thomas Allan, Thomas O'Neill, Henry 20 30 5 32 27 49 25 10 50 50 Notmau, John... Shrimpton, HarryClark, W. II. ... Mollet, Thomas Sandison, Bobert £ S. d. 57 8 0 85 10 0 4 15 0 124 16 0 108 0 0 139 13 0 100 0 0 40 0 0 141 5 0 147 10 0 a ■ ■ ■ Arkle, James ... Lees, Andrew ... Hull, Francis ... 8 „ 23 „ 7 „ 11 „ 18 „ 18 April 25 i, 27 June 27 „ 16 May 31 June 26 May 20 „ 31 „ 31 June 21 „ 23 „ 20 „ 22 „ 29 „ 29 „ 29 „ 29 „ 29 „ 29 „ 29 „ 29 •/, -29 July 6 „ 6 „ 6 „ 6 „ 6 „ 6 „ 6 i, 6 13 291 70 2 25 50 50 40 3 25 50 100 100 25 25 10 15 25 Simpson, E. P, and Dalgleish, John Frater, William Fairclough, Bev. P. W. ... 37 1 0 0 10 0 204 15 0 8 0 0 82 10 0 Barnett, M. P.... Toomey, Miss May Gards, Louis ... 142 10 0 114 0 0 14 2 0 100 0 0 157 10 0 300 0 0 412 10 0 73 8 9 73 8 9 30 15 0 63 15 0 76 17 6 Merfield, J. W. ■Kennedy, Martin Cohen (No. 2 Account), G. J. Campbell, J. L. O'Neill, Henry Albery, Mark ... // - ■ - - - • Palmer, J. 8. ... Ward, John Clark, W. H. ... Payne, M. H. ... Howatt, Mrs. M. M. Shepherd, Bobert Hull, Francis ... Kennedy, Martin Mandleson, Mrs. S, Cohen, B. S, and Cohen, G.J. Ditto... O'Neill, Henry Bourke, William Timperley, William Pogo, A. L. „ 8 May 16 „ 18 „ 18 „ 18 „ 18 June 27 „ 30 July 2 June 28 „ 25 July 4 „ 4 June 27 -2 "„ 6 May 31 June 21 „ 29 „ 28 „ 25 „ 21 „ 23 „ 29 April 9 „ 13 „ 20 „ 20 „ 20 „ "20 „ 20 „ 20 „ 27 ,, 27 ,, 27 „ 27 „ 27 , 27 „ 27 „ 27 ;, 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 i, 27 II • • • It • • ' • • • Cohen (" B " Account), G. J. Frater, William Kilgour, James Frater, William Brown, Thomas Frater, William it • • ■ Taylor, John ... Walker, C. K. Brimblecombe, G. F. Wade, C. G. ... Hull, Francis ... Haywood, M. J. Leary, B. H, and Sproven, Henry Govett, Miss M. L. Bewes, Mrs. M. B. Frater, William Kennedy, Mrs. Mary Pearson, Mrs. E. L, Pearson, W. B, Hamilton, J. F, and Farren, C. F. P. Ditto... Byan, W. A. B. ... . ... Barker, William Pearce, Ed, and Bethune, J. H. ... Frater, William Boss, Donald ... Frater, William King (deceased), Thomas King, Henry, and King, Newton ... 100 50 12 25 25 25 25 50 20 50 8 16 10 13 10 15 25 10 10 40 20 50 30 50 10 Smith, H J. ... Lees, Andrew ... Mitchell, J. A. S. ... ... a . • • Wise, Arthur Campbell, J. L. Heron, George Clark, W. H Pierson, J. M. ... McMahon, John Coe, James Brimblecombe, G. F. 307 10 0 135 0 0 34 10 0 71 17 6 73 2 6 73 2 6 80 0 0 150 0 0 20 0 0 155 0 0 34 0 0 20 16 0 14 0 0 89 0 0 14 0 0 22 13 9 67 17 6 27' 0 0 30 0 0 118 0 0 61 0 0 152 10 0 91 2 6 208 15 0 30 0 0 Greacen, John... Lees, Andrew ... a ■ • • ■•• ... Blair, John Lees, Andrew ... .. Sheppee, G. L.... Shepherd, Bobert Beid, James 9 June 2 2 „ 16 July 5 „ 10 June 28 „ 20 „ 20 „ 27 . 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 10 4 6 59 50 90 10 64 6 Frater, William Greacen, John Dilworth, James Boddiugton, H. A. King, II., and King, Newton King, Newton 30 0 0 12 0 0 17 5 0 177 0 0 68 15 0 139 10 0 31 5 0 18 "0 0
L—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
130
Date of Deed. Date of Registration. Transferor. CO CO U e3 A CO Transferee. Consideration. * 1894. June 20 „ 20 „ 20 „ 28 „ 25 July 9 June 21 „ 21 „ 25 „ 29 May 22 Julv 5 .. 5 . 5 5 June 26 „ 26 July 12 „ 3 „ ' 6 5 June 22 2 „ 2 2 July 16 „ 17 „ 23 „ 27 June 29 ,; 28 July 12 ,; 9 9 9 „ 20 „ 27 „ 12 „ 21 „ 6 . 21 „ 31 „ 28 June 21 Aug. 9 9 „ 15 June 29 Aug. 28 „ 31 1894. July 27 „ 27 i, 27 „ 27 „ 27 „ 27 „ 27 „ 27 i, 27 „ 27 „ 27 „ 27 „ 27 „ 27 » 27 „ 27 „ 27 „ 27 „ 27 „ 27 • ,; 27 „ 27 „ 27 t, 27 „ 27 Oct. 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 i, io i, io „ 10 „ 10 „ io „ io „ 10 „ 10 i, io „ 10 King, Henry, and King, Newton ... // a Frater, William Taylor, John Kennedy, Mrs. Mary Bremner, James Woods, Miss A. C. Chaffey, B. A. ... Graham (deceased), George Bensusan, S. L. a ' ■ • a • • • it • • • Cohen (" B " account), G. J. Cohen (No. 2 account), G. J. Campbell, Edward Kilgour, James Bennick, James „ ... ... Hull, Francis ... Walker, H. C. H. Kensington, W. C. Garland, H. N. Dawson, William Pearce, Edward, andBethune, J. H. Frater, William Jobson, W. J. Frater, William Campbell, Edward Layard, E. L. ... 10 6 10 20 12 63 10 6 5 10 53 11 14 25 50 25 50 10 31 17 14 10 7 6 3 27 60 16 26 30 5 5 34 20 8 62 50 50 40 12 10 10 7 50 5 128 13 20 12 6 King, Newton Henry, J. McK. Malcolm, J. P. Kennedy, Martin Ashwin, Miss H,and Ashwin,Miss M. Fairclough, Bev. P. W. ... a - - • • - Pierson, J. M. ... Graham, Mrs. Sydney ... Logan, John, and McKerrow, F. J. a it a a a a a a Cumming, D. C. Bennick, James Smith, Neil Beid, James Cumming, D. C. Wallace, Miss E. G. Nixon, Thomas Bussell, James Frater, William Beid, James Hudson, James Harland, Thomas £ s. d. 40 0 0 18 0 0 40 0 0 61 0 0 37 10 0 0 10 42 0 0 25 4 0 21 0 0 42 10 0 34 0 0 43 0 0 77 0 0 150 0 0 77 0 0 150 0 0 31 5 0 31 0 0 23 16 0 14 0 0 31 5 0 21 7 0 19 4 0 9 3 0 48 12 0 90 0 0 48 0 0 39 0 0 93 0 0 15 15 0 15 15 0 41 13 0 24 10 0 9 16 0 105 8 0 62 10 0 72 10 0 60 0 0 0 10 0 17 10 0 13 15 0 23 10 0 a • • • Hamilton, Andrew Estevenet, Miss Emilie ... Hamilton, Andrew Bobertson, James Beeves, William P. Hull, Francis ... Latter, E. C, and Harper, L. Hull, Francis ... Mabin, A. E, and Mabin, E. E. ... Black, Harry ... McLeod (deceased), John Watson, John ... Evans, Mrs. E. E. Taylor, B. B. ... Frater, Wrlliam Fenwicke, Minden Bussell (deceased), J. B. „ ... ... „ ... ... Lawson, John ... Browne, Michael Hull, Francis ... Bussell, James... Latter, E. C, and Bhodes, B. H. Kilgour, M. J. ... Wilson, F. J. ... Mitchell, James McLeod, F. M, and McCredie, A. Kelly, J. H. ... Haynes, Daniel Pardy, William S. Turner, J. B. ... Coe, James Bussell, E. B. N, Campbell, H, and Cochrane, W. S. Baron, H. W. Wynyard, B H. Dilworth, James 6 5 0 128 0 0 13 13 0 59 0 0 9 6 0 July 31 Sept. 1 July 30 ;, 27 Sept. 3 3 Aug. 15 ;, 31 Sept. 3 „ 10 i, io „ io „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 Gregson, Jesse Hawkins, sen, H. J. Darrow, James Lyster, Andrew Wynyard, B. H. Hawkins, sen, H. J. Brown (of Brownsville), John Gregson, Jesse Bussell, E. B. N, Campbell, H, and Cochrane, W. S. Hawkins, sen, H. J. Yardin, Francis, and Leterrier, John Hawkins, B. T. Mollet, Thomas Wratt, Eliza ... 25 10 45 18 10 37 7 50 6 32 10 0 6 0 0 60 0 0 20 0 0 9 5 0 34 4 6 6 9 6 46 5 0 5 11 0 „ . . ... „ 13 July 5 Aug. 31 Sept. 3 „ 8 „ 10 „ 10 „ 10 „ 10 „ 10 20 46 26 14 50 Boss (of Auckland), Donald Yardin, Francis, and Huault, P. ... Clement, J. B.... 14 10 0 0 10 0 23 8 0 12 12 0 211 3 0 a • • • ''' Painton, William
L—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand — continued.
19—1. 6.
131
Date of Deed. Date of Registration. Transferor. H3 u c3 A CO Transferee. Consideration. 1894. Sept. 13 Aug. 27 June 25 April 13 June 28 Sept. 17 „ 14 „ 15 „ 15 „ 15 „ 20 „ 19 „ 20 „ 24 „ 24 „ 28 „ 24 „ 19 „ ■ 28 „ 19 Oct. 5 „ 5 Sept. 20 „ 24 1894. Oct. 10 „ 26 „ 26 Nov. 1 „ 1 „ 1 , 1 „ 1 „ 1 „ 1 i, 1 „ 1 ,; i ,. i „ i „ i „ i „ i „ i t, i „ i „" l „ l „ l Pardy, William S. Buttle, G. A. ... Joyce, Mrs. Emily Aldred (deceased), Bev. John England, B. W, and Aldred, W. A. Hawkins, sen, H. J. Pardy, William S. Fogo, Andrew ... Fogo, Andrew L. Byrne (deceased), Patrick Kilroy, Mark ... Jeffrey, William Byley, John England, B. W, and Aldred, W. A. Aldred, Mrs. M. A. Corley, James ... England, B. W, and Aldred, W. A Byley, John Sandison, Bobert Hossack (deceased), Agnes Abraham, B. S. Dawson, Bobert, and Salter, C. E. Dakin (deceased), Bobert Brown (of Brown, Ewing, and Co.), Thomas Sandison, Bobert Clarke, William H. Croft, W. J. ... Howie, John ... Hull, Francis ... Darrow, James Graham, Sydney Brimblecombe, G. F. Bethune (deceased), J. H. Bethune, Frances Brimblecombe, G. F. Graham, Sydney Corley, James ... Sandison, Bobert 50 84 55 136 21 10 12 20 25 10 15 50 50 82 17 17 10 25 76 5 40 79 50 7 Jeffrey, William Beid, James Joyce, James John England, B. W, and Aldred, W. A. Schwartz, N. H. A. Boss (of Auckland), Donald £ s. d. 25 0 0 84 0 0 165 10 0 88 4 0 8 0 0 8 14 0 16 0 0 20 0 0 // Byrne, Christopher Boss (of Auckland), Donald Kebbell, G. M. 12 0 0 37 10 0 37 10 0 41 0 0 8 10 0 11 9 6 7 0 0 16 5 0 51 6 0 Dilworth, James Ollivier" F. M. ... Somervell, Mrs. Elizabeth Ollivier,'F. M. ... Sims, Mrs. Jessie Dilworth, James 16 0 0 31 13 9 Dakin, Mrs. Amy Whitbourn, James 6 16 6 ;, 24 Oct. 13 Aug. 13 July 18 23 Sept. 12 Oct. 17 „ 18 „ 16 „ 13 „ 22 6 Sept. 27 i, 24 „ 21 „ 1 i, i „ 14 „ 14 „ 14 „ 14 „ 14 „ 14 ■„ 14 „ 14 „ 14 „ 14 i, 23 „ 23 „ 23 1895. Jan. 16 „ 23 „ 23 Feb. 6 Mar. 6 ,, 6 April 3 May 8 „ 15 23 15 7 25 25 90 28 25 14 14 28 25 50 90 45 Beid, James Ollivier, F. M.... Milnes, Joseph... Hull, Francis ... Abbott, B. H. ... McDonnell, Edward Brimblecombe, G. F. Somervell, Mrs. Elizabeth Bethune, Frances Ollivier, F. M.... Waltho, J. E. ... Brimblecombe, G. F. Somervell, Mrs. Elizabeth 15 0 0 5 5 0 8 8 0 75 0 0 39 7 6 100 0 0 4 5 0 15 0 0 7 0 0 14 14 0 13 16 0 32 10 0 63 0 0 45 0 0 u ''' n Dec. 28 May 31 Sept. 14 Oct. 30 Sept. 19 „ 24 July 30 June 29 Oct. 1 1895. May 10 April 25 „ 30 Murray, John ... Kensington, W. C. Brimblecombe, G. F. Gibson, William Jeffrey, William Brimblecombe, G. F. Mollet, Thomas Bethune, J. H. Baron, William 100 7 6 25 25 25 42 41 25 Wilson, William Scott ... Brimblecombe, G. F. Campbell, John Ollivier, F. M. ... Brimblecombe, G. F. Somervell, Mrs.. Elizabeth Binney, F. W.... Beeves, C. S, and Adam, W. M. ... Beid, James 0 10 0 28 0 0 6 6 0 2 10 0 27 10 0 25 0 0 88 4 0 133 5 0 11 17 6 ,, 22 „ 29 „ 29 Wilcox (deceased), Henry Schwartz (deceased), N. H. A. Bergh (deceased), Ludwig, and Schwartz (deceased), Niels Levin (deceased), W. H. Arnold, W. M. M, and Simpson, E. P. Jones, Frederick Ewington, F. G, and Matthews, S. H. Ditto... 6 21 30 Willcox, E. D Schwartz, Mrs. E. M. ... Schourup, Mrs. S. L. May 20 Feb. 8 June 5 July 3 12 13 Hunter, James... De Lauret, Miss Josephine 0 1 0 0 10 0 July 12 Feb. 1 „ 24 „ 24 30 5 Milnes, Joseph... Botter, John ... 39 15 0 16 13 4 „ 1 1894. Sept. 19 „ 19 „ 24 5 Chappell, A. H. 16 13 4 „ 17 „ 17 Dalrymple, Mrs. M. E. ... Dalrymple, A. M. 10 14 Beid, James 16 16 0 9 16 0 it
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Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
132
Date of Deed. Date of Registration. Transferor. CO CO u cS A CO Transferee. Consideration. 1895. July 13 „ 23 Aug. 2 July. 25 „ 25 „ 25 Aug. 21 1894. Oct. 31 1895. Sept. 6 „ 24 „ 24 i, 24 „ 24 „ 24 „ 24 „ 23 Aug. 28 Nov. ■ 23 April 1 1894. June 25 „ 25 1895. Feb. 12 1894. Aug. 30 Oct. 18 . 1895. Dec. 20 1894. June 25 1896. April 10 „ 10 Mar. 27 „ 27 „ 27 June 9 „ 30 1892. Oct. 30 „ 30 1893. Jan. 20 Mar. 3 1895. July 31 „ 31 Aug. 28 „ 28 „ 28 „ 28 „ 28 Higgins (deceased), Daniel Faulkner (deceased), Henry Fielder, Mrs. A. L. England, B. W,and Aldred, W. A. 27 21 25 19 4 6 25 Joyce, John, and Kennedy, Mrs. C. Faulkner, Mrs. Eliza Mollet, Thomas Akhurst, Frederick £ s. d. 20 0 0 15 4 0 7 10 0 11 5 0 1 5 0 Aldred, Mrs. M. A. Cogan, B. A. ... „ ... ... Milnes, Joseph... Sept. 4 Anderson, Miss A. C. 13 Morkane, James 16 0 „ 11 Oct. 9 „ 9 „ 9 „ 9 „ 9 „ 9 „ 23 Nov. 20 „ 27 Dec. 4 Cullen, Mrs. Ann Studholme, jun, John ... Studholme, Mrs. E Moorhouse, Miss M. Moorhouse, Miss E. C. ... Moorhouse, Miss. A. J. ... Adams, Mrs. Jessie Frater, William Fenwicke, Minden Horton, A. G. ... Battersbee, Mrs. Lydia ... 43 21 54 20 20 5 20 80 20 27 37 Horton, A. Go ... Bhodes, Mrs. S. A. .... 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 0 10 0 20 0 0 20 0 0 0 1 0 Campbell, J. L. Blacker, C. B.... Wilson, J. L. ... Izard, C. B. ... „ 4 „ 4 Allan, Thomas Bremner, James ... ... 15 35 Morris, Thomas 46 17 6 109 . 7 6 „ ... ... „ 18 1896. Jan. 3 i, 21 Murray, G. A.... 20 Goddard, W. C, and Mullens, J. ... 0 10 0 Davidson (deceased), William Hallenstein, Bendix 241 100 Davidson, Mrs. Louisa ... Forbes, W. G 8 Vis 0 it 3 Campbell, J. L. .... 50 Frater, William ... 0 10 0 „ 3 Frater, William 50 Morris, Thomas 156 5 0 May 13 „ 13 „ 13 „ 13 „ 13 July 1 „ 15 1893. Feb. 10 „ 10 McLaurin (deceased), Peter Low, Mrs. C.'e. 50 50 55 40 30 14 5 Hunter, James .... Milnes, Joseph Maxton, Charles Beatson, Bobert ... Balfour, Kinnear James... Hull, Francis... Nixon, J. H.... [Wm. Black, John, Scott, G. J, and Bitchie, Groth, H. H. ... 2 10 0 2 10 0 0 5 0 0 5 0 0 5 0 14 0 0 0 10 a • • • Bae, Mrs. Catherine Foreman, Miss Sarah Anderson (deceased), Andrew Black, J, Scott, G, and Bitchie, W. 224 50 250"0 0 Mar. 10 „ 24 Arnold, W. M. M, and Simpson, E. P. Murray (deceased), Stewart 5 84 De Lauret, J. GMurray, Mrs. L, Murray, B. W,. and Shaw, Thomas Dixson, Hugh .... Feb. 17 ,, 24 Mar. 3 „ 9 „ 13 i, 13 „ 10 i, 16 „ 13 „ 13 Feb. 23 Mar. 14 „ 13 „ 13 „ 29 April 14 '.„ 13 Mar. 29 April 10 i, 24 i, 24 „ 24 „ 24 i, 24 „ 24 „ 24 „ 24 „ 24 „ 24 „ 24 April 7 „ 7 i, 7 „ 28 „ 28 „ 28 „ 28 May 5 Jones (deceased), Bichard Norrie, Andrew Johnstone, L. A, and Terry, E. ... Black, J, Scott, G. J, and Bitchie, W, Synnott, W. T. Tidswell, G. E. Hamilton, William Black, J, Scott, G.J, and Bitchie, W. 15 2 25 25 10 10 53 52 5 5 5 25 5 5 5 42 20 20 84 Scharff, Justus ... .... Cobbett" Pitt ... Logan, Miss Norah Bremner, James Palmer, J, and Carfrae, A. ... Binney, F. W.... ... ... Arnold, W.M.M., and De Lauret, A.G.! Lamb, B. S. .... ... ... De Lauret, A. G. Arnold, W. M. M,andBoydell,C.B. Dalglish, John, and Simpson, E. P. Barber, Miss J. M. Evans, Miss Clare Atkinson, Mrs. Anne Binney, F. W.... ... ... j 97 10 0 13 0 0 120 0 0 120 0 0 50 0 0 50 0 0 0 10 0 247 0 0 24 10 0 24 0 0 25 0 0 121 17 6 25 0 0 25 0 0 25 0 0 100 0 0 96 0 0 0 10 0 403 4 0 Arnold, W. M. M, and Simpson, E. P. Black, J, Scott, G. J, and Bitchie, W. Arnold, W. M. M, and Simpson, E. P. tl If Carter, Mrs. CM. Evans, Miss M. E. .... Atkinson, William Black, J, Scott;, G. J, and Bitchie, W.
1.—6.
Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
133
Date of Deed. Date of Registration. Transferor. CO CO c3 A CO Transferee. Consideration. 1893. April 12 Mar. 30 April 8 „ 10 May 2 1 June 1 5 5 May 31 June 26 „ 28 July 31 Aug. 14 2 July 13 „' 16 1893. May 5 „ 5 „ 5 . 5 ■ „ 26 „ 26 June 16 „ 16 „ 23 „ 23 July 21 „ 28 Aug. 25 ,t 25 i, 25 „ 25 „ 25 Black, J, Scott, G. J, and Bitchie,W T . Cottingham, Miss A. M. .. Field, E. P. ... Black, J, Scott, G. J, and Bitchie, W. Cape, H. A. De Lauret, J. G. Lamb, B. S. Burton, Miss J. A. Davis, E. A. ... Paling, W. H. ... Boss, Duncan ... Woolls (deceased), William Jones, L. C. E, and Bussell, P. B. Haigh (deceased), Louis Phillips, Louis, and Cohen, N. S. Ghest, E. C. ... Cohen, Victor, Levey, Mrs. C, and Goldring, E. A. Boss, Bev. Duncan 10 6 10 20 5 5 25 5 40 28 10 95 292 107 25 20 112 Binney, F. W.... Fitzgerald, B. M. „ ... >'i ... Binney, F. W. ... Scharff, Justus... ... ! .-.-. £ s. d. 48 0 0 28 16 0 48 0 0 96 0 0 24 5 0 24 5 0 115 12 6 23 2 6 184 0 0 130 0 0 47 10 0 Boss, T. H. '.'.'. '.'.'. ... Woolls, Mrs. S. E Jones, Bichard, and Caird, G. S. ... Powell, Theodore ... ... Binney, F. W. ... Byley, Mrs. Jane Cohen, Victor, Levey, Mrs. C, Hyman, L. H, and Cohen, H. E. Boss, Miss G. H. Boss, Miss E. H. Wilson, B. H. ... :•... ■ Barrv, T. E. ... o'io 0 106 5 0 98 0 0 0 10 0 Aug. 29 „ 29 Oct, 3 „ 18 „ 18 „ 18 „ 26 1894. Jan. 23 Feb. 3 Jan. 31 Feb. 15 Mar. 1 Oct. 13 „ 13 NoV. 3' „ 3 „ 3 „ 3 „ 24 1894. Jan. 31 Mar. 2 ,, 2 „ 2 „ 22 Dunn, Miss Sarah ... ... Mullens, Josiah Coates, John ... Heselton, Thomas .... Sutherland (deceased), Bev. George 12 12 10 3 27 35 40 Wilson, E. H. '.'.'. '.'.'. '.'.'. Sutherland, Mrs. L. J. ... 49 16 0 49 16 0 41 10 0 12 9 0 112 1 0 144 7 6 Williams, William Bensusan, S. L. ... ... Dillon (deceased), G. F.... Wilson, W. H... Schofield (deceased), Mrs. Ellen, and Lane, Bev. George Fisher, S. B. ... Pearson (deceased), W 7 illiam 12 50 116 10 99 Williams, W. L. Bofe, Alfred McCarthy, Bev. Dr. C. ... Binney, F. W. Lane, Bev. George ... 60 0 0 240 0 0 3S"0 0 April 2 „ 10 April 20 ,t 20 5 242 Grant, C. H. ... Pearson, Mrs. E. L, Pearson, W, Hamilton, J. F, Farran, C. F. T. Ditto... ... ... Carfrae, Alexander ... 20 0 0 ;, io 5 5 „ 20 „ 20 „ 27 „ 27 May 4 it • • • O'Neill, Henry 90 4 20 16 1110 0 57 10 0 Feb. 15 May 15 „ 21 „ 26 June 11 i, 11 June 8 „ 8 22 July 13 Pettit"(deceased), Mrs. S. E. Watson, C. H. Kernot, M. E. ... O'Neill, Henry Arnold, W. M. M, and Simpson, E. P. Priddle, C. F, and Stephen (deceased), E. M. Bundle (deceased), J. B, and Thompson, J. Thompson, Joseph Gregson, Jesse... 50 28 50 5 12 Lane, Bev. George, and Armstrong, D. H. Binney, F. W. Kernot, Mrs. C. G. ..: ... Lees, Andrew ... ... .... Simpson, E. P, and Dalglish, John Elwell, B. P, and Priddle, B. G. ... 172 10 0 85 17 6 142 10 0 0 10 0 0 10 0 Aug. 23 Oct 10 32 Thompson, Joseph .-..;■' ... „ 23 .iept. 20 . 22 July 30 Sept. 20 1895. Feb. 8 9 9 July 1 1894. Oct. 17 Dec. 31 „ 31 Mar. 27 „ 10 Nov. 30 1895. Feb. 26 „ 26 Mav 15 Holmes, James ... - .. Heselton, Thomas Brooks, Henry ... ... 32 5 50 11 100 Buthven, J. L, and Walker, J. G. Binney, F. W. 0 10 0 3 2 6 31 5 0 23 2 0 62 10 0 July 3 Aug. 7 » 7 „ 28 Arnold,W. M. M, and Simpson,E. P. Douglas, Mrs. Jessie Beading, Mrs. Tabitha ... Stonier, Miss M. H. 5 40 14 30 De Lauret, Miss Josephine ... Williams, B. A. ... 0 10 0 0 10 0 0 3 6 23 0 0 Forsaith, Bev. T. S. ... ' ... Sept. 11 „ 18 „ 18 „ 25 Beattie, J. A. ... ... ... Catlett (deceased), Miss E. C. 160 7 6 42 Cahalan, J. V. Catlett, W. H. Bartleet, Mrs. F. E. ... Stephen, C. B, and Stephen, S. A. Stephen (deceased), E. M, and Stephen, C. B,
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Transfers on the Colonial Share Registers of the Bank of New Zealand— continued.
134
Date of Deed. Date of Registration. Transferor. CO u cS A CO • Transferee. Consideration. 1895. Sept. 18 1895. Oct. 30 Suttor, Mrs. M, Suttor, W. H, and Acres (deceased), E. H. Smith (deceased), John ... 30 Suttor, Mrs. M, and Suttor, F. A. 30 £ s. d. 0 10 0 April 9 1894. Sept. 12 Dec. 19 Dec. 18 746 Smith, Fergus I, and Smith, L. N. 746 „ 18 „ 18 Walton (deceased), William Priddle, Bev. C. F. D. ... 22 Walton, Mrs. Sophia ... 41 Priddle, C. J, Priddle, F. E, and Priddle, B. G. 22 41 0 10 0 Te. .nsfees on the London Share Beg: :stee of the Bank of New Zealand. Sept. 26 „ 26 „ 26 Oct. 1 Sept. 29 „ 29 „ 29 i, 29 Oct. ■ 1 1 Sept. 28 „ 21 „ 21 „ 28 Oct. 11 Sept. 29 Oct. 1 „ 12 „ 17 „ 11 „ 11 „ 16 „ 26 „ 26 1 it - 1 - Sept. 28 „ 26 „ 28 Oct. 22 1894. Oct. 17 „ 17 „ 17 „ 17 . 17 „ 17 „ 17 „ 17 „ 17 - „ 17 „ 17 „ 17 „ 17 „ 17 Nov. 7 „ 7 „ 7 ,, 7 „ 7 „ 14 " 14 „ 14 „ 21 "„ 21 Oct. 17 . 17 „ 17 „ 17 Nov. 7 Chapman (deceased), Charles Catlin, Ann Cox, C. W. ... Davenport, William Kerr, J. H. ... '.'.'. ..'. Laws, Thomas „ ... ... Barron, Montague Taylor (deceased), G. L. a Bose, Andrew ... Beard, S. W. ... Atkins (deceased), T. P. Lawes, Thomas Cuthbert, Mary B. Pegge, J. T. ... Barnfegham, C. C. Ferguson, George Ochsenbein, William Ferguson, George Pegge, J. T. ... Bishop, Anne ... Dawson, Eliza E. Green, Mrs. J. E. W. ... Bose, Andrew ... Gillett, Charles, and Gillett (deceased), Alfred Gillett, Charles Edwin, and Gillett (deceased), Alfred Atkins (deceased), T. P.... Ochsenbein, C. W. Low, Fanny C. Atkins (deceased), T. P.... 34 Chapman, W. C. N. 33 Chapman, Bev. Charles ... 33 Chapman, G. A. ... ... 51 Ferguson, George 5 „ 2 15 Scoles, Charles 20 „ 5 Hall, J. B.C. 15 Thumwood, Charles 5 „ 20 „ 100 Watson, Thomas 4 Strachan, James 5 Ferguson, George 40 Allinson, T. E. 10 10 Lang, John 4 Cheesman, T. M. 10 Scoles, Frederick 5 20 Wisbey, Mrs. E. M. A. ... 5 Leedham, Frank 5 Thumwood, C. C. 20 Scoles, Charles 20 12 Green, George ... 2 Spence, G. H. ... 100 | Gillett, Charles Edwin, and Gillett, Charles 100 Ditto... 0 5 0 0 5 0 0 5 0 98 16 3 10 0 0 4 0 0 30 0 0 40 0 0 12 10 0 29 1 3 10 0 0 35 0 0 175 0 0 8 0 0 8 15 0 85 0 0 22 10 0 20 0 0 6 0 0 21 5 0 10 12 6 42 10 0 10 0 0 10 0 0 58 15 0 60 0 0 27 0 0 6 0 0 0 5 0 „ 22 „ 7 0 5 0 „ 11 i, 16 „ 22 „ 11 „ 11 Nov. 16 „ 16 „ 16 „ 7 „ 7 „ 7 „ 14 „ 21 „ 21 „ 28 „ 28 1895. Jan. 30 „ 30 „ 30 „ 30 „ 30 „ 30 „ 30 4 Lawrence, Sir James Clarke 15 Ferguson, George 50 Low, Mrs. Jean 1 Barron, Montague 5 Leedham, Frank 12 Cheesman, T. M. 6 Bowland, A. B. 10 Wilbraham, Mrs. M. J. ... 14 0 0 43 2 6 300 0 0 3 0 0 15 6 3 36 0 0 19 10 0 30 0 0 Whitlock, G."F. T. „ ... ... Dec. 29 „ 24 „ 24 „ 15 „ 29 „ 29 • „ 13 1895. Jan. 7 „ 25 „ 25 9 „ 18 „ 5 5 Berkeley, Ada ... Black, C. B. ... Boswe'il, C. A. ... Foxwell, J. K. ... Fox well, Bose E. McLoughlin, Edwd, and McLoughlin, Louisa E. Hatherley, G. D. ..." T- Lawrence, Sir James Clarke 20 10 5 2 2 30 0 10 0 10 0 15 0 0 7 10 0 0 2 0 0 2 0 0 15 0 i, 30 „ 30 i, 30 „ 30 „ 30 „ 30 „ 30 50 10 60 30 6 55 35 2 10 0 0 10 0 0 5 0 1 10 0 0 5 0 2 15 0 52 10 0 Bowland, A. E. Stone, Julia F. a •■■ • • *
135
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Transfers on the London Share Register of the Bank of New Zealand— continued.
EXHIBIT No. 13. [Handed in by Mr. Booth, 3rd August, 1896.] "The £2,000,000 Bank of New Zealand Guaranteed Stock.—lssued July, 1894; repayable at Par, 19th July, 1904. £ s. d. Issue price, £101 i per £100 ... ... ... ... ... 2,025,000 0 0 Charges — Underwriting commission paid to Messrs. Greenwell and £ s. d. Co., London ... ... ... ... ... 25,000 0 0 Brokerage, paid to various brokers (particulars not available) 4,271 5 0 Stamps on certificate, coupons, &c. ... ... ... 837 18 4 Advertising ... ... ... -•• ... 442 6 2 Printing and engraving ... ... ... ... 234 19 11 Solicitor's charges ... ... ... ... ... 44 6 0 Sundries ... ... ... ... ... ... 17 11 6 30,848 6 11 Net ... ... ... ... ... £1,994,151 13 1 The charges were written off to debit of the bank's Profit and Loss Account, leaving the stock standing at £2,000,000 in the bank's Capital Account." • Note. —We have no particulars as to dates of receipt and amount of each instalment.
Date of Deed. Date of Registration. Transferor. CO CO A CO Transferee. Consideration. 1894. Dec. 14 „ 13 1895. Feb. 11 Mar. 5 1894. Nov. 29 „ 28 1895. Jan. 31 1894. Dec. 28 „ 13 „ 12 . 12 Nov. 15 „ 30 „ 14 1895. Mar. 21 1894. Oct. 12 „ 16 Nov. 14 „ 30 1895. 1895. Mar. 27 „ 27 Black, C. B. ... Ferguson, George 20 20 Beatson, Bobert Kinnear, James Balfour... £ s. d. 35 0 0 35 ■ 0 0 „ 27 „ 27 Leach, Abraham Cheesman, T. M. 150 4 Lawrence, Sir James Clarke 0 5 0 a „ 27 „ 27 Ferguson, George Norgate, Frank, and Norgate, Fred. 3 13 Scoles, Charles 5 12 6 24 7 6 „ 27 Stratford (deceased), John 9 a . • •■■ 16 17 6 „ 27 „ 27 „ 27 „ 27 April 3 „ 3 „ 3 Chapman, Bev. Charles Ferguson, George Moore, Ada Moore, Henry Graves, Catherine A. Liberty, Arthur Wynyard, B. H. 33 9 5 6 5 10 10 Cheesman, T. M. Maxton, Charles Greer, Bev. W. B. a • • . ... 1 13 0 13 10 0 7 10 0 9 0 0 10 0 0 20 0 0 20 0 0 .a .3 Paris, Ellen A. 39 Seabrook, J. P. 0 5 0 Mav 22 „ 22 June 12 „ 12 Cuthbert, Mary B. Pegge, G. T. ' Ferguson, George Cheesman, T. M. 5 25 20 5 Mockett, G. T. Greer, Bev. W. B. „. ... 1 10 0 0 50 0 0 40 0 0 10 0 0 June 4 „ 7 Sept. 21 Sept. 25 „ 25 Oct. 23 Greig, William McG. ... Macduff (deceased), A. C. McNicol (deceased), Donald 50 40 12 Stokes, A. W. ... ... Ferguson, George ... ... | McNicol, James, McNicol, Donald, McNicol, Nicol, and McNicol, W. s. '-'■ Thumwood, Charles ... . ... | ■ _ • • • 12 10 0 0 5 0 15 0 0 60 0 0 43 15 0 1894. Nov. 14 „ 14 „ 23 „ 23 Ferguson, George Norgate, Frank, and Norgate, tti n ■ l 30 25
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136
EXHIBIT No. 14. [Handed in by Mr. Foster, 17th August, 1896.] Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. Liabilities. £ s. d. Assets. £ s. d. Capital paid up— Stations— Estates Company .. .. 1,850,000 0 0 Land and improvements .. .. 1,083,959 0 0 Auckland Agricultural Company .. 148,110 0 0 Stock and implements .. .. 335,453 0 0 Debentures— Sundry freehold properties in New ZeaRedeemable in 1910, at £103 .. 750,000 0 0 land .. .. .. .. 396,460 0 0 Redeemable up to 1902 .. .. 282,960 0 0 Interest in Thames Valley Land CornDebts due to Bank of New Zealand .. 1,426,702 0 0 pany, represented by land and stock 50,256 0 0 Accrued interest on debentures .. 26,225 0 0 Coal-mine and land, Waikato .. 12,977 0 0 Reserve for loss on Onehunga Iron- Freeholds beyond New Zealand .. 23,607 0 0 works stocks .. .. .. 3,316 0 0 Leaseholds .. .. .. 52,508 0 0 Sundry creditors .. .. .. 1,238 0 0 Trading concerns .. .. .. 421,062 0 0 Sundry accounts held in suspense .. 4,688 0 0 Amounts due by purchasers .. ... 132,089 0 0 Sundry balances due to company .. 59,690 0 0 Shares .. .. .. .. 16,792 0 0 Mortgages.. .. .. .. 101,569 0 0 Sundries .. .. .. .. 21,020 0 0 Funds in hands of trustees .. .. 21,414 0 0 Deficiency .. .. .. 1,764,383 0 0 £4,493,239 0 0 £4,493,239 0 0 Note.—The above is an estimate of the position after writing down the book-cost of the properties to the level of the latest valuations received.
Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. Book-value. Liabilities. £ s. d. Assets. £ s. d. Capital paid up— Stations— Estates Company.. .. .. 1,850,000 0 0 Land and improvements .. .. 1,586,537 0 0 Auckland Agricultural Company .. 148,110 0 0 Stock and implements .. .. 335,454 0 0 Debentures— Difference between Mr. Hean's valuaBedeemable in 1910, at £103 .. 750,000 0 0 tion and amount at which globo Redeemable up to 1902 .. .. 282,960 0 0 assets were purchasad from the Debts due to Bank of New Zealand .. 1,426,702 0 0 bank .. .. .. .. 54,507 0 0 Accrued interest on debentures ~ 26,225 0 0 Sundry freehold properties in New Beserve for loss on Onehunga Iron- Zealand.. .. .. .. 600,496 0 0 works stocks .. .. .. 3,316 0 0 Interest in Thames Valley Land ComSundry creditors ... .. .. 4,688 0 0 pany, represented by land and stock 137,142 0 0 Sundry accounts held in suspense .. 1,238 0 0 Coal-mine and land, Waikato .. 17,674 0 0 Freehold lands beyond New Zealand .. 53,070 0 0 Leaseholds .. ..- .. 75,721 0 0 Trading concerns .. .. .. 567,658 0 0 Amounts due by purchasers .. .. 132,103 0 0 Sundry balances due to company .. 65,551 0 0 Shares .. .. .. .. 214,080 0 0 Mortgages.. .. .. .. 111,411 0 0 Sundries .. .. .. .. 53,344 0 0 Funds in hands of trustees .. .. 21,414 0 0 Deficiency.. .. .. .. 467,077 0 0 £4,493,239 0 0 £4,493,239 0 0
THE BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED). Balance-sheet at 31st March, 1893. Dr. £ s. d. Cr. £ s. d. To Share capital:— By Properties and other assets : — Authorised — Old properties— 75,000 6-per-cent. cumulative pre- Balance represented by these at ference shares of £10 each. 31st March, 1893, inclusive of the 125,000 ordinary shares of £10 expenses of obtaining transfer of each. titles, formation of the company, Issued — issue of debentures, and prior 60,000 6-per-cent. cumulative pre- encumbrances paid off .. 2,789,281 2 8 ference shares of £10 each .. 600,000 0 0 New properties— 125,000 ordinary shares of £10 Cost of properties acquired by corneach .. .. .. 1,250,000 0 0 pany, including expenditure on Debentures (redeemable in 1910) .. 1,500,000 0 0 stock and improvements .. 500,544 15 3 Loans and debts due by the company 605,434 6 3 Amounts due from purchasers of the Accrued interest on debentures .. 21,225 0 0 properties .. .. .. 161,737 410 Profit and loss balance from that ac- Other debts due to the company .. 54,132 19 9 count .. .. .. .. 24,805 12 8 Cashondepositfordebent're-holders, Contingent liabilities under guaran- being proceeds of sales of properties 412,980 12 1 tees .. .. .. .. .. Bills receivable on hand .. .. 19,998 14 9 Cash at banker's, and on hand .. 62,789 9 7 £4,001,464 18 11 £4,001,464 18 11
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Profit and Loss Account for the Year ended 31st March, 1893. £ s. d. . £ s. d. To Directors'fees, management, cables, By Balance at 31st March, 1892 .. 43,638 2 6 and office expenses in England .. 3,705 7 3 Less dividends on preference and Ditto in New Zealand .. .. 4,564 13 0 ordinary shares .. .. 40,000 0 0 Land-tax and license-foe in New Zealand .. .. .. .. 11,552 16 9 3,638 2 6 Interest on debentures and exchange 84,975 0 0 Net revenue from properties and Interest on bank overdrafts, less on assets, &c, for the year ended 31st deposits .. .. .. 1,135 18 6 March, 1893, including adjustment Profit carried to balance-sheet .. 24,805 12 8 of previous years .. .. 126,107 8 4 Commission, &c, in London .. 933 10 10 Transfer fees .. .. .. 60 6 6 £130,739 8 2 £130,739 8 2 Duncan Stewart, R. J. Jeffray, j Directors . Secretary. Jno. A. Ewen,) I beg to report that I have compared the above balance-sheet with the audited accounts received from the Auckland office of the company, and with the books and vouchers of the company in London, and find it to be in accordance therewith. Certificates for the amount on deposit at the various branch agencies' bank accounts have been seen by me, as well as the pass-books for the balances at the banks in London. London, November, 1893. Auditor.
THE BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED). Profit and Loss Account for Year to 31st March, 1894. Expenditure. £ s. d. Receipts. £ s. d. Directors' fees, management, cables, and ' Balance per accounts to 31st March, 1893 24,805 12 8 office expenses in England .. .. 2,966 18 8 Less dividend paid thereout .. .. 24,000 0 0 Directors' fees, management, cables, and office expenses in New Zealand .. 5,289 1 6 805 12 8 Land-tax and license-fee in New Zealand 11,016 6 8 Net revenue from properties and assets in Income-tax for three years, to March, 1893 3,201 0 3 New Zealand .. .. .. 80,170 5 4 Interest on debentures and exchange .. 85,800 0 0 Commission, &c, in London .. .. 1,014 711 Interest on bank overdrafts, less on deposits 7,297 6 2 Transfer fees .. .. .. .. 76 1 0 Balance —Loss carried to balance-sheet .. 33,504 6 4 £115,570 13 3 £115,570 13 3 £* s. d. Loss shown on New Zealand balance-sheet ... ... ... 29,232 9 0 .'Deduct 1893 profits unapplied ... ... ... ... 805 12 8 28,426 16 4 Add loss declared in London ... ... ... ... 5,077 10 0 £33,504 6 4
BANK OF NEW ZEALAND ESTATES COMPANY. Balance-sheet as at 31st March, 1895. Liabilities. £ s. d. I Assets. £ 8. d. Share Capital. Pboperties. Authorised — Balance, representingunrealisedproper--75,000 6-per-cent. cumulative prefer- ties at date, including cost of issuing ence shares, £10 each. debentures, preliminary expenses, 125,000 ordinary shares, £10 each. and permanent improvements .. 3,021,58119 6 Issued— Amounts due from purchasers .. 128,360 2 8 60,000 preference shares .. .. 600,000 0 0 Advances to trading concerns: Work--125,000 ordinary shares .. .. 1,250,000 0 0 ing capital supplied .. .. 21,000 0 0 I Bank of New Zealand .. .. 27,661 11 4 1,850,000 0 0 | Cash in hand .. .. .. 132 10 9 Debentures redeemable in 1910 at 103 750,000 0 0 ] Bills receivable .. .. .. 100 0 0 Bank of New Zealand .. .. 1,112,535 12 10 Adjusting account of revenue .. 6,150 0 0 Accrued interest on debentures .. 21,225 0 0 Debts due to the company .. .. 10,506 10 1 Onehunga Ironworks Stock Reserve .. 3,316 111 Balance—Profit and Loss Account .. 521,584 0 5 £3,737,076 14 9 £3,737,076 14 9 N.B.—Assets, in terms of section 16 of " The Bank of New Zealand Share Guarantee Act, 1894," are taken as at par or book-value. This is to certify that, having examined the above balance-sheet and accounts, and compared them with the relative books, returns, and vouchers, we have found the same to be correct. This certificate, however, is qualified by our special report of even date. Profit and Loss Account attached herewith. J. B. Hob art. Wellington, 24th July, 1895. R. W. Gibbs.
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AUCKLAND AGRICULTURAL COMPANY (LIMITED). Profit and Loss Account for the Year ending 31st March, 1893. Receipts. £ s. d. Expenditure. £ s. d. Interest on ordinary mortgages .. .. 266 110 Interest on bank overdraft .. .. 1,352 9 0 Surrey Hills mortgages .. 262 3 2 Directors' honorarium .. .. .. 75 0 0 „ New Zealand Loan Company Land-tax ... .. .. .. 1,342 9 8 Trust Funds .. .. .. 997 9 11 License .. .. .. 200 0 0 Profit on working stations for year .. 6,170 2 8 Payment Estates Company, cost of management and office expenses .. .. 355 5 0 Sundries .. .. .. 117 5 3 Wool Consignment Account .. .. 721 3 3 Balance, profit .. .. .. .. 3,532 5 10 17 7 £7,695 17 7
AUCKLAND AGRICULTURAL COMPANY (LIMITED). Profit and Loss Account for the Year ending 31st March, 1894. Receipts. £ s. d. Expenditure. £ s. d. Interest received— Interest on bank overdraft .. .. 357 16 5 Ordinary mortgages .. .. .. 753 1 6 Land-tax .. .. .. .. 1,149 18 10 Surrey Hills mortgages .. .. 271 5 0 License .. .. .. .. 200 0 0 Accrued interest on Loan Company Trust ! Income-tax Account, debenture-holders .. 213 11 0 Funds .. .. .. .. 1,375 0 0 Payment Estates Company, cost of manageProfits on working stations for year .. 5,745 18 1 , ment and office expenses .. .. 350 0 0 | Sundries .. .. .. .. 113 15 3 Balance, profit .. .. .. .. 5,760 3 1 £8,145 4 7 £8,145 4 7
AUCKLAND AGRICULTURAL COMPANY (LIMITED). Profit and Loss Account for the Year ending 31st March, 1895. Receipts. £ s. d. £ s. d. Expenditure. £ s. d. Interest on trust funds .. 1,910 1 6 Loss on working stations for year .. 4,974 19 6 mortgages, &c. .. 760 2 4 Balance, London Charges Account .. 26,348 0 8 Balance, London Interest Account .. 198,476 8 1 2,670 3 10 Less accrued at 31st March, 229,799 8 3 1894 .. .. .. 1,455 0 0 Less balance at credit of Profit and Loss 1,215 3 10 Account in London, being profits made Balance, loss .. .. .. 288,172 19 3 in New Zealand for 1893 and 1894, now transferred to our books .. .. 9,292 811 220,506 19 4 Amount written off share investment and farming stocks .. .. .. 61,237 4 2 Interest on bank overdraft (Ordinary Account) .. .. .. .. 933 15 0 Accrued interest on debentures .. .. 5,000 0 0 Graduated land-tax .. .. .. 414 6 9' Ordinary land-tax on account debentureholders .. .. .. .. 731 6 8 Income-tax on account debenture-holders 296 7 0 License-fee .. .. .. .. 200 0 0 Sundry general charges .. .. 68 4 2 £289,388 3 1 £289,388 3 1
AUCKLAND AGRICULTURAL COMPANY (LIMITED). Statement of Assets and Liabilities as at 31st March, 1895. Assets. £ a. d. I Liabilities. £ s. d. Stations, &c.— , Stations— Land and improvements .. .. 493,470 2 2; Sundry creditors, Bank of New Zealand Stock and implements .. .. 73,195 3 3j Estates Company, &o. .. .. 4,645 15 10 Horse, stock, and grass-seed, manure, Accident Insurance Account .. .. 42 4 2 and sundries on hand .. .. 4,302 0 7 Bank of New Zealand, Cambridge StaGeneral— tion, Working Account .. .. 13,012 19 5 Mortgages and agreements .. £34,669 Bank of New Zealand — Ordinary AcLess Pah Mortgage (property count .. .. .. .. 90,185 14 0 being also shown as an asset Bank of New Zealand, No. 1 Account .. 90,968 3 5 below) .. .. .. 28,490 Debentures outstanding— 6,179 0 0 Old issue .. .. £4,950 Surrey Hills unpaid balances .. .. 3,743 16 0 New issue .. .. 278,010' Pah Estate and other properties taken — 282,960 0 0 over from Williamson's .. .. 28,708 2 4* Accrued interest on debentures .. 5,000 0 0 Shares in various companies taken over Sundry accounts held in suspense .. 1,238 0 2 from Williamson's.. .. .. 5,150 0 0 Apparent surplus .. .. .. 148,110 0 0 Funds in hands of trustees .. .. 21,414 12 8 £636,162 17 0 £636,162 17 0
BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED). Profit and Loss for Twelve Months ending 31st March, 1895. Expenditure. Income. £ s. d. £ s. d. £ s. d. Debenture interest and exchange .. 84,588 18 10 Revenue from stations .. 9,883 19 1 Land-and income-tax in New Zealand .. 10,538 17 5 Revenue from other assets.. 14,336 12 6 Interest .. .. .. .. 12,286 8 4 24,220 11 7 Cost of management in New Zealand .. 6,435 17 11 Less net loss on assets beCost of management in London.. .. 1,854 6 3 yond N.Z.—-trading conPremium on redemption of first moiety of cerns and sundry assets .. 7,189 16 5 debentures .. .. .. .. 37,500 0 0 Cost of remittance for same .. ~ 7,875 0 0 17,030 15 2 Balance of profit and loss carried forward Balance profit and loss at 31st March, 1895 177,308 7 6 from 1894 .. .. .. .. 33,259 13 11 £194,339 2 8 £194,339 2 8
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Pro formd Combined Balance-sheet of the Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited) as at the 31st March, 1895. Liabilities. £ s. d. Assets. £ s. d, Capital paid up,— Stations, — Estates Company .. .. 1,850,000 0 0 Land and improvements .. .. 1,083,959 0 0 Auckland Agricultural Company .. 148,110 0 0 Stock and implements .. .. 335,453 0 0 Debentures, — Sundry freeholds in New Zealand .. 396,460 0 0 Redeemable in 1910 at 103 .. 750,000 0 0 Interest in Thames Valley Land CornRedeemable up to 1902 .. .. 282,960 0 0 pany, represented by land and stock 50,256 0 0 Debts due to the bank .. .. 1,426,702 0 0 Coal-mine and land, Waikato .. 12,977 0 0 Accrued interest on debentures .. 26,225 0 0 Freeholds beyond New Zealand .. 23,607 0 0 Reserve for loss on Onehunga Ironworks Leaseholds .. .. .. 52,508 0 0 stocks .. .. .. .. 3,316 0 0 Trading concerns .. .. .. 421,062 0 0 Sundry accounts in suspense .. 1,238 0 0 Shares .. .. .. .. 16,792 0 0 Sundry creditors .. .. .. 4,688 0 0 Mortgages.. .. .. .. 101,569 0 0 Sundries .. .. .. .. 21,020 0 0 Amounts due by purchasers .. .. 132,080 0 0 Sundry balances due to company .. 59,690 0 0 Funds in hands of trustees .. .. 21,414 0 0 Deficiency.. .. .. .. 1,764,383 0 0 £4,493,239 0 0 £4,493,239 0 0 Note.—The above is an estimate of the position aftor writing down the book-cost of the properties to the level of the latest valuations received.
31st March, 1895. Combined Balance-sheet of Bank of New Zealand Estates Company (Limited), Auckland Agricultural Company (Limited), and Matamata and Joint Interests, etc.
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Bank of New Zealand Estates Company (Limited). Auckland Agricultural Company. Bank of New Zealand in re Matamata, &c. Total, Liabilities. £ s. d. £ s. d. £ s. d. £ s. d. Capital— £60,000 6-per-cent. preference shares £125,000 ordinary shares £333,940 preference shares £533,940 (£333,940 preference and £200,000 ordinary) shares, £385,829 at 18s. written off, leaving Debentures — Redeemable in 1910, at £103 Redeemable up to 1902 Debts due to Bank of New Zealand— Bank of New Zealand Estates Company— General Account Station Adjustment Account .. Auckland Agricultural Purchase Account Account Joint Interests London Office Account Auckland Agricultural Company— Ordinary Account No. 1 Account Station Working Account Matamata Company Account Accrued interest on debentures Reserve to provide for loss —Onehunga Ironworks stocks Sundry accounts in suspense Sundry creditors — Bank of New Zealand Estates Company .. .. £4,645 15 10 Accident Insurance Company .. .. 42 4 2 600,000 0 0 1,250,000 0 0 750,000 0 0 875,327 10 4 186,785 6 1 50,000 0 0 405 0 9 17 15 8 148,110 2 0 282,960 0 0 600,000 0 0 1,250,000 0 0 148,110 2 0 750,000 0 0 282,960 0 0 1,112,535 12 10 90,185 14 0 90,968 3 5 13,012 19 5 } - 194,160 16 10 21,225 0 0 5,000 0 0 120,000 0 0 120,000 0 0 26,225 0 0 3,316 1 11 1,238 0 2 3,316 1 11 1,238 0 2 4,688 0 0 4,688 0 0 Assets. 3,737,076 14 9 636,162 19- 0 120,000 0 0 4,493,239 13 9 Stations— Lands and improvements Stock, implements, &c. Sundry properties— Freeholds Leaseholds Funds in hands of Trustees Mortgages Shares Amounts due from purchasers Sundry balances due to company Sundries Amount paid to bank in excess of Mr. Hean's valuation Trading concerns.. Realisation Adjustment Account, deficiency .. £39,068 7 3 Realisation Adjustment Account, expenses, commission, &c. .. .. 4,343 6 1 Cost of issuing debentures .. 187,500 0 0 Preliminary expenses .. 13,998 19 7 Station Improvement Suspense Account .. .. 44,858 0 0 1,024,943 1 0 244,431 15 3 624,285 6 9 70,119 5 10 103,796 17 5 346,072 1 9 128,360 2 8 65,550 12 2 53,343 19 11 493,470 4 2 77,497 3 10 27,273 2 4 21,414 12 8 7,614 0 0 5,150 0 0 3,743 16 0 68,124 0 0 13,525 0 0 2,008 0 0 5,602 0 0 1,586,537 5 2 335,453 19 1 653,566 9 1 75,721 5 10 21,414 12 8 111,410 17 5 351,222 1 9 132,103 18 8 65,550 12 2 53,343 19 11 54,507 0 0 554,589 11 7 30,741 0 0 54,507 0 0 585,330 11 7 Balance Profit and Loss Account 289,768 12 11 177,308 7 6 289,768 12 11 177,308 7 6 3,737,076 14 9 636,162 19 0 120,000 0 0 4,493,239 13 9
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EXHIBIT No. 15. [Handed in by Mr. Foster, 7th August, 1896.] STATIONS BALANCE-SHEETS AND PROFIT AND LOSS ACCOUNTS, FOR THE YEAR ENDING 31st MARCH, 1895.
AWAMATE ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 22,523 18 5 Live-stock .. .. .. 4,704 6 0 Implements .. .. .. 35C 0 0 Land purchased .. .. 157 16 5 Improvements .. .. .. 51 18 4 Stock adjustment at 31st March, 1895 .. .. .. 514 13 2 Sundries— Turnips .. .. .. 126 0 6 Horse and stock feed .. .. 166 5 0 Seed.. .. .. .. 88 1 0 Material on hand .. .. 30 15 6 Accounts outstanding .. .. 19 12 9 Improvement Suspense Account .. .. .. 274 0 0 Bank of New Zealand overdraft .. .. 1,488 1 8 Accident Insurance Account 2 7 2 Bankof New Zealand, London 91 0 0 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. ' .. .. 708 9 5 Profit and Loss Account .. .. 168 4 8 Valuation at 31st March, 1895— Land and improvements .. 22,733 13 2 Live-stock .. .. 5,178 19 2 Implements .. .. 390 0 0 £29,884 1 2 29,884 1 2 AWAMATE ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 66 19 4 Turnips .. .. 60 0 0 Horse and stock feed .. 187 15 8 General expenses .. 141 3 7 Wages .. .. 645 3 5 Repairs .. .. 121 5 7 Improvement Suspense Account, depreciation 20 per cent. .. .. 68 18 1 Interest .. .. 51 0 10 Reclamation, wool shipments, 1894-95 .. 58 7 6 Reclamation, wool shipments, 1895 .. .. 91 0 0 Rent .. .. 61 10 0 Sundries .. .. 6 5 0 Horse account .. .. 50 7 6 Pigs .. .. 1 15 0 By Sheep Account .. .. 317 4 3 Cattle .. .. .. 12 5 0 Wool .. .. .. 1,113 17 7 Balance (loss) .. .. .. 168 4 8 £1,611 11 6 1,611 11 6 BEERESCOURT ESTATE. Balance-sheet at 31rt March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 2,430 0 6 Live-stock .. .. .. 341 8 0 Implements .. .. .. 90 0 0 Stock adjustment at 31st March, 1895 .. .. .. 290 4 0 Sundries— Turnips .. .. .. 37 6 2 Seed .. .. .. .. 10 15 9 Horse and stock feed .. .. 48 6 8 Accounts outstanding ~ ~ 51 1 6
£ s. d. £ s. d. Bank of New Zealand Estates Company, Capital Account, adjustment due by Estates Company as above .. .. .. 290 4 0 Bank of New Zealand Overdraft .. .. 511 16 5 Accident Insurance Company .. .. 1 12 4 Bank of New Zealand, London .. .. 6 19 1 Profit and Loss Account .. .. 82 13 9 Valuation at 31st March, 1895— Land and improvements .. 2,430 0 6 Live-stock '.'... .. 607 12 0 Implements .. .. 114 0 0 £3,672 0 4 £3,672 0 4 BEERESCOURT ESTATE. proprt and loss account for the year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 13 010 Improvement Account .. 25 13 7 General expenses .. 26 13 7 Horse and stock feed .. 18 17 8 Wages .. .. 201 15 0 Repairs .. .. 35 14 8 Interest .. .. 18 10 10 Reclamation on wool shipments, 1894 .. .. 3 4 6 Ditto, 1895 .. .. 619 1 Seed account .. .. 015 0 Turnips .. .. 25 0 0 By Sheep Account .. .. 40 9 0 Cattle .. .. .. 195 6 1 Horses .. .. .. 9 13 6 Wool .. ~ .. 33 14 5 Pigs .. .. .. 14 8 0 Balance (loss) .. .. .. 82 13 9 £376 4 9 £376 4 7 CARNARVON ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 52,365 17 8 Live-stock .. .. .. 15 6 Implements .. .. .. 350 0 0 Permanent improvements .. .. 88 010 Stock adjustment at 31st March, 1895 .. .. .. 980 12 3 63,743 6 3 Less land sold .. .. .. 2,000 0 0 c a • 61,743 6 3 Sundries— Turnips .. .. .. 275 511 Horse and stock feed .. .. 292 18 4 Accounts outstanding .. .. 40 15 11 Petty cash .. .. .. 7 8 0 Improvement Suspense Account .. .. .. 486 0 0 Material on hand .. .. 5 0 0 Bank of New Zealand .. .. 364 11 7 Accident Assurance Account 11 17 11 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. .. .. 1,068 13 1 Profit and Loss Account .. 2,528 14 11 Valuation at 31st March, 1895 — Land and improvements .. 50,453 18 6 Live-stock .. .. 10,959 7 9 Implements .. .. 330 0 0 £64,283 19 1 £64,283 19~1
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CARNARVON ESTATE. Profit and Loss Account for the Year ending 31st March, 1898. £ s. d. £ s. d. To Implements and saddlery, depreciation.. .. 69 11 6 Turnip Account .. 310 0 0 General expenses .. 251 10 3 Horse and stock feed .. 136 1 8 Wages .. .. 1,032 15 7 Repairs .. .. 174 11 7 Improvement Suspense Account, 20 per cent, depreciation .. .. 120 10 2 Interest .. •• 5 9 11 Reclamation on wool shipments, 1894 .. .. 45 1 8 Reclamation on frozen sheep shipments, 1895 .. 33 12 1 Material Account .. 8 4 11 By Sheep Account .. - •• 1,895 13 2 Cattle .. .. •■ 490 2 0 Wool .. .. •- 2,306 1 4 Pigs .... .. 2 10 0 Horse Account.. •■ •• 4 0 0 Rent .. .. -. 9 10 Sundries .. . - • • 816 9 To Balance (profit) .. 2,528 14 11 £4,716 4 3 £4,716. 4 3 KAKARE ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 6,583 15 0 Live-stock .. .. -• 1,550 9 10 Implements .. .. • • 75 0 0 Improvements .. .. • • 207 12 9 8,416 17 7 Land sold .. .. 40 15 0 Adjustment stock, decrease.. 102 19 0 J , 143 14 0 8,273 3 7 Sundries— Turnips .. •• •• 143 0 1 Horse- and stock-feed on hand .. 62 0 0 Material .. • • ■ - 19 10 9 Seed .. .. • ■ • • 83 19 8 Bank of New Zealand, London .. 61 16 9 Improvements, Suspense Account .. 262 0 0 Bank of New Zealand overdraft .. •• 989 16 2 Accounts outstanding .. 4 2 6 Accident Insurance .. 1 12 4 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital .. 104 13 9 Profit and Loss Account .. .. 258 10 0 Valuation at 31st March, 1895— Land and improvements .. 6,750 13 7 Live-stock .. .. 1,385 10 0 Implements .. .. 137 0 0 £9,268 14 7 £9,268 14 7 KAKARE ESTATE. Profit and Loss Account for the Year ending 81st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 14 14 7 Horse Account.. .. 26 10 0 Turnip Account .. 180 0 0 General expenses . • 68 12 6 Horse and stock feed .. 75 6 6 Wages .. .. 250 4 5 Repairs .. • • 37 3 0 Improvement Suspense Aocount, 20 per cent, depreciation .. .. 64 1 7 Interest .. .. 41 15 3 Reclamation on wool shipments .. .. 66 14 6
£ s. d. £ s. d. By Sheep .. .. .. 221 7 0 Cattle .. .. .. 12 0 Surplus on wool shipments, 1895 .. .. .. 61 16 9 Sundries .. .. .. 2 15 0 Wool .. .. .. 279 11 7 Balance .. ~ .. 258 10 0 £825 2 4 £825 2 4 LOCKERBIE ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 81,927 10 1 Live-stock .. .. .. 17,064 1 6 Implements .. .. .. 1, 000 0 0 Improvements .. .. .. 1,313 6 7 Stock adjustment at 31st March, 1895 .. .. .. 198 5 6 Sundries— Turnips .. .. .. 1,263 8 1 Horse and stock feed on hand .. 725 0 0 Woolpacks .. .. .. 15 0 0 Seed .. .. .. .. 133 2 0 Estimated surplus on frozen mutton .. .. .. 100 0 0 Improvement Suspense Account .. .. .. 1,116 0 0 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. .. .. 1,511 12 1 Bank of New Zealand overdraft .. .. 3,550 5 0 Bank of New Zealand, London 138 3 4 Accident Insurance Company Account ... .. 19. 8 2 Accounts outstanding .. 57 13 7 Balance, Profit and Loss Account .. .. 1,098 12 1 Valuation at 31st March, 1895 — Land and improvements .. 83,240 16 8 Live-stock " .. .. 17,339 7 0 Implements .. .. 923 0 0 £106,367 5 10 106,367 5 10 LOCKERBIE ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ a. d. £ s. d. To Implements and saddlery, depreciation .. .. 150 13 6 Stud Cattle Account .. 28 10 0 Turnip Account .. .. 1 740 0 1 General expenses .. 390 4 8 Horse and Stock-feed Account .. .. 88 3 10 Wages .. .. 1,655 10 0 Repairs .. .. 234 13 2 Improvement Suspense, 20 per cent, depreciation .. 279 19 7 Interest .. .. 255 2 1 Reclamation on wool shipment, 1894 .. .. 157 19 10 Reclamation on wool shipment, 1895 .. .. 138 3 4 Reclamation on frozen mutton, 1894 .. .. 412 14 1 Sheep .. .. •• 2,504 11 5 Cattle .. .. •• 151 7 6 Wool .. .. ■• 3,925 15- 4 Horse .. .. .. 11 3 0 Rent .. .. .. 37 9 0 Balance (profit) .. .. 1,098 12 1 £6,630 6 3 £6,630 6 3
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MANGATORO ESTATE. Balance-sheet at 31st March, 1895. £ b d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 157,431 5 5 Live-stock ';. .. .. 25,202 0 6 Implements .. .. .. 878 0 0 Improvements .. .. .. 3,310 3 0 Land purchased ' .. .. 2,945 11 7 189,767 0 6 Less— Stock adjustment at 31st March, 1895, decrease.. .. 23112 8 189,535 7 10 Sundries— Turnips .. .. .. 958 0 0 Horse and stock feed on hand .. 112 10 0 Material on hand .. .. 14 0 0 Improvement Suspense Account .. .. .. 2,080 0 0 Suspense Account .. .. 417 11 1 Land Purchase Account .. .. 20 8 0 Accounts outstanding .. .. 1,627 9 7 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital .. 3,078 10 4 Bank of New Zealand overdraft .. .. 4,148 7 0 Accident Insurance Account 17 6 7 Profit and Loss Account .. 4,142 15 5 Valuation at 31st March, 1895— Land and improvements .. 163,687 0 0 Live-stock ... .. 25,034 710 Implements .. .. 814 0 0 £197,843 16 10 197,843 16 10 MANGATORO ESTATE. Profit and Loss Account for the Year ending the 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 175 1 6 Horses .. .. 107 10 0 Turnips .. .. 990 0 0 General expenses .. 1,218 14 10 Horse feed .. .. 64 12 0 Wages .. .. 1,623 4 10 Repairs .. .. 603 8 7 Improvement Suspense Account, 20 per cent, depreciation .. .. 528 14 2 Rent .. .. 195 19 0 Interest .. .. 369 18 0 Reclamation on wool, 1894 shipment .. .. 699 12 9 By Unpresented cheques written off .. .. .. 6 8 3 Sheep .. .. .. 2,890 5 0 Cattle .. .. .. 735 11 9 Wool .. .. .. 7,087 6 1 To Balance (profit) .. 4,142 15 5 £10,719 11 1 10,719 11 1 MATAMATA ESTATE. Balance-sheet at 31st March, 1895, Total. Half-share. Valuation at 31st March, 1894— £ s. d. £ s. d, Land and improvements ~183,311 2 1 91,655 11 0 Stock and implements .. 39,466 17 4 19,733 8 8 Other assets .. .. 198 0 9 99 0 5 222,976 0 2 111,488 0 1 Adjustment at 31st March, ' 1895 ~ .. ~ 2,041 11 3 113,529 11 4 Valuation at 31st March, 1895— Land and improvements ..183,147 6 2 91,573 13 1 Stock and implements .. 38,731 4 2 19,365 12 1 Other assets .. .. 5,180 12 4 2,590 6 2 £227,059 2 8 113,529 11 i
MATAMATA ESTATE; Profit and Loss Account for the Year ending 81st March, 1895. £ s. d. £ s. d. To Farm implements, depreciation .. .. 187 16 3 Rates .. .. 258 4 11 Interest and discount .. 84 2 0 Exchange .. .. 7 9 0 Wages .. .. 2,944 2 7 Turnips, manure, &c. .. 4,151 7 0 Horse and stock feed .. 112 9 0 Grass-seeds .. .. 205 19 4 Improvement Suspense Account, 20 per cent, depreciation .. .. 414 16 6 General expenses .. 653 12 10 Entire Horse Account .. 116 9 4 By Cattle Account .. .. 3,227 14 7 Sheep .. .. .. 2,656 11 9 Horse .. - .. .. 22 8 11 Wool .. .. .. 8,174 5 0 To Balance (profit) .. .. 4,944 11 6 £14,081 0 3 14,081 0 3 Half-share, £2,472 ss. 9d. MOTOA ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 61,983 14 0 Live-stock .. ... .. 15,274 13 3 Implements .. .. .. 125 0 0 Improvements .. .. .. 1,238 1 7 Less— 78,621 8 10 Stock adjustment at 31st March, 1895, decrease .. 1,146 9 9 77,474 19 1 Sundries— Turnips .. .. • ... 100 19 11 Horse and stock feed on hand .. 12 0 0 Seed .. .. .. .. 55 18 0 Material on hand .. .. 13 1 9 Improvement Suspense Account .. .. .. 480 0 0 Accounts outstanding .. .. 311 19 3 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. .. .. 91 11 10 Bank of New Zealand overdraft .. .. 1,460 010 Accident Insurance Account 11 18 6 Profit and Loss Account .. .. 406 8 7 Valuation at 31st March, 1895— Land and improvements .. 63,221 15 7 Live-stock .. .. 14,117 3 6 Implements .. .. 136 0 0 £78,946 18 5 78,946 18 5 MOTOA ESTATE. Profit and Loss Account for the Year ending the 31st March, 1895. £ s. d, £ s, d To Implements and saddlery, depreciation .. .. 18 13 6 Sheep ~ ~ 170 2 6 Cattle .. .. 938 9 11 Horse ~ ~ 13 0 0 Pigs ... .. 18 0 General expenses ~ 200 17 10 Horse and stock feed ~ 155 16 8 Wages ~ .. 936 16 2 Repairs .. .. 338 6 10 Improvement Suspense Account, 20 per cent, depreciation ~ .. 128 8 5 Interest .. .. 65 3 3 Reclamation on wool shipments, 1894 .. .. 107 1 9 By Wool .. ~ .. g,466 s 6 Flax ~ .. ~ 190 11 0 Rent .. ~ .. 10 16 6 By Balance (loss) .. ~ ~ 406 8 7 £3,074 4 7 3,074 4 7
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PAPARAMU ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land arid improvements .. .. 31,270 12 11 Live-stock .. .. .. 7,660 12 6 Implements .. .. .. 420 0 0 Less— 39,351 5 5 J. Hume's equity .. .. 5,818 0 0 33,533 5 5 Stock adjustment at 31st March, 1895 .. .. .. 153 8 6 33,686 13 11 Sundries— Turnips .. .. .. 477 9 1 Horse and stock feed on hand .. 159 6 8 Grass-seed .. .. .. 51 5 0 Manure .. .. .. 10 5 0 Material .. .. .. 47 16 0 Improvement Suspense Account .. .. .. 240 0 0 Accounts outstanding .. .. 20 6 10 Wool-packs on hand .. .. 2 7 3 Bank of New Zealand .. .. 1,089 18 0 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital, as above .. .. .. 153 8 6 Bank of New Zealand, London 138 3 4 . Accident Insurance Company Account .. .. 3 4 11 Profit arid Loss Account .. 2,110 14 1 Valuation at 31st March, 1895— Land and improvements .. 31,270 12 11 Live-stock .. .. 7,867 1 0 Implements .. .. 367 0 0 39,504 13 11 Less J. Hume's equity .. 5,818 0 0 £35,938 16 3 35,938 16 3 PAPARAMU ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. To Implements and saddlery, £ s. d. £ s. d. depreciation .. .. 63 12 7 Horses .. .. 7 11 0 General expenses .. 153 12 8 Horse and stock feed .. 52 11 8 Wages .. .. 527 17 1 Repairs .. .. 217 2 1 Improvement Suspense Account, 20 per cent, depreciation .. .. 67 5 11 Interest .. .. 4 13 8 Reclamation on wool shipments, 1895 .. .. 138 3 4 Reclamation on frozen • mutton, 1894 .. 44 12 2 By Sheep .. .. .. 682 6 2 Cattle .. .. .. 1,424 0 0 Surplus on wool shipments, 1894 .. .. .. 58 7 6 Wool .. .. .. 1,223 2 7 To Balance (profit) .. 2,110 14 1 £3,387 16 3 3,387 16 3 RANGIATEA ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 22,794 2 0 Live-stock .. .. .. 5,642 0 0 Implements .. .. .. 525 0 0 Stock adjustment at 31st March, 1895.. .. .. 138 14 0 Sundries— Turnips .. .. .. 546 11 0 Horse and stock feed on band .. 275 0 0 Seed .. .. .. .. 27 0 0 Material on hand .. .. 14 10 0 Manure .. .. .. 5 0 0 Petty cash .. .. ~ 414 11
Improvement Suspense Ac- £ s. d. £ s. d. count .. .. .. 230 0 0 Bank of New Zealand, London .. 47 7 11 Woolpacks .. .. .. 0 18 9 Accounts outstanding .. .. 55 13 3 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital, as above .. ' .. .. 138 14 0 Bank of New Zealand overdraft .. .. 374 10 3 Accident Insurance Account 5 18 9 Profit and Loss Account .. 965 0 10 Valuation at 31st March, 1895 — Land improvements .. 22,794 2 0 Live-stock .. .. 5,825 14 0 Implements .. .. 480 0 0 £30,445 5 10 30,445 5 10 RANGIATEA ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. dTo Implements and saddlery, depreciation .. .. 75 13 5 Turnips .. .. 500 0 0 General expenses .. 118 13 9 Horse and Stock-feed Account .. .. 77 12 11 Wages .. .. 756 8 1 Repairs .. .. 162 15 0 Improvemeut Suspense Account, 20 per cent, depreciation .. .. 58 14 10 Interest .. .. 62 18 7 Reclamation on frozen sheep, shipments, 1894 .. 76 9 6 By Sheep .. .. .. 893 5 2 Cattle .. .. .. 196 3 8 Horses .. .. .. 79 7 3 Wool .. .. .. 1,620 6 11 Surplus, wool shipments, 1894 .. .. .. 17 16 0 Surplus, wool shipments, 1895 .. .. .. 47 7 11 To Balance (profit) .. 965 0 10 £2,854 6 11 2,854 6 11 RANGIURU AND OHAUITI ESTATES. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 54,337 3 3 Live-stock .. .. .. 14,297 1 6 Implements .. .. .. 661 15 0 Improvements .. .. .. 910 0 0 Less— 70,205 19 9 Stock adjustment at 31st March, 1895, decrease .. 414 17 6 69,791 2 3 Sundries — Turnips .. .. .. 485 15 3 Horse feed on hand .. .. 185 12 6 Seed.. .. .. .. 410 0 0 Improvement Suspense Account .. .. ■ ■ 368 0 0 Accounts outstanding .. .. 452 8 8 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. ' .. .. 495 2 6 Bank of New Zealand overdraft .. .. 1,676 2 4 Accident Insurance Account 7 16 4 Profit and Loss Account .. 713 0 3 Valuation at 31st March, 1895— Land and improvements .. 55,247 3 3 Live-stock .. .. 13,929 19 0 Implements .. .. 614 0 0 £72,188 1 2 72,188 1 2
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RANGIURU AND OHAUITI ESTATES. profrt and loss account for the year endrng 31st March, 1895. To Implements and saddlery, £ s. d. £ s. d' depreciation .. .. 99 18 6 Horse Account . .. 28 14 0 Turnips .. .. 505 0 0 General expenses .. 296 0 0 Horse and stock feed .. 336 14 4 Wages .. .. 949 7 7 Repairs .. .. 227 19 10 Improvement Suspense Account, 20 per cent, depreciation .. .. 91 5 11 Interest .. .. 93 15 6 By Sheep Account.. .. .. 63 9 0 Wool Account .. .. .. 23 4 9 Cattle Account .. .. 3,250 2 2 Pigs .. .. .. 5 0 0 To Balance (profit) .. .. 713 0 3 £3,341 15 11 3,341 15 11 RICHMOND DOWNS ESTATE. Balance-sheet at 31st March, 1895. £ s. d £ s. d. Valuation at 31stMarcH, 1894— .Land and improvements .. .. 32,046 5 0 Live-stock .. .. .. 8,010 3 1 Implements • .. .. .. 560 0 0 Improvements .. .. .. 56 12 4 Stock adjustment at 31st March, 1895 .. .. .. 437 7 6 Sundries — Turnips .. .. .. 762 211 Horse and stock feed on hand .. 178 6 8 Manure .. .. .. 46 7 6 Material .. .. .. 87 4 0 Improvement Suspense Account .. .. :: 576 0 0 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. .. .. 493 19 10 Bank of New Zealand overdraft .. .. 1,905 11 2 Bank of New Zealand, London 134 2 1 Accident Insurance Account 6 2 7 Accounts outstanding .. 14 5 9 Profit and Loss Account .. 83 19 4 Valuation at 31st March, 1895— Land and improvements .. 32,102 17 4 Live-stock .. .. 8,507 10 6 Implements .. .. 500 0 0 £48,254 8 9 43,254 8 9 o RICHMOND DOWNS ESTATE. profrt and loss account for the yeas ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation.. .. 86 0 10 Horses .. .. 25 2 9 Turnips .. .. 865 0 0 General expenses .. 171 810 Horse and stock feed .. 450 1 4 Wages .. .. 958 6 11 Repairs .. .. 62 18 8 Improvement Suspense Account, 20 per cent, depreciation .. .. 144 12 8 Interest .. .. 96 2 4 Reclamation on shipments of wool, 1894.. .. 74 8 8 Ditto, 1895 .. .. 134 2 1 Reclamation on frozen mutton, 1894 .. .. 60 13 11 By Sheep .. .. • • 884 12 3 Cattle .. .. .. 1,202 7 8 Wool .. .. •■ 1,125 18 10 To Balance (profit) .. 83 19 4 £3,212 18 4 3,212 18 4
WAIMANA ESTATE. Balance-sheet at 31st March, 1895. Valuation at 31st March, 1894— £ s. d. £ s. dLand and improvements .. .. 21,659 1 5 Live-stock .. .. .. 3,772 1 0 Implements .. .. .. 369 0 0 Improvements .. .. .. 515 5 7 Stock adjustment at 31st March, 1895 .. .. .. 1,013 18 6 Sundries— Turnips .. .. .. 30 0 0 Horse and stock feed on hand .. 234 0 0 Maize on hand .. .. .. 122 4 2 Seed .. .. .. .. 30 0 0 Material and produce .. .. 70 0 0 Improvement Suspense Account .. .. .. 56 0 0 Bank of New Zealand Estates Company Capital Account, adjustment due by capital as above .. .. 1,529 4 1 Bank of New Zealand overdraft .. .. 2,689 2 0 Bank of New Zealand, London 6 8 10 Accident Insurance Account 3 11 9 Accounts outstanding .. 0 5 0 Profit and Loss Account .. .. 627 19 4 Valuation at 31st March, 1895— Land and improvements .. 22,174 7 0 Live-stock .. .. 4,844 19 6 Implements .. .". 310 0 0 £30,028 14 1 30,028 14 1 WAIMANA ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. To Implements and saddlery, £ s. d. £ s. d. depreciation .. .. 76 4 8 Sheep .. .. 9 3 2 Horse .. .. 27 10 0 Pig .. ..- .. 3 10 0 Maize .. .. 110 0 7 General expenses .. 146 3 2 Wages .. .. 613 14 0 Repairs .. .. 43 17 0 Improvement Suspense Account, 20 per cent, depreciation .. .. 13 1 4 Interest .. .. 98 17 11 Rent .. .. 385 6 0 Reclamation on wool shipments, 1894 .. .. 66 0 4 Ditto 1895 .. .. 6 8 10 By Wool Account .. .. .. 696 1 6 Cattle .. .. .. 11l 16 4 Horse and stock feed .. .. 84 10 0 Skins and hides . .. .. 79 9 10 Balance (loss) .. .. .. 627 19 4 £1,599 17 0 1,599 17 0 AUCKLAND AGRICULTURAL COMPANY (LIMITED), STATION ACCOUNT. Balance-sheet at 31st March, 1895. Valuation at 31st March, 1894— £ s. d. £ s. d. Land and improvements .. .. 391,585 1 6 Stock and implements .. ... 77,837 18 6 469,423 0 0 Less debentures .. .. 282,960 0 0 186,463 0 0 Debentures outstanding ~ .. 282,960 0 0 Land Transactions— Purchase, Lot 50, Okoroire, 1 acre .. .. .. 57 10 0 Sales— 469,480 10 0 J. Taylor, 6 acres 3 roods 10 perches .. .. 34 0 0 Payment by Floyd, on account 64 acres 1 rood 32 perches .. ~ 16 0 0 — 50 0 0 Adjustment at 31st March, 1895— 469,430 10 0 Permanent improvements.. 937 13 2 Decrease, stock and implements .. .. 4,642 15 3 3,705 2 1 465,725 7 11
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Sundries. £s. d. £ s. d. Improvement Suspense Account .. .. .. 1,220 0 0 Horse and stock feed on hand .. .. .. 2,749 7 6 Material on hand .. .. 260 1 6 Manure on hand .. .. 258 10 0 Grass-seed .. .. .. 1,009 8 9 Woolpacks, lampblack, &c, on hand .. .. .. 24 12 10 Auckland Agricultural Company, ordinary account— Permanent improvements.. 937 13 2 Wool, &c, at London .. 10,909 1 5 Profit and Loss (loss) .. 4,974 19 6 16,821 14 1 Decrease, stock and implements .. .. 4,642 15 3 Due to Station Account .. 12,178 18 10 12,178 18 10 Accounts owing by Estates — Accident Insurance Company .. .. 42 4 2 Bank of New Zealand Estates Company .. 4,645 15 10 Bank of New Zealand, station overdraft .. .. 13,012 19 5 Valuation at 31st March, 1895— Land and improvements .. 392,530 4 8 Stock and implements .. 73,195 3 3 £483,426 7 4 483,426 7 4 This Statement is made up for the purpose of showing the out-turn of the station properties as valued by Mr. Arthur for the debenture-holders, and does not show the values as appearing in the books of the Auckland Agricultural Company, and must be considered as an informal statement only i AUCKLAND AGRICULTURAL COMPANY. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. 430 10 11 Furniture .. .. 11 15 8 Turnips .. .. 6,241 10 2 Horse and stock feed .. 1,232 17 6 General expenses .. 887 10 4 Wages .. .. 5,962 7 2 Sheep Account .. 2,364 17 10 Renewing pastures .. 302 13 1 Repairs .. .. 1,211 1 3 Cleaning drains .. 323 17 6 Interest .. .. 585 1 2 Housekeeping Account .. 17 3 0 By Cattle .. .. .. 4,493 13 4 Horses .. .. .. 189 4 6 Pigs .. .. .. 12 16 9 Wool .. .. .. 9,723 6 11 Rent .. .. .. 10 5 4 Skins and hides .. .. 166 19 3 Balance (loss) .. .. .. 4,974 19 6 £19,571 5 7 19,571 5 7 ALBURY ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 72,108 12 1 Live-stock .. ... .. 23,336 2 11 Implements .. .. .. 700 0 0 Less— 96,144 15 0 Stock adjustment at 31st March, 1895, decrease .. .. 4,299 15 0 91,845 0 0 Sundries— Stores on hand .. .. .. 8 0 0 Turnips ... ... .. 1,375 6 2 Grain on hand .. .. .. 1,663 12 2 Grass-seed .... .. .. 201 11 2 Petty cash .. .. .. 34 4 9 Sheepskins .. ~ ~ 710 0
£ s. d. £ s. d. Woolpacks .. .. .. 40 8 4 Rabbit-skins .. .. .. 3 10 0 Bank of New Zealand .. .. 1,417 6 0 Improvement Suspense Account .. .. .. 1,410 0 0 Bank of New Zealand Estates Company, Capital Account, adjustment with capital as above .. .. 4,299 15 0 Accident Insurance Account 7 4 1 Station hands .. # .. 28 17 11 Accounts outstanding .. 185 2 1 Profit and Loss Account .. 1,640 9 6 Valuation at 31st March, 1895— Land and improvements .. 72,108 12 1 Live-stock .. .. 19,240 7 11 Implements .. .. 496 0 0 £98,006 8 7 98,006 8 7 ALBURY ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 283 6 7 Cattle Account .. 21 10 0 Horses .. .. 82 4 3 Turnips .. .. 1,167 12 7 General expenses .. 266 18 11 Horse and stock feed .. 183 15 5 Wages .. .. 1,505 6 5 Stores and fuel .. 216 14 5 Repairs .. .. 119 3 2 Improvement Suspense Account, 20 per cent, depreciation .. .. 352 3 4 Interest .. .. 86 1 7 Rent .. .. 250 0 0 Gorse-cutting .. .. 39 2 6 Rabbit Account .. 27 6 10 Reclamation on wool shipments, 1894 .. .. 73 19 2 Coal-mining .. .. 28 7 0 Lime-burning .. .. 15 15 6 By Sheep Account .. .. 1,742 6 11 Pig .. .. .. .. 6 8 0 Wool .. .. .. 4,424 2 0 Grain .. .. .. 187 0 3 To Balance (profit) .. 1,640 9 6 £6,359 17 2 6,359 17 2 AROWHENUA, RANGITATA, AND RIVERSLEA ESTATES. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 55,515 12 11 Live-stock .. .. ... 20,494 8 0 Implements .. .. .. 1,100 0 0 77,110 0 11 Stock adjustment at 31st March, 1895, decrease .. .. 5,410 13 0 71,699 7 11 Sundries — Turnips .. .. .. 543 11 0 Grain on hand .. .. .. 1,728 16 4 Seed .. .. .. .. 41 3 0 Petty cash .. .. .. 26 12 3 Woolpacks .. .. .. 13 6 8 Improvement Suspense Account .. .. .. 620 0 0 Bank of New Zealand .. .. 911 14 10 Bank of New Zealand Estates Company, Capital Account, stock adjustment due to capital as above .. 5,410 13 0 Accident Insurance Account 8 18 5 Profit and Loss Account .. .. 1,534 7 4 Valuation at 31st March, 1895— Land and improvements .. 55,515 12 11 Live-stock .. .. 15,298 15 0 Implements .. .. 885 0 0 £77,118-19 4 77,118 19 4
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AROWHENUA ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 258 11 9 Horse Account.. .. 36 12 0 Pigs .. .. ■ 19 4 6 Turnips .. .. 537 9 6 Horse and stock feed .. 338 8 9 Wages .. .. 1,399 16 7 Stores and fuel .. 258 13 9 Repairs .. .. 281 10 9 Improvement Suspense Account, 20 per cent, depreciation .. .. 157 17 2 Interest .. .. 92 13 4 Rent .. .. 728 17 1 Gorse-cutting .. .. 47 18 3 Reclamation, wool shipments, 1894 .. .. 780 2 8 General expenses .. 401 1 8 By Sheep Account .. .. 107 17 8 Cattle .. .. .. 60 14 0 Wool .. .. .. 2,989 14 8 Dividend, South Canterbury Refrigerating Company .. .. 16 16 0 Grain .. .. .. 629 8 1 Balance (loss) .. .. .. 1,534 7 4 £5,338 17 9 5,338 17 9 AWATERE ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894 — Land and improvements .. .. 73,985 16 7 Live-stock .. .. .. 14,742 15 0 Implements .. .. .. 1,112 4 0 Improvements .. .. .. 30 6 9 89,871 2 4 Stock adjustment at 31st March, 1895, decrease .. .. 4,783 14 6 85,087 7 10 Sundries — Horse and stock feed on hand .. 300 0 0 Stores .. .. .. 80 0 0 Wool.. .. .. .. 225 0 0 Rabbit Account, ammunition, phosphorus, &c. .. .. 136 0 0 Improvement Suspense .. .. 85 0 0 Accounts outstanding .. .. 207 0 6 Bank of New Zealand 983 18 8 , Bank of New Zealand, London 546 8 3 Bank of New Zealand Estates Company, Capital Account, improvements and stock adjustment due to capital, as above .. .. 4,753 7 9 Accident Insurance Account 25 17 4 Station hands .. .. 327 1 10 Profit and Loss Account .. .. 5,603 13 4 Valuation at 31st March, 1895— Land and improvements ... 74,016 3 4 Live-stock .. .. 10,031 4 6 Implements .. .. 1,040 0 0 £91,724 1 8 91,724 1 8 ] AWATERE ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ 8. d. £ s. d. To Implements and saddlery, depreciation .. 166 8 8 Sheep Account.. .. 3,875 9 11 Cattle .. .. 4 5 0 Horse .. .. 25 10 0 Turnips .. .. 31 8 2 General expenses .. 322 3 2 Horse and stock feed 14 3 1 A Wages .. .. 1,787 7 6 Stores and fuel .. 279 14 6 Repairs .. .. 61 14 5 Interest .. .. 129 3 5 Rent ~ .. 585 1 5
£ s. d. £ b. d. Rabbit Account .. 1,179 16 5 Reclamation on wool shipment, 1894 .. 716 16 9 Reclamation on frozen mutton, 1895 .. 20 8 2 Reclamation on rabbit-skins, 1895 .. .. 66 18 11 Renewing pastures .. 20 16 10 Boga Meat Company .. 250 0 0 Sundries .. .. .. 7 0 0 By Wool Account .. .. .. 3,926 13 0 Balance (loss) .. .. .. 5,603 13 4 £9,537 6 4 9,537 6 4 BUSHY PARK ESTATE. Balance-sheet at 31st March, 1895. Valuation at 31st March, 1894— Land and improvements .. .. 19,955 13 10 Live-stock .. .. .. 4,945 16 4 Implements .. .. .. 200 0 0 25,101 10 2 Stock adjustment at 31st March, 1895, decrease .. .. 1,13112 11 23,969 17 3 Sundries— Turnips .. .. .. 100 10 8 Grain on hand .. .. .. 116 0 0 Improvement Suspense Account .. .. .. 120 0 0 Bank of New Zealand .. .. 763 10 6 Bank of New Zealand Estates Company, Capital Account, adjustment due to capital as above .. .. 1,131 12 11 Accounts outstanding .. 6 12 6 Accident Insurance Company Account .. .. 1 16 3 Profit and Loss Account .. .. 40 0 6 Valuation at 31st March, 1895 — Land and improvements .. 19,955 13 10 Live-stock .. .. 3,801 2 5 Implements .. .. 213 1 0 £25,109 18 11 25,109 18 11 BUSHY PARK. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 27 11 2 Cattle Account .. 2 0 0 Horse Account .. 19 10 0 Turnips .. .. 252 8 2 General expenses .. 115 16 0 Horse and stock feed .. 38 1 0 Wages .. .. 504 4 4 Stores and fuel .. 28 9 0 Repairs .. .. 41 7 3 Improvement Suspense Account, 20 per cent, depreciation .. .. 36 9 8 Interest .. .. 54 14 6 Rent .. .. 30 18 0 Rabbit Account .. 11 19 4 Grain .. .. 556 11 10 By Sheep .. .. .. 446 12 8 Pigs .. .. .. 2 17 0 Wool .. .. .. 1,167 9 10 Surplus wool shipments, 1894 .. 63 0 3 Balance (loss) .. .. .. 40 0 6 £1,720 0 3 1,720 0 3 CLARENCE ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 23,292 3 9 Live-stock .. .. .. 11,517 3 0 Implements .. .. .. 650 0 0 Stock adjustment at 31st March, 1895 (increase) ~ ~ 573 10 9
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Sundries. £s. d. £ s. d. Horse and stock feed on hand .. 249 15 0 Stores .. .. .. 334 1 2 Petty cash .. .. .. 169 5 0 Material .. .. .. 84 8 0 Rabbit-skins .. .. .. 52 10 0 Improvement Suspense Account .. .. .. 70 0 0 Bank of New Zealand .. 2,234 0 0 Accident Insurance Account 17 7 7 Station hands .. .. 343 5 3 Accounts outstanding .. 165 6 3 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital as above .. .. .. 573 10 9 Profit and Loss Account .. .. 1,226 9 2 Valuation at 31st March, 1895— Land and improvements .. 23,292 3 9 Live-stock .. .. 12,170 13 9 Implements .. .. 570 0 0 £38,792 16 7 38,792 16 7 CLARENCE ESTATE. Profit and and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 138 17 3 Horse Account .. .. 22 5 6 Turnips .. .. 1 10 2 General expenses .. 164 14 7 Horse and stock feed .. 159 18 0 Wages .. .. .. 2,638 6 4 Stores and fuel .. .. 108 19 2 Repairs .. .. .. 45 14 5 Material Account .. 15 12 0 Improvement Suspense Account, 20 per cent, depreciation .. . • 21 0 1 Interest.. .. .. 154 6 10 Rent .. .. .. 1,070 4 6 Rabbit Account .. .. 432 4 8 Reclamation on wool shipments, 1894 .. .. 596 0 6 By Sheep .. .. .. •. 811 12 7 Cattle .. .. .. .. 6 15 0 Pigs .. 9 0 0 Wool .. .. .. .. 3,515 17 3 Balance (loss) .. .. .. 1,226 9 2 £5,569 14 0 5,569 14 0 ESKBANK ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 31,018 15 1 Live-stock .. .. .. 6,633 3 4 Implements .. .. .. 750 0 0 38,401 18 5 Stock adjustment at 31st March, 1895, decrease .. .. 180 1 0 Sundries— 38,221 17 5 Turnips .. .. .. 192 3 4 Grain on hand .. .. .. 1,576 17 11 Petty cash .. .. .. 24 19 9 Improvement Suspense Account .. .. .. 320 0 0 Accounts outstanding .. .. 5 15 0 Bank of New Zealand .. 295 0 1 Bank of New Zealand Estates Company, Capital Account, adjustment due to capital as above .. .. 180 1 0 Accident Insurance Account 6 16 5 Station hands .. .. 14 1 4 Profit and Loss .. .. 1,623 17 0 Valuation at 31st March, 1895— Land and improvements .. 31,018 15 1 Live-stock .. .. 6,762 16 4 Implements .. .. 440 6 0 £40,341 13 3 40,341 13 3
21—1. 6.
ESKBANK ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. dTo Implements and saddlery, depreciation .. .. 402 13 7 Horse .. .. 39 7 0 Turnips .. .. 198 19 9 General expenses .. 110 9 7 Horse and stock feed .. 460 7 6 Wages .. .. 928 12 1 Stores and fuel .. 142 16 6 Repairs .. .. 70 8 2 Interest .. .. 91 11 8 Reclamation on wool shipments, 1894 .. 121 6 2 Improvement Suspense Account, 20 per cent, depreciation .. .. 78 14 11 Gorso-cutting .. .. 39 7 0 By Sheep .. .. .. 1,311 17 3 Pigs .. .. .. 13 15 0 Cattle .. .. .. 53 15 0 Wool .. .. .. 2,018 12 5 Grain .. .. .. 910 11 3 To Balance (profit) .. 1,623 17 0 £4,308 10 11 4,308 10 11 GLENTUI ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 18,084 19 0 Live-stock .. .. .. 10,549 15 5 Implements .. .. .. 360 0 0 28,994 14 5 Stock adjustment at 31st March, 1895, decrease .. .. -14 12 3 28,980 2 2 Sundries— Turnips .. .. .. 4 18 Horse and stock feed on hand .. 1 19 0 Grass-seed ~ .. .. 45 0 0 Stores .. .. .. 40 10 0 Woolpacks .. .. .. 6 5 0 Petty cash .. .. .. 14 18 3 Fencing material .. .. 7 10 0 Improvement Suspense Account .. .. .. 66 0 0 Bank of New Zealand .. .. 427 12 9 Bank of New Zealand Estates Company, Capital Account, adjustment due to capital as above .. .. 14 12 3 Accident Insurance Account 7 11 9 Accounts outstanding .. 13 16 9 Station hands .. .. 41 11 9 Profit and Loss Account .. 536 4 2 Valuation at 31st March, 1895— Land and improvements .. 18,084 19 0 Live-stock .. .. 10,668 8 2 Implements .. .. 226 15 0 £29,593 18 10 29,593 18 10 GLENTUI ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 126 15 6 Cattle .. .. 4 7 5 Turnips .. .. 53 1 8 General expenses .. 108 3 6 Horse and stock feed .. 45 19 9 Wages .. .. 1,32216 2 Stores and fuel .. 187 14 6 Repairs .. .. 10 3 0 Interest .. .. 10 12 5 Rent .. .. 729 12 9 Reclamation, wool shipments, 1894 .. .. 358 3 5 Ploughing .. .. 4 16 1 Gorse-cutting .. .. 6 0 9 Improvement Suspense Account, 20 per cent, depreciation .. .. 16 18 4
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£ s- d. £ s. d. By Sheep .. .. .. 905 17 4 Horse .. .. .. 6 0 0 Pigs .. .. .. 3 6 2 Wool .. .. .. 2,606 5 11 To Profit for year .. .. 536 4 2 £3,521 9 5 £3,521 9 5 MITCHAM ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 2,794 0 0 Live-stock .. .. .. 299 16 0 Implements .. .. .. 100 0 0 3,193 16 0 Stock adjustment at 31st March, 1894, decrease .. .. 43 8 0 3,150 8 0 Sundries — Grain on hand .. .. .. 112 15 0 Grass-seed .. .. .. 14 0 0 Woolpacks .. .. .. 15 0 Improvement Suspense Account .. .. .. 85 0 0 Bank of New Zealand .. 264 2 9 Accident Insurance Account 0 15 2 Bank of New Zealand Estates Company Capital Account, adjustment due to capital as above .. 43 8 0 Profit and Loss- Account .. .. 95 5 11 Valuation at 31st March, 1895— Land and improvements .. 2,794 0 0 Live-stock .. .. 270 7 6 Implements .. .. 86 0 6 £3,458 13 11 3,458 13 11 MITCHAM ESTATE. Profit and Loss Aooount for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 27 0 9 Turnips .. .. 45 18 0 General expenses .. 16 5 9 Horse and stock feed .. 18 7 5 Wages .. .. 122 17 7 Stores and fuel .. 1 19 0 Repairs .. .. 20 2 8 Reclamation on wool shipments, 1894 .. .. 23 0 9 Interest .. .. 15 6 8 Grain .. .. 6 6 10 Improvement Suspense Account, 20 per cent, depreciation .. ... 20 8 0 By Sheep Account .. .. 108 12 10 Horses .. .. .. 12 8 4 Cattle .. .. .. 5 4 10 Wool .. .. .. 93 2 8 Pig .. .. .. .. 2 18 10 Balance (loss) .. .. .. 95 5 11 £317 13 5 £317 13 5 RETREAT ESTATE. Balance-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894 — Land and improvements .. .. 1,413 18 3 Live-stock and implements.. .. 749 5 2 2,163 3 5 Stock adjustment at 31st March, 1895, decrease .. .. 142 7 2 Sundries— 2,020 16 3 Bank of New Zealand Estates Company, Capital Account, adjustment due to capital, as above .. .. 142 7 2 Bank of New Zealand .. 281 16 6 Profit and Loss Account .. .. 424 3 8 Valuation at 31st March, 1895— Land and improvements .. 1,413 18 3 Live-stock .. .. 543 11 6 Implements .. .. 63 6 6 £2,444 19 11 £2,444 19 11
RETREAT ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. .. 41 10 4 Sheep Account.. .. 51 3 3 Horses .. .. 16 10 0 General expenses .. 50 12 8 Horse and stock feed .. 3 15 9 Wages .. .. 148 7 6 Repairs .. .. 3 8 5 Improvement Suspense Account, 20 per cent, depreciation .. .. 14 16 2 Interest .. .. 7 14 9 Rabbit Account .. 69 0 6 Store Account .. .. 20 15 4 Rent .. .. 37 10 0 By Cattle .. .. .. 2 3 6 Wool .. .. .. 29 11 10 Sundries .. .. .. 9 5 8 Balance (loss) .. .. .. 424 3 8 £465 4 8 £465 4 8 WAIHAORUNGA ESTATE. Balanqe-sheet at 31st March, 1895. £ s. d. £ s. d. Valuation at 31st March, 1894— Land and improvements .. .. 82,290 3 0 Live-stock .. .. .. 19,668 14 11 Implements .. .. .. 660 0 0 Stock adjustment at 31st March, 1895 .. .. 1,217 0 11 Sundries — Turnips .. .. .. 1,522 6 4 Grain on hand .. .. 1,605 2 0 Grass-seed .. .. .. 79 15 1 Woolpacks .. .. .. 9 0 0 Material .. .. .. 5 0 0 Improvement Suspense Account .. .. .. 2,400 0 0 Petty cash .. .. .. 712 10 Accounts outstanding .. .. 5 0 0 Bank of New Zealand Estates Company, Capital Account, adjustment due by capital, as above .. .. 1,217 011 Bank of New Zealand .. 4,401 16 11 Station hands .. 1 13 7 Accident Insurance Account .. .. 11 4 8 Profit and Loss Account .. 2,436 2 0 Valuation at 31st March, 1895— Land and improvements .. 82,290 3 0 Live-stock .. .. 21,119 7 4 Implements .. .. 426 8 6 £110,686 16 0 £110,686 16 0 WAIHAORUNGA ESTATE. Profit and Loss Account for the Year ending 31st March, 1895. £ s. d. £ s. d. To Implements and saddlery, depreciation .. 312 18 1 Horse Account .. 78 12 6 Turnips .. .. 2,140 18 2 General expenses .. 325 210 Horse and Stock Feed Account .. .. 505 17 10 Wages .. .. 1,091 11 9 Stores and fuel .. 358 15 8 Repairs .. .. 44 2 8 Improvement Suspense Account, 20 per cent, depreciation .. .. 596 8 2 Interest .. .. 288 1 5 Rent .. .. 90 1 2 Reclamation on wool shipments, 1894 .. .. 227 15 5 Gorse-cutting .. .. 3 7 6 By Sheep .. .. .. 4,413 18 10 Cattle .. .. .. 3 10 0 Pigs .. .. .. 20 0 0 Wool .. .. .. 4,017 4 4 Grain .. .. .. 45 2 0 To Balance (profit) .. 2,436 2 0 £8,499 15 2 £8,499 15 2
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149
EXHIBIT No. 16. [Handed in by Mr. Foster, 7th August, 1896.] The Assets Bealisation Board in Account with the Bank of New Zealand Estates Company (Limited). Debenture Settlement. To Purchase of properties in terms of £ s. d. By Receipts from 31st March, 1895, to £ s. d, "The Bank of New Zealand and 31st March, 1896, per statement 122,678 3 2 Banking Act, 1895 ".. .. 2,731,706 0 0 Reclamations, less surpluses, on proBalance payable on adjustment of duce shipments to London prior station accounts to 31st March, to 31st March, 1895, returns for 1895 .. .. .. 42,492 5 1 which have been received since Balance payable on adjustment of that date, and amounts paid by freehold properties (other than stations concerned .. .. 2,893 4 1 stations) .. .. .. 2,054 1 8 Balance .. .. .. 2,810,496 7 2 Balance payable on adjustment of other properties .. .. 1,154 15 4 Disbursements from 31st March, 1895, to 31st March, 1896, as per statement .. .. 158,660 12 4 £2,936,067 14 5 £2,936,067 14 5 Balance .. .. ..£2,810,496 7 2
Summary of Adjustments of Station, Freehold, and other Properties, as at 31st March, 1895. Stations. Liabilities, £s, d. £ s. d. Bank overdrafts ... ... ... ... ... 40,267 7 2 Accident insurance ... ... ... ... ... 222 13 2 London office ... ... ... ... ... ... 1,061 411 Due to Estates Company in adjustment ... ... ... 33,855 6 8 Sundry accounts outstanding ... ... ... ... 5,849 11 11 Sundry accounts outstanding and paid by Estates Company on account Assets Board ... ... ... ... 1,328 1 3 82,584 5 1 Less Assets — Due by Estates-Company in adjustment of stock, &p. ... 27,935 14 6 Due by Estates Company in adjustment of loss ... ... 10,467 16 3 Sundry amounts paid to Estates Company on account Assets Board ... ... ... ... ... ... 1,688 9 3 ■ 40,092 0 0 42,492 5 1 Freeholds. Bents accrued at 31st March, 1895 ... ... ... ... 2,084 310 Less rates, &c, accrued at 31st March, 1895 ... ... ... 30 2 2 2,054 1 8 Other Properties. Waikato Coal and Shipping Company, bank overdraft, and other liabilities ... ... "... ... ... ... ... 1,154 15 4 Excess of liabilities over assets to be added to cost ... ... £45,701 2 1
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150
PRODUCE SHIPMENTS TO LONDON. Statement showing Reclamations and Surpluses on Shipments for Year ending 31st March, 1895; also Value of Wool not taken to Profit by Estates Company at that date.
£ s. d. Net reclamation, as above ... ... ... ... ... 3,554 3 10 Value of wool not taken to profit by Estates Company— £ s . d . 36 bales, Glentui Estate ... . 360 12 10 28 bales, Waihaorunga Estate ... ... 300 6 11 660 19 9 £2,893 4 1
Statement of Beceipts and Expenditure on Account of the Assets Bealisation Board from 31st March, 1895, to 31st March, 1896. Receipts. Expenditure. General— £ s . d. General— £ s d Rents .. .. .. 8,635 310 Lands purchased .. .. 5,542 11 6 Miscellaneous .. .. .. 183 11 2 Land-and income-tax, and license .. 8,346 7 0 Stations— Disbursements on account properties Live-stock .. .. .. 84,600 010 (including realisation expenses) .. 3,206 2 7 Wool .. .. .. 2,900 10 9 General charges .. .. 3,855 15 11 Skins and hides .. .. 588 11 9 Stations— Grain .. .. .. 6,928 17 11 Live-stock bought .. .. 27,253 2 2 Interest .. .. .. 133 1 4 Wages .. .. .. 20,832 9 6 Implements .. .. .. 4611110 General expenses .. .. 08|415 210 Grass-seed .. .. .. 235 5 1 Interest .. .. .. 2,166 14 1 Rent .. .. .. 835 4 9 Rent .. .. .. 2642 210 Flax .. .. .. 210 19 4 Rates and taxes .. .. 0 0 Bank of New Zealand, London, for Bank of New Zealand, London, for surpluses on produce shipments .. 2,466 2 4 deficiencies on produce shipments .. 3,984 410 Sundry receipts .. .. 14,499 2 3 Sundry payments .. .. 7,033 9 6 £122,678 3 2 _ £158,660~12~4
The Assets Beaeisation Board in Account with the Bank of New Zealand Estates Company (Limited). Gash Settlement. £ s. d. £ s d To Interest on £2,731,706 debentures, at By Cash received on account sales made 27 273 9 2 3| per cent., for six months, to 30th Interest on amounts due by purchasers 427 10 9 September, 1895 .. .. 47,804 17 1 Balances at credit of various estates Interest on £47,804 17s. Id., at 3J per with the Bank of New Zealand at cent., from 30th September, 1895, 31st March, 1895 .. 6 775 19 5 to 31st March, 1896 .. .. 836 11 8 Balance .. 68 727 10 R Interest on £2,731,706 debentures, " ' at 3J per cent., for six months, to , 31st March, 1896 .. .. 47,804 17 1 Realisation expenses .. .. 319 3 0 Calls paid on Thames Valley Land Company's shares, with exchange .. 6,439 1 0 £103,204 9 10 9 10 Balance .. .. .. £68,727 10 6
Cheese. Reclamation. Wool. Estate. Mutton. Reclamation. Reclamation. Surplus. Net Reclamation. Net Surplus. £ s. d. £ s. a. £ s. d. 13 8 0 £ s. d. £ s. d. 13 8 0 1,238 13 9 44 1 7 1,738 4 3 74 3 10 52 2 8 163 9 0 264 1 8 195 13 3 £ s. d. Carnarvon Lockerbie Mangatoro Matamata Waharoa S.S. ... Motoa 1,240 13 3 1 19 6 502 14 10 44 1 7 1,235 9 5 74 3 10 172 9 7 264 1 8 195 13 3 52 2 8 9 0 7 Paparamu Bangiatea Bichmond Downs Awatere Albury Arowhenua Bushy Park Clarence Eskbank Glentui Waihaorunga ... A.A. Company ... 591 14 10 11 1 3 258 14 78 ' 2 468 13 5 0 3 591 14 10 111 3 258' 14 78 '2 468 13 5 0 3 310 11 0 92"6 1,462 12 2 1 310 11 0 92 '6 1,462 12 2 1 1,217 '6 8 1,217 6 8 74 3 10 3,592 19 3 2,258 8 9 2,371 8 0 5,914 11 9 !2,360 |3,554 7 11 3 10 Net reclamation £ 5,914 11 9 |5,914 11 9
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Station Properties transferred to Assets Realisation Board as at 31st March, 1895, with Adjustments at that Date.
151
Les ik Account. Sundries. Balance Bai Estate. • Amount payable by Assets Realisation Board in Terms of Bill. Bank Balance per Pass-book. 'Credit Balances in Italics.) Cheques and Lodgments outstanding. Accident Insurance Account. London Office Account. Profit and Loss Account, Capital Adjustment. Sundry Balances of Accounts outstanding. ogogo <! Total oi Sundries. Grand Total. Adjustments to Capital, Improvements, and Stock. ' Profit and Loss Account, Debit Balance. 0 IS ■% s .2 fgs" ~ aS-Sg-.ga ° 3 S3 c ■% <2 ■5 Total. Grand Net Total. Crs.* Drs.* Total Bank Overdraft. £ s. d. 29,105 12 4 3,241 12 6 63,495 6 3 8,507 3 7 104,386 3 8 194,910 7 10 200,714 11 4 79,671 19 1 34,641 13 11 29,925 16 0 53,091 12 11 18,679 9 4 42,276 7 10 28,105 6 6 587,151 8 0 94,451 0 0 56,062 7 11 15,560 0 0 2,141 0 0 87,500 7 10 24,648 17 3 37,054 17 6 39,305 17 5 29,801 2 2 3,239 8 0 2,077 16 3 106,780 18 10 £ s. d. 1,417 0 6 511 16 5 1,142 2 0 941 8 1 3,304 16 4 3,500 15 7 £ s. d. 71 1 2 £ s. d. 1,488 1 8 511 16 5 £ s. d. 2 7 2 1 12 4 11 17 11 1 12 4 19 8 2 17 6 7 £ s. d. 91 0 0 6 19 1 £ s. d. £ S. d.j £ s. d. £ s. d. 1,581 8 10 520 7 10 2,546 3 3 995 11 0 4,878 0 6 8,477 9 0 474 18 0 1,474 3 0 2,252 15 9 1,345 9 10 £ s. d. 30,687 1 2 3,762 0 4 66,041 9 6 9,502 14 7 109,264 4 2 203,387 16 10 201,189 9 4 81,146 2 1 36,894 9 8 31,271 5 10 £ s. d. 708 9 5 290 4 0 1,068 13 1 104 13 9 1,511 12 1 3,078 10 4 £ s. d. 168 4 8 82 13 9 £ s. d. 15 19 11 4 4 8 42 9 11 £ s. d. 892 14 0 377 2 5 1,111 3 0 363 3 9 1,628 8 7 3,127 16 0 47 14 4 551 6 1 178 10 6 161 18 11 £ s. d. 29,794 7 2 3,384 17 11 64,930 6 6 9,139 10 10 107,635 15 7 200,260 0 10 201,141 15 0 80,594 16 0 36,715 19 2 31,109 6 11 £ 876 372 £ Awamate L460 Beerescourt .. Carnarvon .. Kakare Lockerbie Mangatoro .. Matamata .. Motoa Paparamu .. Rangiatea Rangiuru and Ohauiti Richmond Dns. Waimana A. A. Company Albury Arowhenua .. Rangitata Riverslea Awatere Bushy Park .. Clarence Eskbank Glentui Mitcham Retreat W aihaorunga 777 10 5 48 8 1 245 8 8 647 11 5 2,528'l4 11 5'l0 5 258 10 0 363 413 989 16 2 3,550 5 0 4,148 7 0 138 3 4 l,098"l2 1 4,142 15 5 4"2 6 57 13 7 13 18 4 169 0 0 474 18 0 2 3 8 0 13 5 116 16 6 49 5 8 47 14 4 53 5 8 25 2 0 23 4 11 1,064 11 18 6 3 4 11 5 18 9 91 11 10 153 8 6 138 14 0 406 8 7 "498 826 864 14 9 ! 1,147 10 1] 269 12 4 595 6 1 57 12 1 104 17 11 1,460' 0 10 138"3 4 2,ll6'l4 1 965 0 10 374 10 3 217 11,496 2 5 1,853 16 6 2,590 7 1 12,375 4 1 907. 15 8 432 4 7 1,676 2 4 7 16 4 713 0 3 2,396 18 11 74,168 1 2 495 2 6 26 11 11 521 14 5 73,646 6 9 179 19 11 3 18 10 9 14 10 30 16 10: 109 6 6 497 18 8 2,166 18 3 16,511 16 3 109 6 6 43,922 10 1 28,637 15 10 588,344 3 0 100,503 2 1 410 2,157 12,178 51 14 8 98 14 11 637 15 4 51S 10 4 479 10 3 1,905 11 2 2,689 2 0 13,012 19 5 6 2 7 3 11 9 42 4 2 7 4 1 8 18 5 134 2 1 6 8 10 83 19 4 14 5 9 0 5 0 4,645 15 10 214 0 0 311 10: 2,144 0 11 2,699 7 7 17,704 11 3 6,161 8 7 5,419 11 5 44,420 8 9 30,804 14 1 604,855 19 3: 100,612 8 7 493 19 10 1,529 4 1 16,480 19 5 627 19 4 5,940 4 6 5,410 13 0 5! 940 3,876 • •• 528 10 5 2,062 17 9 77,090 1 7 .. I 79,152 19 4 94,149 19 9 25,788 18 11 40,133 14 6 41,425 13 3 30,725 17 2 3,547 13 11 2,501 19 11 113,647 7 3 2,059,082 9 4 1,534 7 4 699 15 11 643 4 8 2,729 9 9 904 14 5 483 2 4 260 2 2 269 6 4 4,404 19 2 284 2 9 120 5 10 495 9 9 609 14 4 55 9 7 4 0 7 12 10 2 3 2 3 983 18 8 25 17 4 1 16 3 17 7 7 6 16 5 7 11 9 0 15 2 546 8 3 4,753 7 9 1,131 12 11 327 1 10 6 12 6 508 11 6 14 1 4 55 8 6[ 1218 1 6,649 11 11 1,140 1 8 3,078 17 0 2,119 15 10 924 15 0 308 5 11 424 3 8 6,866 8 5 5,603 13 4 40 0 6 1,226 9 2 56 0 8 3 13 4 106 8 8 370 14 5 9 12 10 5,659 14 0 43 13 10 1,906 8 7 370 14 5 9 12 10 95 5 11 424 3 8 1,271 17 4 88,490 5 9 25,745 5 1 38,227 5 11 41,054 18 10 30,716 4 4 3,452 8 0 2,077 16 3 112,375 9 11 850 L091 2,234 0 0 295 0 1 318 17 11 573 10 9 1,799 L803 550 264 2 9 281 16 6 4,401 16 11 1,803 18 0 550 16 5 43 8 0 142 7 2 2,436 2 0 j 31018 4 95' 5 11 424 3 8 ""51 281 113 7 15 11 3 1,217 0 11 54' 16 5 L219 11 4 8 .. -- 20,253 3,872 3 9 2,223 12 9 40,267 7 2 1,328 1 3 ■82,584 5 1 .27,935 14 6 10,467 16 3 1,688 9 3 40,092 0 0 2,018,990 9 4 :0,00' 1,976,498 4 3 38,394 1 10 4,749 19 4 222 13 2 1,061 4 11 133,855 6 8 5,849 11 11 * Shillings and pence omitted. 82,584 5 1 40,092 0 0 42,492 5 1
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152
EXHIBIT No. 17a. [Handed in by Mr. Foster, 7th August, 1896.] BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED) AND AUCKLAND AGRICULTURAL COMPANY (LIMITED). Properties as at 31st March, 1896. _ . Book-value. Stations — £ d Land > &c - -•• ... ... ... 1,641,044 5 2 Stock, &c. ... ... ... ... 335,453 19 1 Freeholds ... ... ... . . ... 653,566 9 1 Leaseholds ... ... ... ... ... 75,721 510 Funds in hands of trustees ... ... ... 221,414 12 8 Mortgages ... ... ... ... .'.'.' 17 5 Shares ••• ■■• ■■■ ... ... 352,222 1 9 Due by purchasers ... ... ... ... 132,103 18 8 Sundry balances due to company ... ... ... 44 ; 550 12 2 ' Sundries ... ... ... ... ... 53,343 19 11 Trading concerns ... ... ... ... 606,330 11 7 £4,026,161 13 4
EXHIBIT No. 17b. [Handed in by Mr. Foster, 7th August, 1896.] ASSETS REALISATION BOARD. Properties purchased. "A." Stations— jg Si Land, &c. ... ... ... ... ... ... ... 1,641,044 5 2 Stock, dee. ... ... .. ... ... ... ... 335,453 19 1 Freeholds ... ... ... ... ... ... ... ... 600,391 15 9 Thames Valley Land Company shares ... ... ... ... ... 137 142 0 0 Waikato Coal Company ... ... ... ... ... ... 17 674. q q £2,731,706 0 0
153
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FREEHOLDS. Bank of New Zealand Estates Company (Limited). List of Assets at 31st March, 1895.
Description. Area. Land. Buildings. Stock, Plant, Implements, and Sundries. Total Bookvalue. Part Lot 18, Section 6, Newmarket Part Allotments 15/16, Section 6, Auckland (21ft. lin., Queen Street) Ditto, " Haymarket" (100ft. 4in., Durham Street) Lot 58, Pakuranga Lot 7, and Part 6 and 9, Tikirangi, Three Kings Farm Hotel and section known as " Delta," Henderson Paddock at Henderson Lots 19 and 22, Section 18, Beach Road, Auckland (92ft. x 198ft.) Part Lot 7, Takapuna Lots 5 to 8 of Allotments 86 to 90, Section 16, suburb of Auckland Omu Block, near Dargaville Lot 15, Section 25, Nelson Street, Auckland, with house and two cottages Meadow Bank Farm, Remuera, Auckland Part Lot 11, Onehunga Sections, Kohukohu Township Lots 33, 35, 37, 38, 39, of s/d. of Lots 71, 59, of Section 12, suburbs of Auckland Allotment 74, Lot 1; Section 11 of s/d. Lots 81, 82, 85 of part Allotments 75 to 79, Takapuna Part Lots 45, 4, and 5, and part 6 of Section 18, suburb of Auckland, Glenside Estate, Symonds Street, with large house Lots 2 to 5 of Allotment 25, Section 17, Mill's Lane, Auckland, with large brick store Part Lot 27 of Section 17, Wyndham Street, Auckland, with brick stables, &C. Lots 34 to 35, Section 42, Cook Street, Auckland, with cottage and stables Lots 12 to 16, Section 3, Port Street, Shortland Street, Emily Place, Auckland, with cottage and fish-house Unsold section in Morrinsville Township, with two or three small buildings Lot 5, Kawakawa, with shop .. .. Section 512, Ashburton, with large wooden buildings Lot 67, and part 68 and part 456 of 1 and 3, Omaka, with six-roomed house and sheds Allotment 1 of 36 and 47, Omaka, with sevenroomed house Allotments 9 and 10 of 36/47, Omaka .. .. I Part Lot 402 of Sections 1 and 3, Omaka, with two dwellings of seven and ten rooms each Part Allotment 33 of 47/48, Opawa, with house, four rooms Allotments 2 and 3 of 16 of 4, Omaka, with two houses, seven and twelve rooms Allotments 724 to 727, Picton, with cottage Part Allotment 41, and Lots 42 and 43, of Section 48, Opawa, with shop, store, and house of seven rooms Part of Lot 2 of Lot 1 of Section 4, Omaka, with house, six rooms Lot 86 of 1 and 3, Omaka, with smithy, &c, and grain store Allotment 87 of Sections 1 and 3, Omaka, with house, eight rooms Allotment 159 of 1 and 3, Omaka, with fourroomed house Lot 4 of 1 and 3, Omaka, with house, four rooms Part Section 204, Picton, with two stores .. 1 Lots 265 and 274, Picton, with store and shop .. Lot 6, Omaka Allotments 51, 52, 59, 62, of Section 2, Omaka, with house, six rooms Lot 13, Section 45, Opawa, with house, four rooms Lot 115, of 46, Opawa, with house, six rooms .. Lot 170, Section 46, Opawa, with house, four rooms Lot 171, Section 46, Opawa, with house, four rooms Allotments 4 and 49 of Section 25, Taylor's Pass Allotments 1/4 of Section 4, Omaka, with house, four rooms Lots 5 and 42 of Section 4, Omaka, with house, four rooms Lots 6/9 of 42, Section 4, Omaka, with stable .. Lot 11 of 42, Section 4, Omaka, with house, eight rooms A. E. P. 3 1 16 £ a. d. 2,000 0 0 £ s. d. 100 0 0 £ s. d. £ s. d. 2,100 0 0 ! - 7,000 0 0 5,850 0 0 12,850 0 0 350 0 0 223 1 0 6,700 0 0 14,000 0 0 400 0 0 1,215 17 0 7,100 0 0 15,215 17 0 42 0 0 2 2 0 800 0 0 30 0 0 1,200 0 0 400 0 0 1,200 0 0 30 0 0 2,200 0 0 i,ooo"o 0 4 2 0 9 5 3 175 0 0 1,650 0 0 75 0 0 250 0 0 1,650 0 0 3,147 0 0 0 12 1,550 0 0 700 0 0 600 "o 0 1,550 0 0 1,300 0 0 249 1 36 0 2 27 40 0 0 6 3 0 14,000 0 0 410 0 0 1,500 0 0 1,000 0 0 1,340 13 9 15,340 13 9 410 0 0 1,803 0 0 1,000 0 0 303 "o 0 23 1 17 2,500 0 0 3,000 0 0 10 0 0 5,000 0 0 1,547 13 10 6,547 13 10 0 0 14 467 0 0 2,590 0 0 3,057 0 0 0 0 14£ 873 0 0 437 0 0 1,310 0 0 1 1 36 700 0 0 300 0 0 1,000 0 0 7,900 0 0 100 0 0 8,000 0 0 60 0 0 1,300 0 0 340 0 0 1,640 0 0 0 1 0 30 0 0 1,000 0 0 50 12 10 5,000 0 0 80 12 10 6,000 0 0 1 0 19 800 0 0 200 0 0 1,000 0 0 0 2 38 100 0 0 343 5 10 443 5 10 1 0 29 0 10 140 0 0 200 0 0 -642 S 0 140 0 0 842 3 0 0 0 20 68 0 0 100 0 0 168 0 0 0 2 32 300 0 0 634 0 0 934 0 0 0 2 0 10 0 100 0 0 100 0 0 150 0 0 332 0 0 250 0 0 432 0 0 0 3 29 500 0 0 400 0 0 900 0 0 0 10 500 0 0 275 0 0 775 0 0 0 10 300 0 0 275 0 0 575 0 0 0 10 140 0 0 150 0 0 290 0 0 0 10 0 0 37 0 2 0 28 2 34 4 3 17 70 0 0 350 0 0 365 0 0 118 11 0 750 0 0 116 3 6 400 0 0 180 0 0 186 3 6 750 0 0 545 0 0 118 11 0 950 0 0 20o"'o 0 2 0 28 125 0 0 100 0 0 225 0 0 0 10 0 1 18 220 0 0 75 0 0 200 0 0 125 0 0 420 0 0 200 0 0 0 1 18 60 0 0 100 0 0 160 0 0 2 0 0 4 0 0 120 0 0 569 0 0 125 3 0 120 0 0 694 3 0 10 0 160 0 0 150 0 0 310 0 0 4 3 24 0 3 2 500 0 0 217 0 0, 50 0 0 450 0 0 550 0 0 667 0 0
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154
Description. Area Land. Buildings. Stock, Plant, Implements, and Sundries. Total Bookvalue. A. E. P. 0 0 30 £ s. d. 60 0 0 £ s. d. 90 0 0 £ s. d. £ s. d. 150 0 0 Lot 99, Section 50, Omaka, with house, three rooms Lot 100, Section 50, Omaka, with house, four rooms Lot 101, Section 50, Omaka, with house, four rooms Lots 1, 2, 4, and 5, Section 5b, Omaka Lots 3 and 4, Section 5b, Omaka Lot part Section 5a, Omaka, small cottage and shed Lot 6 and 7 of 38, Wairau West Allotments 3 and 4 of Sections 15 and 17, Omaka, with two houses Lot 5, part B.S. 41, Opawa, Christchurch, with house, &o. Lots 11, 16, and 17, part R.S. 74, Wilson's Road, Christchurch, with house, &o. Part of R.S. 85, Riccarton, with house, &o. Lot 103, part R.S. 163, Riccarton Road, Christchurch, with house, &c. Lots 16/25, part R.S. 96, Opawa Part R.S. 96, adjoining above Part R.S. 64, Opawa, on River Heathcote Part Section 53, Manchester Street, South Belt, Christchurch, with large store Part Town Section 714, Gloucester Street, Christchurch, with bakehouse (40ft. x 105ft.) Lots 168 and 169, part R.S. 79, Sydenham, near Christchurch Part Section 985, Tuam and High Streets, Christchurch, with warehouse Part R.S. 885, 1659, 1686,1688, Hornby Junction Part R.S. 4463, 5993, 6131, 6132, 6162, 8472, Hornby Junction R.S. 10850 and 10851, Ashley District B.S. 23710, 23711, 28830, Block 10, Hororata Farm, with buildings Allotments 274 and 276, Cambridge Allotment 107, Cambridge, with cottage Allotment 8 of 77 and 80, Otago Peninsula Allotments 12 and 13, Block 1, Mornington, brick house, four rooms Sections 44/48, Block 3, 1 of 49, 57, 58, 59, " Sandymount," Otago Peninsula 316 sections, Waverley Township, half interest Part Section 11, Block 1, Upper Kaikorai, Dunedin Section 2 and part Sections 48/51, Block 34, Dunedin, with Leith Brewery Allotments 1, 2a, 2b, 3/12, 14, 15, Part S.D. 53 71, 74, &o., Block 16, Dunedin, with Albion Brewery Part Section 48, Block 9, North Harbour and Blueskin Section 1 of 4 and 1 of 5, North Harbour and Blueskin, with buildings Musselburgh Township, with Grand Pacific Hotel Balmacewen and St. Leonard's-on-the-Hill Sections 4, 5, and 6, Block 7, Township of Gordon, N.E. Valley, Dunedin, with cottage, five rooms Sections 59 and 60, Napier, with house Section 124, Bright Street, Gisborne, with sixand four-roomed houses Section 199, Grey Street, Gisborne, with house, four rooms Section 110, Grey Street, Gisborne, with two houses, four rooms each Section 107, Grey Street, Gisborne, with house, four rooms, and shed Section 51, Ormond, with two small cottages .. Part Section 53, Block 16, Town of Gore Part Section 38, Block 16, Town of Gore, with house and stable Section 4, Lyell Township, with small cottage .. Lot 255, Punui Lot 6 and 7, Waitoha, with saleyards; Lots 5, 6, 18, &c, Ngaroto, with saleyards Lot 195, Kirikiriroa Lots 75 and 76, Part 78 and 77, Hamilton East Section 17, Block 1, Invercargill Head, Conyerstown Part R.S. 319, Mandeville District Part Town Section, Charles and Sewell Streets, Kaiapoi, with blacksmith's shop, store, stable, Ac. Part R.S. 319a, Mandeville District, with Northern Brewery and malt-house, &c. Part Sections 63 and 61, Kincaid Run, with buildings; part Section 37, 252 acres, leasehold expiring June, 1896, also held 0 10 0 10 1 3 32 1 2 12 13 3 0 0 2 0 104 1 28 4 1 20 0 3 0 73 1 10 0 2 30 2 3 25) 0 1 141 2 0 28) 0 3 14 0 2 0 0 0 111 97 0 0 183 0 39 100 0 0 384 3 24 2 0 0 10 0 6 0 28 0 10 503 3 14 84 1 28 1 1 28 65 0 0 75 0 0 120 10 0 130 0 0 500 0 0 79 0 0 2,183 0 0 1,520 0 0 600 0 0 6,750 0 0 300 0 0 1,840 0 0 5,000 0 0 1,400 0 0 500 0 0 1,800 0 0 1,400 0 0 1,500 0 0 200 0 0 1,750 0 0 65 0 0 80 0 0 300 0 0 20 0 0 800 0 0 5,140 0 0 1,000 0 0 125 0 0 125 0 0 85 16 11 350 15 11 850 0 0 500 0 0 550 0 0 1,000 0 0 860 5 3 200 0 0 700 0 10 250 0 0 37 0 0 80 0 0 190 0 0 200 0 0 120 10 0 130 0 0 585 16 11 79 0 0 2,533 15 11 2,370 0 0 1,100 0 0 7,300 0 0 1,300 0 0 1,840 0 0 5,860 5 3 1,600 0 0 500 0 0 2,500 0 0 1,400 0 0 1,500 0 0 200 0 0 2,000 0 0 65 0 0 117 0 0 300 0 0 100 0 0 800 0 0 5,140 0 0 1,000 0 0 10 0 1,750 0 0 3,250 0 0 5,000 0 0 1 2 35-39 17,000 0 0 8,000 0 0 25,000 0 0 63 1 20 1,267 0 0 1,267 0 0 30 0 0 400 0 0 400 0 0 800 0 0 90 3 25-53 37,000 0 0 3,137 7 6 40,137 7 6 56 2 12-75 0 0 23-1 5,800 0 0 70 0 0 250 0 0 5,800 0 0 320 0 0 1 0 7J 0 10 250 0 0 100 0 0 1,150 0 0 350 0 0 1,400 0 0 450 0 0 0 1 28 30 0 0 250 0 0 280 0 0 0 10 68 10 0 300 0 0 368 10 0 0 10 175 0 0 100 0 0 275 0 0 0 2 29 0 0 32 0 0 30-7 130 0 0 50 0 0 50 0 0 75 0 0 100 0 0 205 0 0 50 0 0 150 0 0 0 0 11 34 0 0 18 1 31 40 0 0 380 0 0 500 0 0 10 0 0 1,500 0 0 50 0 0 380 0 0 2,000 0 0 50 0 0 3 3 0 74 3 37 250 0 0 500 0 0 2,090 0 0 250 0 0 500 0 0 2,090 0 0 3 1 37 0 1 32 450 0 0 400 0 0 916 0 0 450 0 0 1,316 0 0 3 1 16 2,000 0 0 2,751 11 3 4,751 11 3 150 0 0 1,200 0 0 126 0 0 1,326 0 0
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22—1. 6.
155
Description. Area. Land. Buildings. Stock, Plant, Implements, and Sundries. Total Bookvalue. A. K. P. 1,334 3 13 £ s. d. 3,016 0 0 £ s. d. £ s. d. £ s. d. 3,016 0 0 Sections 1, 2, 4, 19, 5, 17, 18, 21, 23, Block 7, and Sections 1 and 8, Block 13, Tuapeka West Lots 24, 25, and 30, Southbridge, with eightroomed house and three-roomed cottage Lot 19, Southbridge Lot 23, part R.S. 4477, Southbridge, with cottage Town Acre 91, Church Street, Masterton, with seven-roomed house and stable Lot 30, Section 57, Villa Street, Masterton, fiveroomed house Sections 31, Block 2, and 28 and 29, Block 2, Milton, with workshop, &c. Part Suburban Lot 22, Fitzroy District, New Plymouth, with tannery and cottage Part Section 56, Block 2, part Section 29, Block 4, Oarnaru Lots 186/190, Tauranga, with house Lots 151, 154, 166/168, Tauranga, withjiouse .. Lots 1/3, Te Aroha, goldfields lease Part Lots 73/75, Grahamstown, with buildings (81 x 99) Sections 13990 and 14015, Timaru Sections 13746 and 16378, Timaru Part Section 3977, Timaru Section 323, Waimate, with brick store Sections 1/3, Waimate Part Town Acre 490, Wellington, with Waverley Hotel(22ft. x 141ft.) Lot 10 of Town Acres 480 and 481, with house (100ft. x 106ft.) Part Town Acre 307, Wellington, with elevenroomed house Lots 9 and 10, T/A 91/93, with house (133ft. x 166ft.) Section 66, Wellington, with house Part Section 568/9, Wellington, with house, twelve rooms Part Section 49, Wellington, with Victoria Buildings Sections 1013 and 1014, and part 1015, Berhampore Section 10, Block 13, Winton Section 2, Block 3, Winton Sections 15, 13, and part 12, Block 3, Winton .. Sections 8 and 15, Block 4, Winton Sections 17, 18, and part 16, and 30/33, Block 6, Winton Lots 43 and 45, part Allotment 17, Section 6, Newmarket Allotment 4, Maramarua House, &c. .. Allotment 184, Te Papa Tauhara South A, Allotment 1547a Tauhara North, Allotment 4698 Sundry lots, Henderson Allotment 5a, Sections 1 to 14, Waipareira Allotments 6 and 6a, sundry lots, Waipareira .. Allotments 47, 48 of 7a, Waipareira Part Section 7a, Waipareira Part Allotment 2, Kamo (Karno Colliery) Allotments 106/108, 101, 104, and 105, Karangahape Kamai No. 1, 4985a Kamai No. 1, 4985 | f Purakautahi Block, 4345a I jr a if interest -j Kumikumi, No. 4985d Ongaonga, No. 2, 4985c J I Lots 28 to 30, Allotment 29, Section 8, O'Neil Street, Ponsonby, Auckland Lot 29, Okura Company, Waitemata Pahikairanga Block, Hobson County Allotments 32 and 34 of Allotment 50, Whangarei Part Allotment 22, Section 8, Ponsonby Part Allotment 413, Hamilton East Allotment 219, Kirikiriroa Allotments 432 and 436, Ngaruawahia Allotments 25, 26, and others, Huia Sundry lots, Township of Queenstown, near Onehunga Part Lot 1, Section 20, Onehunga One-third interest Lot 2, Section 8, Jermyn Street, Auckland Lots 16, 17, and Part 18, Section 30, Queen Street, Onehunga Lot 11, Part 12, Section 35, Onehunga Allotment 71, Awhitu Allotments 194, 195, 197, 198, 204, Taupiri Allotments 44, 105, and 107, Whangamarino .. 0 3 0 0 1 29-5 0 0 25 10 0 0 2 0 0 1 28 15 0 0 93 0 0 1 2 14 13 9 0 2 0 170 0 0 62 0 0 27 0 0 0 0 39 0 3 0 0 2 34 1 1 26 0 1 18-36 0 0 29-5 2 2 0 0 1 68 0 0 20 0 2 20 0 2 0 44 0 25 265 0 0 20 0 0 50 0 0 250 0 0 50 0 0 155 0 0 100 0 0 1,860 0 0 362 0 0 150 0 0 750 0 0 50 0 0 ]- 3,687 8 9 600 0 0 80 0 0 30 0 0 .1,000 0 0 1,000 0 0 1,000 0 0 500 0 0 1,000 0 0 1,000 0 0 3,500 0 0 2,119 0 0 I 1,986 17 0 285 0 0 150"0 0 500 0 0 75 0 0 700 0 0 350 0 0 300 0 0 450 0 0 450"0 0 900 "o 0 1,709 *6 6 1,000 0 0 1,493 3 11 1,500 0 0 1,561 8 6 1,847 16 0 2,488 5 0 550 0 0 20 0 0 200 0 0 750 0 0 125 0 0 855 0 0 450 0 0 1,860 0 0 662 0 0 600 0 0 750 0 0 500 0 0 3,687 8 9 600 0 0 980 0 0 30 0 0 2,709 5 6 2,000 0 0 2,493 3 11 2,000 0 0 2,561 8 6 2,847 16 0 5,988 5 0 2,119 0 0 1,986 17 0 400 0 0 400 0 0 0 0 36 180 0 0 180 0 0 700 0 0 50 0 0 18,900 0 0 1,514 1 20 5 2 0 612 1 16 1,118 2 19 107 1 18 1,232 0 0 302 0 0 3,544 0 0 1,000 0 0 327 0 0 1,327 0 0 [ 5,172 16 0 5,172 16 0 111 13 6 111 13 6 -8,891 4 11 8,891 4 11 3,507 3 4 2,656 0 0 3,507 3 4 2,656 0 0 1,033 0 0 2,853 0 0 463 0 0 2,617 0 0 3,057 0 0 1 0 17 [ 6,909 0 0 6,909 0 0 250 0 0 250 0 0 479 0 0 332 0 0 0 2 0 3 0 0 13 1 27 3 0 0 1 0 13 1,571 0 0 7 0 0 120 0 0 165 0 0 1,970 0 0 97 11 4 60 0 0 30 0 0 1,772 10 0 155 0 0 120 0 0 165 0 0 1,970 0 0 97 11 4 60 0 0 30 0 0 1,772 10 0 155 0 0 0 2 20 0 2 7 100 0 0 328 12 2 100 0 0 328 12 2 0 2 27 486 0 0 486 0 0 0 3 3 71 0 0 250 0 0 150 0 0 100 0 0 35 0 0 156 5 0 120 0 0 100 0 0 35 0 0 156 5 0 120 0 0
1.—6.
156
Description. Area. Land. Buildings. Stock, Plant, Implements, and Sundries. Total Bookvalue. A. B. P. 50 0 0 50 0 0 50 0 0 100 0 0 100 0 0 10 0 10 0 330 0 0 180 0 0 £ s. d. [ 251 10 0 ) | 11 0 0 £ s. d. £ s. a. £ s. d. Allotment 107, Komokorau Allotment 20, Kirikiriroa Allotments 74 and 135, Hortin Allotments 87 and 135, Tahikaramea Allotments 126 and 178, Pirongia Allotment 382, Kihikihi Allotment 106, Alexandra Section 3257, Okapako Part Lots 34, 41, 46, and 47, Section 8, Surrey Hills Estate, suburbs Auckland Part Maukoro Block Allotment 270, Pakeatea Sections D and E, Allotment 49, Warkworth .. Allotment 175, Mahurangi Unsold portion Kopu Township Maraetai Block, near Lichfield Section 288, Palmerston Street, Gisborne Part Allotment 2, Section 25, Auckland Lot 22, Cambridge Lots 3/6, Onehunga, with Ironworks Lots 35 and 91, Manukau Harbour Section 12, Block 1, Seward Bush, near Invercargill R.S. 4900, Block 15, Rangiora Lots 438/9, 1/3, Omaka Lots 30/2, Section 53, Omaka Lots 33, 73, and others, Picton Lots 18a, 72, of Section 50, Omaka Lot 56, Section 50, Omaka Part 1 of 34 and 2 of 37, Pelorus Lot 88, Whangamarino Lot Part CI, Waotu S. Block No. 2a, Waotu N. Block C10, Waotu S. Te Karamu A Block D, No. 9, Waotu Part Block 3, Matanuku Part Mangatautari, 4o, Section 1 Section 6, Mangatautari Eight Lots, Township of Waihou Lot 476, Lichfield R.S. 361, Hutt R.S. 33200, Block C, Leeston .. R.S. 31876/7, part Block 2, Leeston R.S. 19089, part Block 15, Grey district, Canterbury Part R.S. 320, Kaiapoi Aickman's Road, Papanui, Blocks 6 and 8, part R.S.133 Interest in part R.S. 298, 373,, 1463, Belfast .. Interest in part Section 159, Clyde Street, Christchurch Lot 10/25, part R.S. 48, Ferry Road, Christchurch Part Section 738, Hereford Street, Christchurch Part 43, 95/7, 53/4, 171, 207, 208, Broadwater, N.S.W. (Richmond) Part 6, Ballina, N.S.W. Gourlay's land, S.T. Belt, Christchurch R.S. 32642, Burke district, Canterbury Section 35, Block 36, Clyde Street, Dunedin Section 36/7, Block 36, Clyde Street, Dunedin .. Sections 19/22, Block 1, and Sections 14/28, Block 11, Musselburgh Section 8, Block 3, South Dunedin Section 3, Block 36, St. Kilda Sections, Ravensbourne extension Section 42, Block 20, Filleul Street, Dunedin .. Sections 10 and 11, Burke's Township Section 34348, part Reserve 1574, Canterbury .. Sections 28/29, Bishopscourt, Dunedin St. Clair Park Estate, suburbs, Dunedin Half-share Section 1, Block 6, Nenthorn Sections in Gordon Township, Dunedin Sections, " Kelvin Grove," suburbs, Dunedin .. Sections 28/30 and 32, Block 3, St. Clair Park Estate Allotments 8 and 15, Block 9, and Lots 2/7, Block 11, Ascotvale Sections 8/18, Block 47, 1/7, 9/26b, 48, Rattray Street, Dunedin Sections, Bishopscourt, Dunedin Sections 12 and 69, St. John's Wood, North-east Valley Part Section 55, North-east Valley Section 109, Grey Street, Gisborne Section 193, Grey Street, Gisborne Section 108, Grey Street, Gisborne Lot 3, Block 21, Riversdale, Hukunui.. Lot 1 1, Block 20, Hukunui 2,680 0 0 100 0 0 7 2 0 183 0 0 17 1 30 59-164 0 0 0 10 0 0 26-17 10 0 6 0 0 498 0 0 ' 9 2 32 10 2 16 0 2 0 0 3 0 3 0 0 2 0 0 10 0 228 2 0 50 0 0 20 0 0 319 0 24 91 1 0 180 0 0 1,988 1 20 252 0 0 1,420 0 0 52 0 0 0 2 24 0 10 190 0 0 143 0 0 40 0 0 2 2 26 250 0 0 75,277 19 0 1,340 0 0 ll6' 0 0, 489 0 0 40,185 2 0; 130 0 0 1,182 10 0 12 0 0 I 2,000 0 0 ) 72 0 0 335 0 0 10 0 0 30 0 0 125 0 0 | 175 0 0 456 0 0 20 0 0 24 7 0 220 0 0 60 0 0 180 0 0 1,894 0 0 126 0 0 j 1,332 0 9 20 0 0 87 10 0 190 0 0 1,430 0 0 400 0 0 21 0 0 2,299 19 2 39,365 6 9 251 10 0 11 0 0 250 0 0 75,277 19 0 1,340 0 0 110 0 0 489 0 0 40,185 2 0 130 0 0 1,182 10 0 12 0 0 43,665 5 11 72 0 0 335 0 0 10 0 0 30 0 0 125 0 0 175 0 0 456 0 0 20 0 0 24 7 0 220 0 0 60 0 0 180 0 0 1,894 0 0 126 0 0 1,332 0 9 20 0 0 87 10 0 190 0 0 1,430 0 0 400 0 0 21 0 0 0 2 0 0 1 21 155 0 0 111 18 0 155 0 0 111 18 0 109 2 13 0 0 32 j- 6,175 5 0 6,175 5 4 2 2 13 650 0 0 C50 0 0 0 0 19 1,018 3 4 1,000 0 0 1,000 0 0 86 0 0 0 10 650 0 0 !• 2,293 19 8 i 2,293 19 8 650' 0 0 650' 0 0 '- 0 3 0 900 0 0 900 0 0 0 319-46 415 0 0 415 0 0 0 10 0 014-75 11 131-92 0 10 0 136-2 23 0 0 0 126-4 68 31-90 11 2 0 5 0 0 4 2 13 1 010-6 100 0 0 25 0 0 999 0 0 1,976 0 0 20 0 0 142 0 0 80 0 0 5,145 2 5 100 0 0 25 0 0 999 0 0 1,976 0 0 20 0 0 142 0 0 80 0 0 5,145 2 5 1,483 0 0 1,050 0 0 480 0 0 1,483 0 0 1,050 0 0 480 0 0 1 0 26-4 80 0 0 80 0 0 4 3 9-2 24,800 0 0 24,800 0 0 9 3 37 0 0 20-8 1,611 12 10 80 0 0 1,611 12 10 80 0 0 0 0 26 0 10 0 10 0 10 0 10 0 10 43 0 0 150 0 0 60 0 0 100 0 0 90 0 0 10 0 0 43 0 0 150 0 0 60 0 0 100 0 0 90 0 0 10 0 0 I
1.—6.
Deduct Richmond River property .. .. .. •• •• 2 '??? 1 o ? on account Onehunga Ironworks, to adjust values .. ... _____ _ ooq o 9 Total, freeholds & 600,391 15 9 £ s. d. Freeholds , 600,391 15 9 ireenolds ... 1,976,498 4 3 stations .. .. . ■ •" • • • • 107 im (i n Thames Valley Land Company .. •• ■• •• •• ■• UAa ft ft Waikato Coal Company ~ . • > • • ■ • ■ ■ • • • I '' D '^ t _ v Amount per bill £2,731,706 0 0
157
Description. Area. I Land. Buildings. Stock, Plant, Implements, and Sundries. Total Bookvalue. A. K. P. 10 0 10 0 219 0 0 151 0 0 40 0 19 50 0 0 634 0 0 400 0 0 1,330 0 0 50 0 0 1,071 0 0 12 0 0 0 10 2 2 17 2 0 16 £ s. d. 30 0 0 30 0 0 204 0 0 l 50 0 0 80 0 0 280 0 0 800 0 0 616 5 0 25 0 0 3,390 0 0 100 0 0 50 0 0 150 0 0 100 0 0 £ s. d. £ s. d. £ s. d. 30 0 0 30 0 0 204 0 0 Lot 80, Hamilton East Lot 318, Hamilton East Lots 1 and 2, 39, 69, and 38, Horotui Half interest Lot 5 and north part Lot 34, Kiaka Lots 25/6, 31, 35, and 38/9, Matakana Lot 66, Tuhikaramea Part Kiwitahi, No. 3, C Block Kohata Papanui Block Two-thirds interest Mangaotapu Lot 134, Kirikiriroa Part Lot 302, Kirikiriroa Lot 243, Kirikiriroa Section 3, Block 2, Invercargill Lot 7, Section 33, Block 19, Invercargill Lots 115/17,125, part Section 32, Lot 19, Powelltown, Invercargill Lots 4/5, part Sections 14/23, Invercargill Head Lots 31/35, Block 1, Campbelltown Hundred .. Lots 41/2, Block 19, Invercargill Head Sections 45, 57, and 60, Block 19, Invercargill, Clarendon Half interest in Sections 1 and 79, Block 2, Campbelltown Section 24 and others, Block 10, Invercargill Head | Sections 10/11, Block 11, Invercargill Head I Section 13, Block 12, Invercargill Head ) Section 7, Block 2, Winton Sections 18/19, Block 2, Otautau Sections 2/3, Block 10, Wrey's Bush Section 11, Block 5, Wrey's Bush Sections 1/3, Block 24, Wallacetown Section 5, Block 19, Winton Section 2, Block 19, Winton Section 20, Block 29, Invercargill Section 17, Block 31, Invercargill Part town section, Charles and Sewell Streets, Kaiapoi Part Section 7, Norwich Quay, Lyttelton, with wooden store and brick bond Lot 18, Section 57, Villa Street, Masterton Lots 18/20, 47/9, Dryerton, near Masterton Lots 40/1, Bingsland, near Christchurch Section 123, Block 4, Oarnaru .. 1 Sections 92, 102/3, Block 4, Oarnaru .. j Section 1, Block 4, Oarnaru Sections 1/5, 17/19, Block 10, Fairfax Lots 175/7, Te Puni Lot 9, Te Puni Lot 191, Te Puni Lots 80/3, Section 1, Tauranga, with brewery and plant Lots 18/22, Section 1, Tauranga, with grain store Lot 190i Section 1, with blacksmith's shop Lot 85, Section 1 .. One-eighth interest in White Island Allotments 10/12, and others, Apatia Lots 68/9, and 89, Te Papa Lots 66/9, Te Puni Lot 1, Greerton Part Karaka Block3, Grahamstown (37ft. x 177ft.) Vacant allotment, Walter's Block (57 links x 52 links) Sections 8, 21/2, Studholme Junction, Waimate Town Acres 38/40, Berhampore, Wellington .. Part Section 74, Havelock (5ft. frontage) Part Sections 38/9, Suburbs of Nelson Section 14, Block 13, Molyneux Lot 18, Karamu, Waikato Allotment 37, Timaki Block, Karamu Part Allotment 3, Kapanga Lot 1, Section 19, Kingston, Coromandel Lots 1/3, part Town Acres 480/1, Boulcott Street, Wellington (129ft. x 94ft.) Lot 3, part Town Acre 91/3, Upper Willis Street, Wellington (95ft. x 52ft.) Lots 1/4, Block 1, Thorndon Reclamation, Wellington Lots 149/52, Wellington Reclamation Part Section 7, Block 1, East Winton.. Part Sections 12/13, Block 6, East Winton Allotments 2 and 4, Block 4, South Winton Part Sections 12 and 13, Waitemata (Pah Estate) Lot 43, Section 10, Auckland Suburbs Section 3, Block 14, Biverton Lot 13, Karaka, Auckland 20 0 31 1 2 12 55 2 2 117 2 4 310 2 6 930 0 6 0 10 0 2 0 2 3 38 0 2 0 0 2 26 0 10! 0 1 0/ 0 10 0 10 0 1 32 0 0 13* 0 2 0 12 0 0 2 0 1 0 6 95 0 0 30 0 0 I 956 18 1 150 0 0 2,213 4 0 30 0 0 30 0 0 20 0 0 20 0 0 40 0 0 160 0 0 120 0 0 500 0 0 50 0 0 200 0 0 80 0 0 500 0 0 50 0 0 80 0 0 280 0 0 800 0 0 616 5 0 25 0 0 3,390 0 0 100 0 0 50 0 0 150 0 0 100 0 0 95 0 0 30 0 0 956 18 1 150 0 0 2,213 4 0 30 0 0 30 0 0 20 0 0 20 0 0 40 0 0 liiO 0 0 120 0 0 1,000 0 0 50 0 0 200' 0 0 80 0 0 0 10 2 0 7 113 0 0 5 0 0 7 0 0 0 2 1 120 0 0 90 0 0 500 0 0 120 0 0 90 0 0 500 0 0 20 0 0 15-5 0 0 500"o 0 300"0 0 20 0 0 955 0 0 0 2 11) .0 1 2 0 0 16) 588 0 0 390 0 0) 250 0 0 200 0 0 ' 10 0, 1,155 0 0 300 0 0 250 0 0 1,405 0 0 300 0 0 1,260 0 0 1,200 0 0 175 0 0 175 0 0 0 2 34 2 0 0 88 0 0 700 0 0 88 0 0 700 0 0 0 3 0 0 10 50 0 0 30 0 0 150 0 0 150' 0 0 I - 0 0 11J 1,775 5 0 1,775 5 0 471 15 0 471 15 0 1 0 241 0 1 oj 4 1 37-5 ■3 3 8 0 3 0 825 0 0 6 0 0 0 10 160 0 0 17,000 0 0 69 4 8 10 0 0: 20 0 0 16,000 0 0 500 0 0 • 5 0 0' 40 0 0 17,000 0 0 69 4 8 10 0 0 20 0 0 26,728 2 4 500 0 0 5 0 0 40 0 0 9,000 0 0 1,728 2 4 476,443 1 9 84,954 7 8 41,393 9 1 602,790 18 6
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158
Bank of New Zealand Estates Company (Limited). List of Assets at 31st March, 1895.
Bank of New Zealand Estates Company (Limited). List of Sundry Assets at 31st March, 1895.
Estate. Description. From whom leased. .rea. ;enl ,ease expires Awamate Part Taupara Block Aranui Block No. 1 B Native Beserve, Matuka Block Aranui Block D Natives Allotment 31, Ngatiawa Block, Whakatane Allotment 32, Patuwai Block, Whakatane Run 23 Riverslea Natives „ Te Rawha Acres. 366 59 35 83 £ 50 7 20 40 9 Oct., 1898. Say 1899. 22 Sept., 1907. * * Mangatorot Waimana 19 17,521 8,043 Say 11 Average 372 105 1 Jan., 1930. 1 July, 1899. 7,654 „ 151 1 Jan., 1902. Albury} Arowhenua § • - Rangitata Crown Steward Education Beserve Colonial Bank of N.Z. .. Island Reserve 5,400 1,172 300 1,200 , 250 „ 615 25 52 2 March, 1900. 1 Nov., 1898. 1 March, 1895. 1 month's notice either side. 24 Sept., 1897. 1 July, 1896. a • • Awaterej| Upton Downs Run Upton Fells Run Chalk Range Weld's Hill Run Braes of Sutherland Camden Blairich Upton Fells No. 2 School Reserve C. S. Praser (late Zeisler) Crown 1,000 15,000 4,541 1,080 3,140 1,575 11,950 11,750 2,400 87 75 . 204 41 17 40 20 58 114 30 23 it • > Bushy Park School Commissioners of Otago Crown 1 March, 1899. 1 May, 1901. Clarence Warden Run No. 2 • , No. 3 Tytler No. 213 .. Part Jam Run Kaikoura Shearing Reserve Warden Run No. 4 No. 5 Crown land, Nos. 145, 146, 146a Run 494 Hokonui Native Reserve.. Part Reserve 2003, Waiho 37,476) 415 80 28,944 1,288 6,300 2,900 1,677 33,990 . 408 „ 332 9 „ 235 32 18 745 1 July, 1896. Glentui J 1 May, 1901. 1905. 4 April, 1896. Retreat Waste Lands Board Public Trustee School Commissioners of Canterbury 1,280 2,000 327 2 30 90 1 March, 1904. 1 Jan., 1910. 1 May, 1907. Waihaoranga Negotiating for neleases. f We are gradual! twelve months' noti< j converting the leasehold int< ;e. § Not renewed. || Ni freehold, it renewabl I Governm Lent can resume on
Description. Book-value. Thames Valley Land Company. interest in Thames Valley Land Company, represented by land and stock ... £137,142 £ Company owns 162,842 acres freehold land, valued at ... .... 64,770 Stock and implements .. ... ... ... ... ... 23,550 £88,320 Estates Company hold ... ... . ... ... 25,128 shares Outside holding... ... ... ... ... ... 17,825 „ Total shares of company ... ... ... 42,953 Waikato Coal Company. 3,726 acres freehold land, Waikato, with coal-mine in active operation £17,674
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159
STATIONS. Bank of New Zealand Estates Company (Limited). List of Assets at 31st March, 1895.
Area. Land. Buildings! i Stock, Plant, Implements, and Sundries. Total Book-value. Description. Acres. 2,414) 562/ 300 7,422 3,500 21,700 13,233) 17,5211 55,016 9,020 .7,073 4,988 6,746 6,547 12,498 4,850) 15,697/ 19,490) 5,400/ 5,072 5,591) 2,200/ 498) 1,472/ 57,213) 51,436/ 2,243) 85/ 16,673) 79,080/ 4,810 7,341) 33,900/ 677 1,226) 3,280/ 17,860) 327 J 19,830 22,920 16,294 8,680 8,728 2,728 5,670 12,066 7,719 736 4 £ a. d. £ £ s. d. £ s. d. .wamate, freehold twamate, leasehold Jeerescourt, freehold larnarvon, freehold Cakare, freehold jockerbie, freehold langatoro, freehold langatoro, leasehold latamata, freehold lotoa, freehold 'aparamu, freehold tangiatea, freehold langiuru, freehold rtiauiti, freehold tichmond Downs, freehold Vaimana, freehold Vaimana, leasehold Jbury, freehold Jbury, leasehold .. ..rowhenua, freehold tangitata, freehold langitata, leasehold tiverslea, freehold iiverslea, leasehold twatere, freehold Lwatere, leasehold iushy Park, freehold iushy- Park, leasehold Uarence, freehold .. !larence, leasehold Iskbank, freehold Hentui, freehold J-lentui, leasehold litcham, freehold letreat, freehold tetreat, leasehold Vaihaorunga, freehold Vaihaorunga, leasehold 7 encourt Vaitoa )koroire lora Hora 'aeroa langapouri langawhero lunga Hunga )hauia ?amahi Farm lurrey Hills (twelve allotments) 21,483 13 2 2,130 0 6 49,498 18 6 6,250 13 7 78,735 16 8 157,962 0 0 153,987 19 3 61,786 15 7 24,652 12 11 22,029 2 0 38,448 13 11 15,313 9 4 31,142 17 4 21,174 7 0 69,008 12 1 42,711 12 11 9,891 0 0 623 0 0 72,466 3 4 1,250 300 955 500 4,505 5,725 8,300 1,435 800 765 1,285 200 960 1,000 3,100 1,790 500 1,550 5,568 19 2 721 12 0 11,289 7 9 1,522 10 0 18,262 7 0 25,848 7 10 32,890 12 1 14,253 3 6 8,234 1 0 6,305 14 0 11,892 19 0 2,651 0 0 9,007 10 6 5,154 19 6 19,736 7 11 10,013 15 0 4,740 0 0 1,430 0 0 11,071 4 6 28,302 12 4 3,151 12 6 61,743 6 3 8,273 3 7 101,503 3 8 189,535 7 10 195,178 11 4 77,474 19 1 33,686 13 11 29,099 16 0 51,626 12 11 18,164 9 4 41,110 7 10 27,329 6 6 91,845 0 0 54,515 7 11 15,131 0 0 2,053 0 0 85,087 7 10 18,235 13 10 1,720 4,014 3 5 23,969 17 3 21,292 3 9 2,000 12,740 13 9 36,032 17 6 30,048 15 1 970 7,203 2 4 38,221 17 5 17,084 19 0 1,000 10,895 3 2 28,980 2 2 2,664 0 0 130 356 8 0 3,150 8 0 1,038 18 3 375 606 18 0 2,020 16 3 80,040 3 0 2,250 2,365 1,500 1,550 270 500 21,545 15 10 103,835 18 10 131,257 2 8 114,959 0 0 81,315 0 0 39,706 0 0 34,878 0 0 11,581 10 0 24,450 0 0 24,937 0 0 10,004 0 0 10,849 0 0 2,143 11 6 205 77,497 3 10 L000 Buildings 610,3331 1,535,782 5 2 50,755 0 0 50,755 335,453 19 1 1,921,991 4 *54,507 0 1,586,537 5 2 1,976,498 4 * Amount paid by Bank of New Zealand Estates Company fi >r consolidated properties in ixcess of Mr. Heai i's valuation.
160
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EXHIBIT No. 17c. [Handed in by Mr. Foster, 7th August, 1896.] BANK OF NEW ZEALAND ESTATES COMPANY AND AUCKLAND AGRICULTURAL COMPANY. Properties retained by the Bank at 31st March, 1895. Book-value. "A." £ s. d. Freeholds beyond New Zealand ... ... ... 53,174 13 4 Leaseholds ... ... ... ■•• ••• 75,721 5 10 Due by purchasers ... ... ••• ■•• 132,103 18 8 Mortgages ... ... ... ••• ••• 111,410 17 5 Shares ... ... ... - ••• 214,080 1 9 Funds in hands of trustees ... ... ■■■ 21,414 12 8 Sundry balances due to company ... ... ... 44,550 12 2 Sundries ... ... ... - -- 53,343 19 11 Trading concerns ... ... ... ••• 588,656 11 7 £1,294,456 13 4
FREEHOLDS BEYOND NEW ZEALAND.
Description. Area. Land. Buildings. 'otal Bool value. Adelaide. Town Acres 346/7, with two cottages ; half-interest .. Part Town Acre 276, Adelaide Part Town Acre 276, Adelaide (30ft. by 105ft.) Part Town Acres 349/50, Adelaide, with stables Part Town Acre 349, with stables Part Town Acre 349, with stables Sundry lots, Grange, Adelaide Part Section 236, Adelaide, with house Part Sections 1145 and 1181, Adelaide, with house .. Sundry lots, Millwood, Adelaide; half-interest Sundry lots, Westbourne, Adelaide ; half-interest .. Lots 2 and 3, Section 4, Sellwood, with brick house .. A. E. P. 0 0 9 0 0 29 £ s. d. 50 0 0 904 0 0 600 0 0 £ s. d. 150 0 0 £ s. d. 200 0 0 904 0 0 600 0 0 0 2 36 0 0 8 0 0 38 50 0 0 17 0 28 8 0 32 7 0 15 [3,000 0 0 636 0 0 5,000 0 0 2,572 0 0 2,000' 0 0 5,572 0 0 636 0 0 7,000 0 0 0 0'35J 373 0 0 354 0 0 50 0 0 90o"'o 0 373 0 0 354 0 0 950 0 0 Sydney. Lot 6, Eurella, Sydney, with brick cottage Lot 9, Ashfield, Sydney, with two brick cottages 0 0 20J 0 0 23i 100 0 0 200 0 0 388 0 0 506 0 0 488 0 0 706 0 0 Fiji. Levuka, section, with store Section at Suva, with shed 0 0 0 0 10 63 0 0 200 0 0 200 0 0 400 0 0 263 0 0 600 0 0 Adelaide. Lot 6, Section 104, Port Augusta, Adelaide.. Section 13, Palmerston, N.T. Lots 255, 294, part Sections 964/7, Myrtleholme Lot 28, Section 29, Bristol Lot 16 and others, part Section 217, Rosslyn Lots 52/4, 71/6, Section 952, New Wingfield Lots 1/2, Blocks 5/8, Section 300, Kensington Park .. Lots 365 and others, Henley Beach Lots 35 and 39, Brighton Lots 5, 44/6, Brighton Lots 15/19, Section 74, Williamstown Lot 2, Section 1079, Port Adelaide.. Lots 75/79, Section 916, Thornton Lot 340, Grange Lot 12, Section 2030, West Hilton .. - Lots 29/30, part Section 87, Bristol Part Block 20, Section 228, Henley Lot 44, Section 29, Hilton.. Lots 123 and 4, part Sections 412 and 2070, Finsbury Park Lots 24 and others, Myrtleholme Lots 104 and 114, Section 235, Hawthorne Lot J, Section 235, Hawthorne Lots 29 and others, Dover Lot 41, part Section 223, Woodhurst Lot 1441, Section 203, Dover Part Lots 54/55, Section 299, Upper Kensington 0 0 15 0 2 0 0 0 36 0 0 27 1 1 21 0 2 28 0 1 33 3 1 14 0 3 15 0 2 5 0 1 11 10 2 0 1 19 0 2 28 0 0 15 0 1 14 0 0 13 0 0 18 0 0 24 5 0 0 Nominal. 30 0 0 10 0 0 77 0 0 40 0 0 170 0 0 150 0 0 10 0 0 70 0 0 15 0 0 25 0 0 15 0 0 44 0 0 10 0 0 20 0 0 15 0 0 10 0 0 5 0 0 5 0 0 30 0 0 10 0 0 77 0 0 40 0 0 170 0 0 150 0 0 10 0 0 70 0 0 15 0 0 25 0 0 15 0 0 44 0 0 10 0 0 20 0 0 15 0 0 10 0 0 5 0 0 0 3 38 0 3 2 0 1 29 5 1 31 0 0 10 0 2 14 0 0 20 Nominal. 3l" 0 0 31 0 0
161
1.-6
Description. Area. Land. Buildings. 'otal Boo! value. A. E. P. 0 12 5 0 0 £ s. d. £ s. d. £ s. d. Lots 13, 18, and 141, Derby, W.A. Location 24, No. 24, Park of Plantagenet, W.A., Freemantle Lot 36, Section 371, Prospect West Lot 120, Section 453, Grange Lots 9 and 26, part Section 417, Woodville West Lot 92, Section 453, Grange Lots 48 and 126, part Sections 242/3, New Brighton .. Lots 50 and part 51, Glenelg .. Lots 36 and 39, South Quorn Sections 621, 647, Frome Sections 242, 205, and 206, Port Augusta W. Part Section 1687, Shee Oak Lodge, Bagot Hundred of N.T. Section 47 and others, Beach Port Lot 18, Section 72, Port Massovie Lots 15/17, Pinda Part Section 997, Hundred of Adelaide Lots 194, 207, Pinda Sections 60/62, Farina Sections 111 and 118, Clapton Lots 48, Section 2130, Port Wakefield North Lots 12/16, 36/40, Yorketown Section 4, 59 and others, Port Hughes Lots 55 and others, Block C and D, Section 49, Crossfell Lot 61 and others, Section 88, Bordertown W. Section 44 and others, Stevenston Sections 1, 5/9 Lots 26/7 and 87/8, Port Moorowa Lots 2/7 and others, Ferguson Part Section 1162, Mount Lofty Section 423, Nurnberg, Sydney Land at Riverstone, Lot 3, Parish of Londonderry .. Lot 21, Cumberland, Hawkesbury River, undivided moiety Lots 8/10, Section 2, Bull Hill Estate Lots 22 and others, Mount Druitt Estate, Bookhill .. Brighton Estate, East Sandgate, near Brisbane Lots 7 and 8, Section 33, Goulburn Lots 15 and 16, Section 2 .. Half-interest in part 149, 155, 177, 178, County of Lismore One-third share in Parramatta Recreation - ground, known as 9 acres One-third share in land known as Hudson's, at Rose hill Railway Part of Crown Park 14, Jackson Street, Toorak, Melbourne, with house, seven rooms Lot 1, Ashfield, Sydney Lot 6, Alt Street, ditto, with brick cottage, 8 rooms, " Locksley " Lot 16, Section 2, Croydon Avenue Lot 20, Section 2, Croydon Avenue Land at Bantry Bay, Middle Harbour, Manly Third-interest in land at Parramatta, known as 9 acres Third-interest in land at Rosehill Railway, known as Hudson's Lots 10 and 5, Section 3, Brush Farm, Hunter's Hill Lot 18, Greenhill Estate, Croydon Lot 3, Section 79, Rockhampton Lot 8, Section 79, Bolsover Street, Rockhampton .. Lot 5, Section 2, Princhester Section 2, Lot 4 .. Subdivision 1, Portion 159, Rockhampton One-third interest in land in Argyle Street, Grafton City Allotments 10/11, Block 3, Grant's Braes, Dunedin .. Section 8, Subdivision 73, South Brisbane Portion 156, Parish South Brisbane Lot 12, part of Tamama Navua Viti Levuka Lot 7, Section 18, Suva Lot 4, Tamavua Lot, Suva Land at Tamavua Island of Viti Levu, Nadi River, known as Nasau .. Island of Vici Levu, Nadi River, known as Nakoka .. Land at Sava Sava, Island of Vanua, Levu 0 0 24 0 2 8 0 2 2 0 1 15 0 2 10 0 3 5 0 1 22 7 0 0 0 2 33 320 0 0 13 0 0 2 0 0 2 5 5 0 0 12 0 0 3 0 0 2 0 0 1 12 3 0 10 4 0 37 2 0 26 10 0 12 4 0 2 24 2 0 0 6 2 34 86 0 0 5 3 33 50 0 0 17 2 4J 3 2 10J 239 2 12" 0 2 0 0 2 0 171 3 0 75' 0 0 162 0 0 75 0 0 50 0 0 517 0 0 30 0 0 20 0 0 5 0 0 450 0 0 30 0 0 20 0 0 20 0 0 50 0 0 20 0 0 30 0 0 10 0 0 5 0 0 20 0 0 15 0 0 480 0 0 30 0 0 30 0 0 24 0 0 5 0 0 44 0 0 246 0 0 150 0 0 135 0 0 50 0 0 5,332' 0 0 I 181 0 0 75 0 0 162 0 0 75 0 0 50 0 0 517 0 0 30 0 0 20 0 0 5 0 0 450 0 0 30 0 0 20 0 0 20 0 0 50 0 0 20 0 0 30 0 0 10 0 0 5 0 0 20 0 0 15 0 0 480 0 0 30 0 0 30 0 0 24 0 0 5 0 0 44 0 0 246 0 0 150 0 0 135 0 0 50 0 0 5,332 0 0 181 0 0 400 0 0 400 0 0 11 3 2 600 0 0 600 0 0 5 0 0 470 0 0 470 0 0 0 0 27J 350 0 0 800 0 0 1,150 0 0 0 0 38J 0 0 20J 287 0 0 100 0 0 323 0 0 287 0 0 423 0 0 0 3 1J 0 3 2l| 255 3 7 11 3 10 5 0 0 1 500 0 0 8,840 0 0 13,955 0 0 500 0 0 8,840 0 0 3,955 0 0 1 0 4J 0 0 25J 0 10 0 10 0 2 0 0 2 0 15 0 20 495 0 0 62 0 0 1,320 0 0 660 0 0 495 0 0 62 0 0 1,320 0 0 660 0 0 I Nominal. 150 0 0 796 0 0 150 0 0 796 0 0 0 2 0 0 0 18ft, 27 3 0 5 0 0 400 0 0 0 0 35 5 0 0 0 1 21 50 0 0 381 0 0 321 0 0 925 0 0 175 0 0 175 0 0 j 177 0 0 177 0 0 30 0 0 1,029 0 0 20 0 0 30 0 0 1,029 0 0 20 0 0 [ 400 0 0 I 200 0 0 400 0 0 200 0 0 923 0 0 923 0 0 42,534 0 0 8,240 0 0 50,776 0 Land situated at Richmond River, Parish Broadwater, N.S.W. 2,293 0 0 2,293 0 0 44,827 0 0 8,240 0 0 53,069 0 0 Adjustment, Onehunga Ironworks 105 0 0 £53,174 0 0
1.—6
162
LEASEHOLDS.
look-values. Description. Area. Lease Expires Land. Buildings. Total. Lot 5, subdivision of Lot 9, Section 2, Gore Street, Auckland, with brick store Lot 11 of 15, Section 9, Suburbs of Auckland, with bakery .. Lot 43, Queen Street, Auckland, with brick shop, &c. Lots 11/13, Section 17, Auckland, with brick building Lot 5, Block 1, Te Aroha, with boarding-house Lots 38/40, Queen Street, Auckland, with Palmerston Buildings Part Lot 17, Section 17, Auckland, with bond Part Section 4, Block 46, Dunedin, with stables, Manners Street ' Part Section 29, Block 26, Great King Street, Dunedin, with workshop Section 2, Block 16, N. E. Valley, Dunedin, with brick house Part Town Acre 499, Wellington, with Queen's Hotel Part Town Acre 474, Wellington, with three brick cottages .. Part Town Acres 210 and 229, Adelaide, with buildings Lots 38/39, Alexandria, Sydney, with five brick cottages Lot in Cumberland, Sydney, with three brick cottages Lots 14/23, Pyrmont, Sydney, with twelve cottages Lots 15/23, Pyrmont, Sydney, with eleven cottages Lot 2, Kamo, Whangarei, coal area, no surface-rights Lot 55, Section 2, Commerce Street, Auckland, with store .. Part Lots C and D, railway reclamation, Auckland, half interest Lots 1/4, Block 81, Raleigh, Waitara, half interest.. Section 827/9, Cashel and Hereford Streets, Christchurch .. Section 7", Block 5, Manor Street, Dunedin Section 19, Block 42, Bond Street, Dunedin Part Sections 1, 2, and 5, Block 46, Dunedin Lot 1 of 56, Block 20, Dunedin, with Royal Albert Hotel .. Section 2, Harbour Board Block, Oarnaru Sections 146/8, Customhouse and Waterloo Quay, Beclamation, Wellington One-seventh share in mineral lease, Lake Macquarie Section at Tologa, Levuka, Fiji, with three cottages* Land in Fiji, known as Kakbolundamu Shillings and pence A. R. P. 0 0 17 1/2/1959 £ 1,000 £ 2,250 £ 3,250 0 1 30 0 0 13 0 0 14 0 10 0 1 4-38 7/5/1923 1944 2853 1903 9/12/1944 1J500 10,000 408 2,647 2,379 360 15,711 408 4,147 12,379 860 17,711 21000 0 17 0 0 18-7 1/1/2010 1915 8,000 8,000 0 0 20 1/9/1901 0 10 44ft. x 92ft. 66ft. x 107ft. 0 15 0 0 26| 0 1 6$ 0 1 3§ 296 0 0 0 0 9 3 3 28 11/11/1897 12/12/1897 1919 1902 1984 1964 1929 1929 1,750 1,270 1,295 1,285 580 1,000 1,400 1,750 1,270 1,295 1,285 580 1,600 1,400 1/2/1959 1933 13 102 516 516 13,102 10 6 0 3 18 0 10 0 0 9-8 0 1 9 0 0 7 0 0 24 0 0 20 1/5/1899 31/10/1935 5/9/1906 1/4/1896 23/3/1915 22/12/1895 1913 1,950 1,950 L716 649 1,716 649 1,800 1,800 800 0 0 0 0 37J 200 0 0 9/7/1896 'l50 150 400 3 400 3 29,802 45,919 75,721 * Bil ;hc to remove buildings.
163
1.—6
BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED). Amounts Outstanding on Account Sales at 31st March, 1896.
23—1, 6,
Si-anc i, am fame ol 'urc Laser. imoum Iranc: , ani fame o: 'urcl ,aser. .mourn Auckland— Barker, W. R. and R. Holden, J. and T. Douglas, David Dobbie, David Arthur, A. C. .. Bond, Mrs. Mary Donner, P. W. McLaurin, W. G. „ (No. 2 account) Tucker, W. H. Manders, H. B. Stopford and Macfarlane.. Reynolds, R. J. Parker, J. R. C. O'Meara, W. A. Howarth (now G. Nutting), G. Hamon, W. J. Birrell, R. M. .. Caulton, S. 0... Crawford, W. F. De Latour, C. A. Lysnar, W. D. Poverty Bay Park Company Mitchelson, Mrs. E. Rich, P. D. .. Landers, J. O. Hunter, Jeffray Manukau Timber Company Johnston, John Gifford and Evans Nixon, T. R. and J. J. Lever, Henry Hogan, W. .. Jones, W. H. .. Irvine, Mrs. Sarah Russell, David Piatt, John Christian, A. .. Lucas, Joseph Irvine, James Ehrenfreid, Louis McKean, Mrs. L. N. Roberts, Thomas Sexton, C. H. .. Sexton, Alfred Newton Borough Council Knipe, W. J. .. Pilleul, P. J. .. Williams, T. .. Evans, Morris.. Pinson, G. .. Broderick, A. J. Smith, J. C. .. Landin, Harriet Carr, Mrs. R. .. Jones, G. W. .. Hare, Edward Parr, T. D. .. Mackay, Mrs. E. S. Hallett, Mrs. Broadhurst, George Hood, Thomas Bleloch, Prank Goodyear, Joseph Gilfillan, W. A. Clifford, J. M. Smith, W. H... Thompson, J. W. 31enheim — Hogan, Patrick Bubb, James Smale, Thomas Brown and Lucas Mowat, J. T. .. McKenzie, John Huddlestone, J. B. Hale, Alfred White, Elizabeth A. Chandler, W. .. Cambridge—. Runciman, James £ s. d. 4,000 0 0 1,928 13 1 275 5 0 3,835 15 0 6,930 16 3 114 1 0 1,366 13 4 463 6 3 573 15 0 156 10 8 795 2 6 1,337 0 6 2,000 0 0 442 2 6 117 5 0 297 17 0 144 4 6 130 7 3 1,360 0 0 106 0 0 307 4 10 237 4 9 500 0 0 3,000 0 0 200 0 0 48 0 0 235 0 0 1,030 0 0 120 0 0 67 16 3 551 13 7 45 0 0 148 0 0 120 0 0 90 0 0 13 0 0 120 0 0 21 10 0 224 10 0 125 0 0 35 0 0 800 0 0 75 0 0 625 0 0 60 0 0 60 0 0 150 0 0 65 0 0 30 0 0 32 0 0 70 0 0 32 15 0 110 6 3 191 0 0 Christchurch— Trevor, Dr. Canterbury Freehold Land Association Duncan, George Barwell, T. W. and A. .. Bissett, C. .. McLeod, D. .. Wareing, J. B. Matthews and Tresize Brown, John Taylor, B. .. Austin, J. .. Clark, A. M. .. McCulley, H. .. Pye, Charles .. Casey, W. Widdowson, W. Heggarty, J. .. Stumbles, John Mitchell, Eli .. Wallace, J. Hulme, H. J. .. . .. .. Cook, William : Lee, Joseph Anderson, W. Dunedin— Harold, J. Richards, 0. A. Hunter, Thomas Every, J. H. .. Kaikorai Football Club Ellis, John Black, A. D. .. Butler, H. Moritzon and Hopkin Barber, Alexander Gisborne— Hills, J. E. .. Gore— Roche, Kate Hutt— Hodder, W. G. Jones, L. W. Hamilton— Coates, J. Frodsham, C. .. Honeyburn, James Edgeeumbe, George Baker, W. .. Invercargill— Corbitt, E. . Kaiapoi— Taylor, E. .. Lawrence— Humphrey, Thomas New Plymouth— Wright, Walter Carthew, P. R. Napier— Nelson, W. .. Hatch, J. Rangiora— Ivory, A. Te Awamutu— Bell, H.J. Tokomairiro — Allison, J. J. .. Milnes, J. W. and J. P. Tauranga— Clarke, W. A. .. Commons, W... Vercoe, J. L. .. Thames — Edwards, Mrs. E. Waimate — Childs, P. E. .. Jones and Co. .. Winton — Daley, M. .. Lindsay, W. Sands, R. Wellington— Jones, D. ., £ s d. 329 0 0 45 6 0 200 0 0 587 0 0 1,366 1 3 3.149 10 3 1,896 15 4 3,011 0 3 1.150 0 0 1,525 10 0 1,557 4 9 2,655 3 9 90 0 0 2,010 9 6 487 10 0 5,550 0 0 178 0 0 877 10 0 120 0 0 4,789 17 6 200 0 0 2,830 0 0 400 0 0 1,070 15 0 400 0 0 9 12 40 0 0 50 0 0 320 0 0 855 0 0 30 0 0 17 12 10 2,600 0 0 ■ 160 0 « 100 0 0 324 2 6 31 0 0 2,700 0 0 6 0 0 178 10 0 3,821 0 0 500 0 0 1,000 0 0 60 0 0 139 @ 0 100 0 0 345 0 0 100 0 0 270 0 0 350 0 0 21 10 0 37 0 0 29 10 0 160 0 0 45 0 0 35 0 0 150 0 0 120 0 0 1/066 13 4 2,500 0 0 22,750 0 0 38 18 0 242 0 0 1,525 0 0 800 0 Q 445 0 0 15 0 0 100 0 0 200 0 0 765 0 0 820 13 7 749 19 9 100 0 0 140 0 0 30 0 0 157 10 0 27 10 0 2,070 0 0 200 0 0 120 0 0 764 10 5 550 0 0 29 9 0 40 0 0 80 0 0 300 0 0 600 0 0
1.—6
164
Amounts Outstanding on Account Sales at 31st March, 1896— continued.
MORTGAGES.
trancl t, am fame o: 'urc! laser. .mount Sranc] i, am fame o! 'urc: laser. .mount Vellington— continued. Mason, A. P. Cohen, F. Lechner, J. W. Munn, C. J. .. Board of Education Vyndham— Woblmann, Gustav Adelaide— Arditt, Jonathan Nicholas, F. S. Lewis, J. Sydney— Redman, G. C. Lynch, D. J. Clarke, Charles Fleming, W. .. Withers, H. J. Turner, A. £ s. d. 369 12 0 140 0 0 22 10 0 450 0 0 5 10 0 53 0 0 37 0 0 100 0 0 200 0 0 Auckland — Hobson, Thomas Allen, F. G. .. Ambury and English Blaikie, R. .. Borebam, C. .. Durbin, A. Cleal, E., jun... Gray, J. R. Morrison, A. R. Morrison, Annie Roberts, James Thome, W. .. White, R. C. .. Wilkinson, T. .. Ellis, Mrs. E. E. Lovett, William £ s. d. 35 0 0 61 0 0 700 0 0 128 0 0 95 0 0 25 0 0 120 0 0 292 16 0 250 0 0 412 0 0 90 0 0 200 0 0 550 0 0 160 0 0 350 0 0 275 0 0 774 14 11 275 0 0 410 7 0 182 17 0 541 12 7 525 0 0 Total £132,103 18 8 Total £128,360 2 8 Approximate value Total approximate value £3,729 £132,089 Approximate value .. £128,360
Description. Book-value. Description. Book-value. Kay, W. R. Pry, Mrs. S. Johnston, W. Canon Wi Pere and Carroll Parker, W. B. Roberts, George Wilson, F. H. Storey, C. J. Johnston, W. Canon Forsyth, James Ive, Henry Pilkington, J. Piesse, F. J. Interest in Mclnerney's mortgage to B. N. Z. over Section 11 and part 12, Block III., Winton, and hotel Read, John Stewart, G. V., mortgage for £200 o/a W. Fraser £ s. d. 90 0 0 5,000 0 0 49 19 2 74,195 18 3 1,200 0 0 400 0 0 8,500 0 0 1,000 0 0 277 0 0 2,557 0 0 250 0 0 840 0 0 117 0 0 200 0 0 Brought forward Herbert, G. S. McLean, G. Breakell, H. J. Brown, Thomas Heaslip, R. H. Brown, A. C. Butler, E. Harbutt, F. J. Hicks, F. Vosper, W. Bridgman, J. Hally, G. J. Hamilton Bros. Philson, W. W. Richardson, J. R. S. Morrison, E. W. Costello, William .. Kidd, — .. £ s. d. 101,646 17 5 2,150 0 0 95 0 0 82 10 0 533 0 0 270 0 0 300 0 0 775 0 0 800 0 0 200 0 0 1,200 0 0 800 0 0 75 0 0 1,200 0 0 150 0 0 588 10 0 85 0 0 160 0 0 300 0 0 6,810 0 0 160 0 0 Carried forward £101,646 17 5 Total £111,410 17 5
165
1.—6
SHARES.
SUNDRY BALANCES DUE TO COMPANY.
'escript jion. loo: :-val [ue. 877 Bank of New Zealand 100 Otago Daily Times 911 Otago Daily Times 100 Auckland Fibre Company .. 2,750 Auckland Fibre Company 1,208 Taupiri Reserve Colliery Company 600 Northern Boot and Shoe Company !0,000 Preference Auckland Agricultural Company .. tO, 000 Ordinary Auckland Agricultural Company !0,000 T. and S. Morrin and Co. (Limited) .. 8,378 Paid-up Humphrey's Gully Gold-mining Company .0,208 19s. paid-up Humphrey's Gully Gold-mining Company .1,903 Paid-up Ross United Gold-mining Company 9,195 19s. 6d. paid-up Ross United Gold-mining Company 3,336 New Umberumberaka S. and L. Mining Company 240 McKinlay and Mount Wells Tin-mining Association 2,400 Mona Vale Land Company 57 Holt-Sutherland Land Company 40 Great Western Steamship Company 330 Gabriel and Blue Spur Gold-mining Company 803 Preference New Zealand Loan and Mercantile Agency Company (Limited) 1,606 Ordinary New Zealand Loan and Mercantile Agency Company (Limited) 700 New Zealand-River Plate Land Company 1,000 New Zealand Insurance Company .. £ s. d. 7,929 2 0 875 7 11 8,764 0 0 250 0 0 36 0 0 482 8 0 358 18 0 | 148,110 0 0 32,540 19 0 | 650 0 0 t 660 0 0 1,067 2 6 306 2 6 1,625 0 0 4,795 5 0 480 0 0 | 1,400 0 0 250 0 0 3,500 0 0 £214,080 4 11 3 2 £214,080 1 9
Description. Book-value. Working capital supplied to trading concerns Bank of New Zealand—Joint account with Messrs. Glynn and Jeffray Bank of New Zealand—Manager's Suspense Account .. .. .. Bank of New Zealand—Sundry agencies Cash in hand and bills receivable .. Adjusting account of revenue Balance due to company in sundry suspense accounts, &c. £ 21,454 15 6,193 233 6,150 10,506 £44,551 Sundry amounts due by purchasersEstates Company Auckland Agricultural Company 128,360 3,743 £132,103 .« mm Funds in hands of Trustees— Funds furnished by New Zealand Loan and Mercantile Agency Company as trustees for debenture£21,414
166
1.—6
SUNDRIES.
TRADING CONCERNS. w Total Book-value. lsr „ TTle Total Book-value, JSame - £ a. d. JName ' £ s. d. A ... ... ... 31,057 0 0 1 ... ... ... 58,400 0 0 ~ (40,452 0 0 J ... ~, ... 6,366 0 0 13 '" 1 4,000 0 0 X 33,331 0 0 C ... . .... ... 43,270 0 0 L ... 80,810 0 0 D ... 78,851 0 0 M 79,997 0 0 „ (56,445 0 0 4 0 0 * '•• •'• •■■ |17,000 0 0 „— F ... .. ... 19,675 0 0 Total ~, .., £588,656 0 0 G ... ... ... 19,000 0 0 ——- H ... ... ... 20,000 0 0
Description. Book-value. Hamilton, James, debt .. .. .. — Day, C, debt Aickin, Graves, debt .. .. .. .. .. .. .. ... Graham, J. B., p.d.bs. .. .. .. .. .. .. Sundry material, Karekare Sawmills Balance Owen and Graham's book-debts and p.d.bs., &c. .. ,. Whyte, J. B., debt Balance owing by F. Larkworthy, in terms of agreement to pay £2,000 in ten annual instalments, and £5,000 from Bank of New Zealand Provident Fund Pension Balance owing by Waikato Timber Company after sale of stocks .. -.. Sundry p.d.bs., on account Hunter and Nolan Two chronometers held in Sydney on account s.s. " Triumph " Government life policies—No. 5236, £1,000; No. 5693, £1,000 Sundry book debts, T. Horton's estate, on account Fell Brothers Steam-engine, 26-horse-power, Parapara Sawmill Bond by W. B. Parker, Robert Patchett, and James Bubb, on account R. and W. Patchett, held as collateral security on account of their debt, bond p. £681 10s. 5d. Australian Mutual Provident Society, policy No. 185353, Table J, 60, on life of J. J. Sinclair, for £5,000 J. R. Dart's p.n. for £50 on account J. J. Sinclair Debt due by F. Hicks's estate, assigned to J. Hume Sundry p.d.bs. on account J. Houghton and Sons . . .. .. .. ... Australian Mutual Provident Society, policy for £1,000 on life of W. Moon Balance p.d.bs., Hitiri and others Balance Thomas Wells's composition Government life policy on life of C. W. Turner, No. 25915, for £1,000, paid up .. Bond, C. W. Turner, with Bank of New Zealand, undertaking to pay £3,000 Dividend, Lightband, Allen, and Co's. estate Government life policy, No. 1278, for £1,000, on life of E. P. Day Australian Mutual Provident Society, life policies Nos. 182269 and 70, on life of E. P. Kenyon, p. £1,000 each Reversionery interest in £200 due to C. W. Dudley on death of his mother, and sundry materials, casks, &c, on account Marshall and Copeland, balance, £70 Black Diamonds, on account F. D. Bich, Shag Point Mine Account F. Hamilton's debt, unsecured F. and J. Hamilton's debt ;. P.d.bs. on account Buckland and Co. G. F. Dickson, unsecured debt J. P. Harris, unsecured debt Guarantee 'by J. Pearson on account W. F. Pearson Deficiency in estate of W. Balfour, to be written off .. .. A. D. Bayfield, unsecured debt Government life policy, £1,00Q, No. 101, on life of Duncan McNab T. W. Carr and Sons p.d.b. on account James Lavery for £936 Sundry p.d.bs. on account D. McLeod and Co. Sundry p.d.bs., T. W. Carr and Sons James Forsyth's promissory note on account Golden and Co., No. 2 Account Unsecured debt by Sir H. J. Wrensfordsley Interest in Law life policy on life of W. W. Billyard, No. 8010, with reversionary interests Life policies in Colonial Mutual Life Association, £200 each, on life of Rev. F. Firth, Nos. 7119 and 7336 Eight life policies in Australian Mutual Provident Society, £500 each, Nos. 82908/82915 Life policy in London and Lancashire Life Company, p. £1,000, No. 12007 Life policy, Mutual Life Association Society of Victoria, p. £300 Steam navvy, &c, and plant, at Glen Innes .. Bond for £1,000 by the Silver Queen Silver-mining Company directors—p.n. held for collection, £233 On account Burgess Watson, dividend of 2Jd. in the pound on claim for £1,801 8s. 7d., p. £1,392 14s. 2d. Byder Bros., p.d.b. on account Mango Island Company Balance F. Goodfellow's promissory note, £1,071 17s. 6d. ; £194 6s. 5d. still due Wilson and Murchie, estimated dividend to come Sundry assets not valued by Mr. Hean, taken over from bank, unrealised balance now being Past-due bill on account J. Buchanan Sundry p.d.bs. on account Buckland's property .. .. .. Furniture at Williamson's " Pah " Estate £ s. d. 300 0 0 432 16 3 675 0 0 2,674 0 0 45 7 3 2,248 -8 9 595 0 0 2,425 9 4 453 5 2 32 4 1 61 9 0 2,000 0 0 79 13 9 1,485 0 0 381* 0 0 366 13 11 189 3 5 324 17 1 1,071 6 8 1,500 0 0 782 0 6 298 2 8 2,492 0 0 141 16 11 80 0 0 1,772 17 8 1,473 2 2 306 16 2 181 0 0 176 0 0 109 0 0 2,963 10 7 265 0 0 650 0 0 16019 10 241 0 0 462 0 0 2,000 0 0 460 5 6 4,595' 1 0 4,753* 6 2 564 0 0 267 9 2 7,530 0 0 50 0 0 75 8 10 3,143 7 10 £53,343 19 11
EXHIBIT No. 18. [Handed in by Mr. Foster, 7th August, 1896.] Realisations for Year ending 31st March, 1896.
1.-6.
167
Property. Area. Sale Price. Payments on Account. Balance. Surplus. Deficiency. Book Cost. Latest Valuations. Land-tax + 10%. Auckland. Lot 5, Kawakawa, with store and dwelling 3,147 acres, Omu Block Sections at Kohukohu Proceeds sale of plant of Onehunga Ironworks.. Sections 21 and 22, part of Carnarvon Estate... Lot 1, Section 19, Eingston, Coromandel Sections 23 and 24, part of Carnarvon Estate... Paddock No. 23, part of Lockerbie Estate Lot 219, Kirikiriroa Section 30, Kohukohu Lot 9, Section 5, Kopu Section 24, Lot 5, Surrey Hills Sale of old office, Onehunga Ironworks Sale of rails and forge Sale of lathe Lot 6, Section 24, Surrey Hills Lot 2, Section 70, Surrey Hills Part of Lot 1, Cambridge ... Lot 413, Hamilton East Lot 21, part of Lockerbie Estate Section of Lockerbie Estate for windmill Lot 127, Morrinsville Part of Matamata Estate ... A. E. P. 0 2 3-7 3,147 0 0 30 0 0 339 1 4 0 10 334 1 37 2 0 0 3 0 0 £ s. d. 104 0 0 2,360 0 0 63 15 0 201 4 10 3,240 13 6 8 0 0 3,344 16 3 40 0 0 50 0 0 35 0 0 15 0 0 55 0 0 15 0 0 11 11 0 50 0 0 105 0 0 118 0 0 5 0 0 80 10 3 303 11 3 50 0 0 20 0 0 30 0 0 £ s. d. 76 0 0 2,360 0 0 63 15 0 201 4 10 810 13 6 8 0 0 836 16 3 40 0 0 10 0 0 3 10 0 15 0 0 55 0 0 15 0 0 11 11 0 50 0 0 105 0 0 118 0 0 5 0 0 £ s. d. 28 0 0 2,430 0 0 2,508'"0 0 40 0 0 31 10 0 £ s. 23 7 810 0 8"'o d. 2 0 0 £ s. d. io"o 0 £ s. d. 80 12 10 1,550 0 0 63 15 0 201 4 10 3,240 13 6 3,344 16 3 40 0 0 60 0 0 35 0 0 15 0 0 55 0 0 15 0 0 11 11 0 50 0 0 105 0 0 118 0 0 5 0 0 97 11 4 303 11 3 50 0 020 0 0 30 0 0 £ s. d. 100 0 0 2,360 0 0 63 15 0* 201 4 10* 3,240 13 6* 10 0 3,344 16 3* 40 0 0* 66 0 0 35 0 0* 15 0 0* 55 0 0* 15 0 0* 11 11 0* 50 0 0* 105 0 0* 132 0 0 5 0 0 78 0 0 303 11 3* 50 0 0* 20 0 0* 30 0 0* I 13 1 27 30 1 17 80 10 3 17 1 1 0 2 0 10 0 0 303 11 3 50 0 0 20 0 0 30 0 0 Wellington. Sections 6, 7, 10-13, 15, and 16, part of Carnarvon Estate Sections 8, 18-20, part of Carnarvon Estate ... Sections 4 and 5, part of Carnarvon Estate Lot 1, part of Carnarvon Estate Section 1a, part of Carnarvon Estate Part T.A. 490, 22ft. by 141ft., with Waverley Hotel Lot 3, Boulcott Street, "Wellington ... Lot 307, part of Section 30, Kent Terrace, with house 2,226 1 37 1,369 1 35 377 3 0 419 2 35 146 2 39 14,000 0 0 9,586 5 7 2,455 7 6 2,308 9 0 807 1 9 2,600 0 0 4,793 2 10 1,000 0 0 2,308 9 0 14,000 0 0 4,793 2 9 1,455 7 6 807"l 9 14,000 0 0 9,586 5 7 2,455 7 6 2,308 9 0 807 1 9 2,709 5 6 14,000 0 0* 9,586 5 7* 2,455 7 6* 2,308 9 0* 807 1 9* 2,211 0 0 2,600 0 0 109 5 6 0 0 15 T % 630 0 0 2,100 0 0 100 0 0 2,100 0 0 530 0 0 15 0 0 393 3 11 645 0 0 2,493 3 11 660 0 0 2,475 0 0 - * Sales marked thus (*) include only portions of meantime at sale price. iroperties valued as a whole. Surpf ses or deficiencies cannot therefoi ■e be shown until final realisation. Valuations are therefore shown
1.—6.
Realisations for Year ending 31st March, 1896— continued.
168
Property. Area. Sale Price. Payments on Account. Balance. Surplus. Deficiency. Book Cost. Latest Valuations. Land-tax + 10 %. Wellington — continued. Section 1038, Berhampore ... Part of Lot 10, T.A. 480, Boulcott Street Section 1040, Berhampore ... Section 1013, Berhampore ... Section 1014, Berhampore ... Section 1015, Berhampore ... Section 568, Tinakori Eoad, with house Lots 9 and 10, T.A. 91 and 93, Willis Street ... Section 3, part T.A. 92, Willis Street Sections 263 and 264, Taratahi Plain A. B. P. £ s. d. 230 0 0 550 0 0 300 0 0 350 0 0 305 0 0 230 0 0 2,100 0 0 1,500 0 0 575 0 0 600 0 0 £ s. d. 23 0 0 550 0 0 30 0 0 35 0 0 30 10 0 23 0 0 210 0 0 300 0 0 57 10 0 10 0 0 £ s. d. 207 0 0 270 0 0 315 0 0 274 10 0 207 0 0 1,890 0 0 1,200 0 0 517 10 0 590 0 0 £ s. d. £ s. 74 0 96 0 488 0 425 5 320 15 747 16 500 0 d. 0 0 0 0 0 0 0 £ s. d. 304 0 0 550 0 0 396 0 0 838 0 0 730 5 0 550 15 0 2,847 16 0 2,000 0 0 471 15 0 600 0 0 £ s. d. 249 0 0 470 0 0 326 0 0 348 0 0 303 0 0 229 0 0 3,021 0 0 1,650 0 0 440 0 0 600 0 0 103 "5 0 100 "o 0 Blenheim. Lots 41-43 of 47 and 48, Opawa, with store ... Lot 3, Elaxmere, Omaka Lot 4, Flaxmere, Omaka ... Lots 4 and 49, Taylor's Pass 10 0 52 3 8 52 0 0 2 0 0 625 0 0 1,075 0 0 975 0 0 80 0 0 50 0 0 600 0 0 100 0 0 575 0 0 475 0 0 875 0 0 80 0 0 193 0 0 40 "0 1 0 432 0 0 2,050 0 0 600 0 0 (1,000 0 0 11,000 0 0 132 0 0 120 0 0 Cambeidge. Part of Ngatihourua Estate 91 3 0 91 15 0 91 15 0 91 15 0 78 15 0 Chbistchuech. Lot 21, E.S. 24811, part of Eiverslea Estate ... Part E.S. 1102 and 7122, Arowhenua On account Belfast sections, proportion of realisations and rents, p. Loan Company, to 31st March, 1895 Further proportion to 30th June, 1895 Third instalment on account above, under reconstruction scheme On account Belfast sections, proportion realisation to 31st December, 1895 Ditto, to 31st December, 1895 Ditto, to 31st March, 1896 ... Part of Mitcham Estate Part of Albury Estate 498 2 0 9 2 3 498 10 0 54 14 8 104 10 3 125 9 3 10 9 498 10 0 54 14 8 104 10 3 125 9 3 10 9 124 18 0 623 8 0 54 14 8 104 10 3 125 9 3 10 9 498 10 0 54 14 8* 104 10 3* 125 9 3* 1 0 9* 153 7 5 153 7 5 153 7 5 153 7 5* 677 6 0 0 3 0 21 18 1 257 0 7 2,710 0 0 3 17 0 21 18 1 257 0 7 2,710 0 0 3 17 0 45 0 0 21 18 1 257 0 7 2,755 0 0 3 17 0 21 18 1* 257 0 7* 3,346 0 0 3 17 0* * Sales marked thus (*) include only portions of properties valued as a whole, meantime at sale price. Surpluses or deficiencies cannot therefore be shown until final realisation. Valuations are therefore shown
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Realisations for Year ending 31st March, 1896— continued.
169
Property. Area. Sale Price. Payments on Account. Balance. Surplus. Deficiency. Book Cost. Latest Valuations. Land-tax + 10%. Chbistchuech — continued. . E.S. 11593, 11595-6, Albury Estate ... Sale of 64 shares, South Canterbury Eefrigerating Company, atj £3 15s. Eealisations and rents on account of Belfast Sections to 30th September, 1895 Payment Loan Company, on account Belfast, under reconstruction scheme A. e. p. 114 1 30 £ s. d. 429 2 10 240 0 0 397 18 7 £ s. d. 70 0 0 240 0 0 397 18 7 £ s. d. 359 2 10 £ s. d. £ s. d. £ s. d. 429 2 10 240 0 0 397 18 7 £ s. d. 429 2 10* 240 0 0* 397 18 7* 113 113 113 1 1 3* Dunedin. Section 11, Block I., Balmacewan ... Sections 44-8, Block 34 of 49 and 57-9, Sandymount Section 9, Bishopscourt Section 47, Bishopscourt Section 23, Block 6, Clarendon Lots 82-92, Eavensbourne Extension Lots 76-81, Eavensbourne Extension Lot 8, Block 2, Otago Peninsula Section 29, Bishopscourt ... Section 28, Bishopscourt Sale of old clocks, on account Albion Brewery Eent, Eeid and Co., Filleul Street sections 0 0 36 0 16 0 0 37-5 2 0 9-3 0 2 36-5 0 2 9-16 6 0 23 50 0 0 875 0 0 20 0 0 80 0 0 17 9 11 27 10 0 18 0 0 154 7 6 70 0 0 65 0 0 15 0 62 10 0 50 0 0 875 0 0 4 0 0 10 0 0 11 9 11 27 10 0 18 0 0 31 9 4 70 0 0 25 0 0 15 0 62 10 0 16 0 0 70 0 0 6 0 0 75 0 0 50 0 0 800 0 0 20 0 0 80 0 0 17 9 11 27 10 0 18 0. 0 300 0 0 41 10 0 38 10 0 15 0 62 10 0 50 0 0* 1,650 0 0 20 0 0 80 0 0 17 . 9 11* 27 10 0* 18 0 0* 143 0 0 44 0 0 44 0 0 15 0 62 10 0* 122*18 2 145 12 6 0 "6 25-2 40 0 0 28 IO 0 26 10 0 Invebcabgill. Payment on account New Zealand Insurance Company on account building destroyed by fire, Eetreat Estate Sections 5-10, Block 9, and 1-26 of Block 10, Clarendon 50 0 0 50 0 0 50 0 0 50 0 0* 57 3 24-3 175 0 0 17 10 0 157 10 0 175 0 0 175 0 0* Kaikouba. Grange Farm, loss by fire ... 275 0 0 275 0 0 275 0 0 275 0 0* Mastebton. Lot 30, Section 57, and house, Villa Street, Masterton 0 2 0 135 0 0 135 0 0 10 0 0 125 0 0 137 0 0 * Sales marked thus (*) include only portions of properties valued as a whole, meantime at sale price. Surpluses or deficiencies cannot therefi ire be shown until final realisation. Valuations are )herefore shown
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Realisations for the Year ending 31st March, 1896— continued.
Property. Area. Sale Price. Payments on Account. Balance. Surplus. Deficiency. Book Cost. Latest Valuations. Land-tax + 10%. Mastebton — continued. Lot 18, Section 37, Masterton A. 0 E. P. 2 0 £ s. d. 50 0 0 £ s. d. 50 0 0 £ s. . d. £ s. d. £ s. d. £ s. d. 50 0 0 £ s. d. 50 0 0 Oam ABU. Section 31, Block III., part of St. Clair Park Estate 0 0 35-2 70 0 0 70 0 0 70 0 0 70 0 0 Thames. Goldfields lease, Sections 1-3, Te Aroha 220 0 0 220 0 0 530 0 0 750 0 0 330 0 0 Timaru. Lots 13746 and 16378, Timaru 62 2 0 875 0 0 100 0 0 775 0 0 108 9 6 983 9 6 821 10 0 Waimate. Section 8, Studholme Junction Sections 1-3, High Street, Waimate... Sections 21 and 22, Studholme Junction 0 0 0 0 34 3 0 2 0 25 0 0 25 0 0 15 0 0 25 0 0 25 0 0 15 0 0 29 0 0 5 0 0 19 0 0 54 0 0 30 0 0 34 0 0 10 0 0 28 0 0 6 0 0 Auckland. 107 0 0 53 10 0 133 14 4 289 6 9 53 10 0 133 14 4 289 6 9 53 10 0* 133 14 4* 289 6 9* Section 23, Huia ... Sales scrap-iron, Onehunga Ironworks Sales scrap-iron and steam-hammer, Onehunga Ironworks Fencourt and other properties, loss by fire, payment by Insurance Company Onehunga Ironworks, plant sold 53 10 0 133 14 4 289 6 9 90 0 0 90 0 0 90 0 0 90 0 0* 36 7 4 36 7 4 36 7 4 36 7 4* 63,337 12 5 27,391 9 2 35,946 3 3 1,277 12 2 4,243 6 6 1,277 12 2 66,303 6 9 65,620 4 8 Deficiency on book cost Plus realisation expenses ... Deficiency on forced sale of sheep at Carnarvon, consequent on sale of property 2,965 14 4 319 3 0 1,302 0 6 £4,586 17 10 Deficiency on latest valuation Plus realisation expenses and loss on Carnarvon sheep, as above 2,282 11 10 : 1,621 3 6 * Sales marked thus (*) include only portions of properties valued as a whole. Surpluses or deficiencies cannot therefore be shown until final realisation. Valuations are therefore shown meantime at sale price. £3,903 15 4
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171
Realisations from 31st March, 1896, to 18th July, 1896.
24—1. 6.
The sales of properties from 31st March, 1895, to 31st March, 1896, amount to £63,337 12s. 3d. On this there is an ascertained deficiency on book-values of £2,965 14s. 4d., and on latest valuation of £2,282 lis. lOd. ; but in cases where only portions of properties (which have been valued as a whole) have been sold (such as Carnarvon), no surpluses or deficiencies are shown, as they are only ascertained when the whole of the property is disposed of. Carnarvon : Estimated loss on final realisation— on land, £3,000 ; on stock, £1,302 : total, £4,302. Sales of Arowhenua and Albury Estates and Middleton property (Christchurch), not yet completed, therefore not shown above. Memo.—In cases where book-cost or latest valuation is not shown, the sales comprise only portions of properties which have been valued as a whole ; surpluses or deficiencies, consequently cannot be shown, The net deficiencies as shown are therefore only on property where the separate valuations are ascertained.
Dependency. Area. Property. Sale Price. Payments on Account. Balance. Surplus. Deficiency. Book-cost. Latest Valuation: Land Tax + 10'/*. Auckland A. R. p. Lot 11, Section 27, Surrey Hills .. .! Lots 16 and 17, Kohukohu Lot 4, Section 66, Surrey Hills Lot 36, Section 7, Surrey Hills .. Sections D and E, Allotment 49, Warkworth Lot 43, Section 10, Suburbs of Auckland Part Allotment 9, Huia, 15 acres Lots 35 and 91, Manakau Section 7a, Waipareira Onehunga Ironworks, sale of bolts" Lots 15 and 21, and centre Section 27, Surrey Hills Lot 10, Town Acre 480, Boulcott Street ' .. Section 266, Taratahi, part of Kakare Estate Section 17, part 9, part of Carnarvon Estate Section 2, part Town Acre 480, Wellington Terrace Allotment 1, part Section 480, Boulcott Street .. Part Section 3, Carnarvon Lots 6-8, part Rural Section 133, Aickman's Road Part Rural Sections 885, 1659, Hornby.. Section 323, Waimate, with store Section 42, Block XX., Filleul Street .. Section 29, Block III., St. Clair Tuapeka West Farm Section 20, Block XXIX. Frankley Road Tannery, part Lot 22, Fitzroy .. Section 7, Block II. . . £ s. d. £ s. d. 220 0 0 20 0 0 7 0 0 7 0 0 190 0 0 90 0 0 70 0 0 10 0 0 45 0 0 5 0 0 500 0 0 100 0 0 15 0 0 15 0 0 150 0 0 25 0 0 266 0 0 i 66 0 0 3 8 0 3 8 0 500 0 0 1,250 0 0 250 0 0 200 0 0 50 0 0 .. 3,386 10: 100 0 0 .. i 500 0 0 25 0 0 500 0 0 1,950 0 0 I 50 0 0 106 0 0 15 0 0 1,400 0 0 1,400 0 0 1,000 0 0 50 0 0 62 10 0 62 10 0 100 0 0 2,300 0 0 300 0 0 100 0 0 25 0 0 .. j 500 0 0 : .. j 70 0 0 £ s. d. £ s. d. 200 0 0 100 0 0 60 0 0 i. 40 0 0 400 0 0 £ s. d. £ s. d. £ a. d. 65 0 0 110 0 0 lio' 0 0 500 0 0 500 0 0 7 2 0 15 "0 0 498 0 0 125 0 0 '.'. 200 0 0 Wellington Christchurch Wairnate Dunedin 0 0 25-1 42 0 0 520 3 29 300 0 0 0 1 21 96 3 3 0 0 39 500 0 0 1,000 0 0 150 0 0 3,286 10 475 0 0 500 0 0 : 1,900 0 0 91 0 0 950 0 0 20 '6 0 I 100 0 0 .. j 2,000 0 0 75 0 0 500 0 0' 50 0 0 70 0 0 ! 70 0 0 12,722 1 0 i 140 0 0 j 200 0 O-i 1,450 0 0 \ 1,320 0 0 91 0 0 i 591 0 0 66o' 0 0 591 0 0 660 0 0 5 18 0 : lli 18 0 220° '0 , 0 ! 1,400 0 0 1.280 0 0 980 0 0 957 0 0 62 10 0 716 0 0 3,016 0 0 | 2,882' 0 0 60 0 0 ; 160 0 0 99 0 0 450 0 0 495 0 0 88 0 0 1,137 18 0 | Lawrence Invercargill New Plymouth .. Winton 1,334' 3 28 15 0 0 0 10 15,390 19 0 ' 2,668 18 0 12,722 1 0 140 0 0 1,137 18 0 ! 140 0 0 5 .. .. .. 997 18 0 fuation .. .. .. 1,000 0 0 140 0 0 ! Net deficiency on book-cos Net deficiency on latest v£
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Particulars of Properties being purchased by Government.
EXHIBIT No. 19. [Handed in by Mr. Foster, 7th August, 1896.] AUCKLAND AGRICULTURAL COMPANY (LIMITED). Sketch Statement of Assets and Liabilities as at 31st March, 1895.
For Exhibits 20a, 20b, 20c, 20d, 20e, 20f, see Index and Exhibit No. 52.
EXHIBIT No. 20g. [Handed in by Hon. Mr. Seddon, 7th August, 1896.] The Assets Eealisation Board in Account with the Bank of New Zealand Estates Company. Debenture Settlement. £ s. d. £ s . _. To Purchase of properties in terms of By Amount claimed in excess of Mr. " Bank of New Zealand and Bank- Hean's valuation, and disallowed ing Act, 1895 ".. .. .. 2,731,706 0 0 for reasons stated in special auditors'report .. .. .. 54,507 0 0 Amount of value of sheep written up and disallowed for reasons stated in special auditors'report .. 83,380 0 0 137,887 0 0 Balance .. .. .. 2,593,819 0 0 2,731,706 0 0 2,731,706 0 0 Balance.. .. .. .. 2,593,819 0 0 Balance payable on adjustment, as Balance .. .. 2,603,976 7 3 per statement attached.. .. 10,157 7 3 £2,603,976 7 3 Total £2,603,976 7 3 Balance.. .. '.. ..£2,603,976 7 8
Cost. Latest Valuation. Sale Price (Approximate). Deficiency on Cost. Deficiency, Latest Valuation. I .rowhenua Ibury ... liddleton £ 41,621 72,108 7,300 £ 41,125 76,354 6,600 £ 29,000 65,778 5,500 £ 12,621 6,330 1,800 £ 12,125 10,576 1,100 121,029 124,079 100,278 20,751 23,801 l__
Assets. £ s. d. Ijiabilities. £ s. d. Stations, ftc.— Land and improvements .. .. 493,470 4 2 Stock and implements .. .. 73,195 3 3 Horse, stock feed, and grassseed, manure, and sundries on hand .. .. .. .. 4,302 0 7 General — Mortgages and agreements .-. £34,669 Ltess Pah mortgage (property being also shown as asset below) .. .. .. 28,490 6,179 0 0 Surrey Hills unpaid balances .. 3,743 16 0 Pah Estate and other properties taken over from Williamsons .. 28,708 2 4 Shares in various companies taken over from Williamsons .. 5,150 0 0 Funds in hands of trustees .. .. 21,414 12 8 Stations—Sundry creditors (Bank of New Zealand Estates Company, &c.) Accident Insurance Account.. Bank of New Zealand Cambridge Station Working Account Bank of New Zealand Ordinary Account .. .. Ditto No. 1 Account Debentures outstanding— Old issue New „ Accrued interest on debentures Sundry accounts held in suspense Share capital 4,645 15 10 42 4 2 13,012 19 5 .. 90,185 0 0 .. 90,968 3 5 4,950 0 0 .. 278,010 0 0 5,000 0 0 1,238 0 2 .. 148,110 2 0 £636,162 19 0 £636,162 19 0
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Statement of Adjustment between the Assets Eealisation Board and. the Bank of New Zealand Estates Company.for the Year ended 31st March, 1896. £ s. d. £ s. Cash received on account of lands sold, &c. 27,273 9 2 Disbursements from Ist April, 1895, to 31st Interest on amounts due by purchasers .. 427 10 9 March, 1896 .. .. .. 158,660 12 A Balanoes at credit of various estates with Balance payable on adjustment of freeholds 2,054 1 8 the Bank of New Zealand at 31st March, Balance payable on adjustment of other 1896 .. .. .. .. 6,775 19 5 properties .. .. .. .. 1,154 15 4 Reclamations on produce shipped to Lon- Realisation expenses .. .. .. 319 3 0 don .. .. .. .. 2,893 4 1 Calls paid on Thames Valley Land CornReceipts from Ist April, 1895, to 31st March, pany .. .. .. .. 6,439 1 0 1896 .. .. .. .. 122,678 3 2 Interest due on £2,593,819 worth of debenWool, frozen meat, &c, shipped to London 90,000 0 0 tures, at 3J per cent., for the six months Balance due by Assets Board to Bank of ended 30tn September, 1895 .. .. 45,391 16 8 New Zealand Estates Company .. 10,157 7 3 Interest on £45,391 16s. Bd., at 3i per cent., for the half-year ended 31st March, 1896 749 7 2 Interest on £2,593,819 worth of debentures, at 3J per cent., for the six months ended 31st March, 1896 .. .. .. 45,39116 8 £260,205 13 10 £-200,205 13 10
EXHIBIT No. 21. [Handed in by Hon. Mr. Seddon, 7th August, 1896.] Sir— Bank of New Zealand (Head Office), Wellington, 22nd August, 1895. As requested by you last night we have now the honour to submit herewith proposals for putting the. Bank of New Zealand into a sound position. We would respectfully direct your attention to the following necessary conditions to enable a bank carrying on such a large business as the Bank of New Zealand to maintain its position. 1. First-class credit of the institution is paramount, both to insure the confidence of depositors and to enable it to conduct the vast business connected with the trade and industry of the colony. 2. The removal of the incubus represented by the attachment of the Estates Company to the bank, which, under existing conditions, must appear in the bank's balance-sheet, and is properly a subject for attack and for injurious comments from opposing banking institutions both in and out of the colony. 3. The importance of the Government bank having the confidence of the financial discount houses in London. 4. The confidence of the shareholders of the institution, which, owing to the uncertainty of its financial position, must to some extent be weakened, and the good-will and active co-operation of a large body of shareholders in such a colonial institution is desirable. Under existing conditions we regret to say that many of the foregoing desirable conditions do not exist. The balance-sheets of the different institutions attached to the bank, which are in your possession, will, we apprehend, clearly demonstrate that on the 30th August next the placing before the shareholders of the true position of the institution would be certain to have a disastrous effect. In order to enable the bank to be rehabilitated, we would, after anxious and careful deliberation, submit the following proposals : — (1.) The capital of the bank is— £2,000,000 " A " stock, called capital, but in reality and effect a fixed loan on deposit; £900,000 in 100,000 shares of £5 ss. each; and 50,000 shares of £7 10s. each. Besides the above there is a call of one-third of the reserve liability, made 29th November, 1894, payable in three instalments, of which the last is due on 25th November next. This is estimated to produce £450,000. (2.) We propose that the £900,000 capital, and the proceeds of the call, estimated at £450,000 —total £1,350,000 —should be applied as follows : — £376,900 to writing off existing bad debts of the bank ; £200,000 to be put to a Contingency Fund, for writing off existing debts which may hereafter prove to be irrecoverable ; the balance, about £773,100 to writing down Estates Company shares in the bank's books, and to be applied in the books of the Estates Company in wiping off the deficiency against which no assets exist, and in writing down to the latest valuation all those assets other than the freehold properties in New Zealand, and stock and implements. (3.) In lieu of the £900,000 capital written off, and the reserve liability written off and otherwise applied, it will be necessary for the bank's credit to create £1,000,000 of fresh capital, and this, we would propose, should be done by the Government subscribing for that amount in preferred shares, to carry 3_ per cent, per anrrurn cumulative dividend on the amount paid up, payment to be made by the Government for these shares in Government securities bearing 3_ per cent, per annum, payable in London. It will not be necessary that the money for these shares should be paid into the bank at once, or that the whole of it should be paid at all, but that the shares should be subscribed for we consider absolutely necessary. We therefore suggest that payment for the shares should be made from time to time as agreed upon between the bank and the Government, and that the bank may from time to time repurchase these shares at a price equal to par value, with accrued interest.
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(4.) We would propose to create deferred shares amounting to £1,400,000, ranking pari passu with each other. These shares to be issued as fully paid up, free from further liability, and to be divided as follows :— £900,000, in 150,000 shares of £6 each, to be issued share for share to such of the present shareholders as pay up the first call of one-third the reserve liability. £500,000, in 50,000 shares of £10 each, to be held by the Assets Board, as hereinafter provided, against possible deficiency on realisation of freeholds in New Zealand and stock and implements. The dividends when earned to be payable on these deferred shares, but not without the consent of the Colonial Treasurer so long as the £2,000,000 " A " stock is outstanding. (5.) The ordinary shareholders of the bank are to remain liable for the whole of the reserve liability, and may not transfer the deferred shares without the sanction of the Board of the bank. (6.) All ordinary shares are to cease to carry dividends, and after the next half-yearly meeting any voting rights. (7.) The remaining two-thirds of reserve liability to be hypothecated to the Assets Board as security for deficiency, and to be called up as the Colonial Treasurer from time to time requires. (8.) The stations, with their stock and implements, and the other freehold properties in New Zealand, to be taken over by the Government at the present book-values at which they stand in the books of the Estates Company, and vested in a Board of Administration, to be called the Assets Board, and to consist of a Chairman and two directors to be appointed by the Government, and two directors to be appointed by the Bank of New Zealand. For these assets the Estates Company to receive from Government 3-J-per-cent. securities payable in London. (9.) The Assets Board are to administer and realise the assets taken over, and are to keep an account, putting on the one side, — (a.) The total cost; (b.) Interest payable on the securities given for the cost; (c.) Charges, outgoings, and expenditure of the Board. And on the other side, — (a.) All proceeds from realisations ; (b.) All income from the properties held, or other revenue ; (c.) Proceeds of further calls on reserve liability; (d.) Dividends on the £500,000 deferred shares ; (c.) Any balance of the £200,000 Contingency Fund not required to make good deficiencies on any present debts due to the bank. Any deficiency after realisation of properties is to be made good,— (a.) By proceeds from any remaining reserve liability of the bank's shareholders; and (b.) If, after that, a deficiency should still remain, by sale of so much of the £500,000 deferred shares as may be requisite. Any of the fifty thousand deferred shares not so required are to be cancelled, and any part of the Beserve Liability Fund not required is to be likewise cancelled. Any credit balance to the Eealisation Account to go to the redemption of " A " stock. (10.) The Government to have the appointment of one director of the bank in addition to the President so long as they hold preferred shares. (11.) In order to restore the bank's earning-power, the disability, so far as the purchase by the bank of the business of any other bank is concerned, caused by the Act of 1894 should be removed. This is, in our opinion, absolutely imperative. The bank should therefore be empowered to purchase the sound business and assets of any other bank carrying on business in the colony. With the increased burdens thrown upon the bank caused by the £2,000,000 of additional stock, and the readjustment of capital which is proposed herein, a very large addition to the bank's earningpower is essential. The only way in which this can be got, sufficient to enable the bank to make profits to pay its way and sustain its credit, is by the acquiring of the business of another institution. At present the banks of the colony are beyond the colony's resources to properly maintain. If the Bank of New Zealand—after rehabilitation—desired to obtain the necessary increase of business to enable it to carry on, it could only be done by cutting the rates in order to take accounts from existing institutions. Eetaliation on their part would be certain to follow, and the outcome of such a course would, in all probability, be that the earning-power of the bank could not be increased within a reasonable time to a sufficient extent to enable it to provide for its requirements. In any proposal for the purchase of another banking institution it would obviously be a condition that the responsibility for bad and doubtful debts would require to be borne by the selling institution. (12.) As a loss at the present time accrues to the bank through the investing of the largemun of £1,000,000 in Government or liquid securities in terms of clause 10 of " The Bank of New Zealand Share Guarantee Act, 1894," we would propose that this clause should be repealed, as being, under the reconstruction scheme, unnecessary. (13.) We have for several weeks given the various points of this scheme our most earnest attention and consideration, and have satisfied ourselves that no less help from the Government than the scheme requires will suffice to place the bank on a firm and secure footing ; but we are equally satisfied that if the scheme be carried out the bank will be at once placed in a secure position, and on a profit-earning basis, that no loss will ultimately accrue to the colony from the guarantee for the £2,000,000 stock, and that the deferred shares herein mentioned will earn 5 per cent, per annum dividend for the benefit of the shareholders and of the colony. We have, &c, W. Watson, President. Walter W. Johnston, \ Wm. Booth, ... Thos. G. Macarthy, Directors. M. Kennedy, ) The Hon C. C. Bowen, Chairman, Banking Committee.
1.-6.
EXHIBIT No. 22. [Handed in by Mr. Booth, 7th August, 1896.] Particulars of Colonial Bank Landed Property and Premises.
EXHIBIT No. 23. [Handed in by Mr. Booth, 7th August, 1896.] Particulars of Writings-off, 1895-96. Written off, 1895-96. Applied. £ s. d. £ £ s. d. Capital ... ... ••• 900,000 0 0 Call, 1895, to Estates Beserve Fund ... ... 45,000 0 0 Company Share AcCall, 1895, received to 13th count ... 441,206 July, 1896 ... ••• 441,206 0 0 Share capital to Profits ... ■•• ••• 7,031 11 5 Estates Company Profits ... ... £49,470 Share Account ... 323,100 And from suspense Accounts . 4,723 To Estates Company ... 764,306 0 0 . 54,193 0 0 Contingency Fund ... 171,136 General Contingency Account 62,480 18 8 Bad debts written off 542,316 Interest Suspense Account ... 3,720 5 10 Further, for March, Eecoveries ~ 105 6 3 1896 54,193 Consolidated Properties Acoount ... ... ... 4110 10 To bank ... ... .. 767,645 0 0 Eeserved Profit Account ... 17,968 8 0 Bad Debt Suspense Account 204 0 0 £1,531,951 1 0 £1,531,951 0 0 25—1. 6.
175
Place. Book-value. Since sold for Outgoings, Rates, &c. Gross Income per Annum. Auckland Arrow Balclutha Blenheim Bluff* Cambridge Christchurch Cromwell* Cromwell (late Bank of New Zealand) Dunback Dunedin ... ... ' Gore Hampden Invercargill Lawrence Marton Middlemarch Napier Nelson Nenthorn New Plymouth ... Normanby Oarnaru t Ophirt Oxford (Piako County) Palmerston (Otago) t Palmerston (residence) + ... Palmerston North Queenstown Eangiora Eeefton St. Bathans* Timaru Wanganui Wellington Westport J Wyndham £ s. d. 6,624 12 1 492 12 9 3,304 2 5 696 18 8 281 11 4 250 0 0 12,958 8 6 2,604 3 7 775 0 0 45 12 6 36,928 0 4 1,746 19 3 42 0 0 5,204 12 8 2,559 19 6 265 0 0 53 12 6 6,072 6 3 2,768 15 11 315 10 11 2,967 18 6 69 7 1 4,854 16 11 1,014 16 2 10 15 0 1,399 6 1 1,038 0 11 3,992 13 1 1,484 5 10 1,390 19 11 200 0 0 619 11 7 5,000 0 0 3,805 5 0 12,232 0 2 1,252 13 8 77 6 1 £ a. 250 0 1,009 0 25 0 d. 0 0 0 £ s. d. 239 6 8 15 *9 8 4 17 6 80 12 9 0 0 11 376 13 1 6 15 0 0 10 0 56 5 0 0 2 2 76 19 0 22 9 7 2 15 3 26 1 8 £ s. d. 572 0 0 13 0 0 39 0 0 962 0 0 84 10 0 39 0 0 208 0 0 80 0 0 20 16 0 3 "*0 0 188"lO 0 47 11 3 6 5 0 1,000 "o 0 0 16 8 18 15 0 340 0 0 3,003 15 3 65 0 0 116 5 2 11 1 8 90 16 6 125,399 15 2 5,381 11 9 1,109 13 0 2,611 16 0 • Now occupied by Bank of New Zealand for banking purposes. f Occur, banking premises—rest of premises let. J Will shortly be occupied by Ba purposes. Head Office, Bank of New Zealand, Wellington, 4th August, 1896. pied by Bank of I ank of New Zeal; Eiohd. W. G: Ac. few Zealand for tnd for banking 3BS, jountant.
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EXHIBIT No. 24 not feinted.
EXHIBIT No. 25. [Handed in by Mr. Booth, Bth August, 1896.] Writings-off, 1888-96. £ Total writings-off * ... ... ... ... ... ... 3,095,799 The various accounts comprised in the Consolidated Properties Account were, prior to the sale to the Estates Company, written £ down in 1889-90 by ... ... ... ... ... 1,195,231 Further writings-off took place in 1895-96, in the shape of reduction of Estates Company's share capital, amounting to ... ... 764,306 Total ... ... ... ... ... 1,959,537 Leaving balance written off other accounts ... ... ... £1,136,262 Of which £171,136 still remains to credit of the Contingency Fund Account. Eichard W. Gibbs, Accountant. Bank of New Zealand, Head Office, Wellington, 7th August, 1896.
EXHIBIT No. 26. [Handed in by Mr. G. Hutchison during examination of Mr. Booth, 12th August, 1896.J Mr. C. H. Mills. 'BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED) ASSETS SPECIAL EEALISATION. [Private Bile.] analysis. Title. Zealand, dispose of its property by a process Preamble. of lottery depending upon chance. 1. Short Title. 3. Consent of President and two Directors of Bank 2. The Directors may, with the consent of the Presi- of New Zealand to be conclusive. dent and two Directors of the Bank of New 4. Interpretation of " Directors."
A BILL INTITULED An Act to authorise the Bank of New Zealand Estates Company (Limited) to dispose of its Property in the Special Manner provided by this Act. WHEEEAS on the twenty-second day of July, one thousand eight hundred and ninety, a company (hereinafter referred to as " the Company ") was incorporated in Great Britain by the name of the Bank of New Zealand Estates Company (Limited), having for one of its principal objects the acquisition by purchase, either wholly or in part, of the lands, hereditaments, securities, undertakings, and assets of the Bank of New Zealand : And whereas the Company has acquired a large portion of such property, but cannot from a variety of causes dispose thereof or of its other property by the ordinary methods of realisation : And whereas the Company desires authority to realise its property in the special manner provided by this Act : Be it therefore enacted by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows : — 1. The Short title of this Act is "The Bank of New Zealand Estates Company (Limited) Assets Special Eealisation Act, 1895." 2. The Directors of the Company may, notwithstanding any Act or law or anything contained in the Company's memorandum or articles of association, from time to time, with the previous consent in writing of the President and two Directors of the Bank of New Zealand, divide the whole or any part of its real and personal property into lots or shares, of such values and proportions as they think fit, for the purpose of realising the same, and may adopt such mode or device depending upon or to be determined by lot, drawing, chance, or otherwise, as they think fit, for the purpose of such realisation, and may issue and sell tickets entitling the holders thereof respectively to a chance of acquiring any of such lots or shares, and may from time to time distribute, convey, transfer, and assign such property in pursuance of such mode or device : And the Directors may do, execute, and perform all such acts, deeds, instruments, matters, and things as they think necessary or conducive for the purpose of giving effect to the powers and authorities conferred by this Act; and the title of any person taking under any distribution, conveyance, transfer, assignment, or other instrument under this Act shall be good, valid, and effectual to all intents and purposes whatsoever. 3. The consent in writing of the President and two Directors of the Bank of New Zealand shall be conclusive evidence that the Directors of the Company are empowered to exercise the powers and authorities conferred by this Act. 4. For the purposes of this Act, the term " Directors " shall include the general attorneys of the Company in New Zealand, and any local Board of Directors of the Company in New Zealand.
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EXHIBIT No. 27. [Handed in by Mr. Booth, 12th August, 1896.: Dear Sir, or Madam, — Bank of New "Zealand, Wellington, 6th December, 1894. I enclose herewith notice of a call of £3 6s. Bd. per share of the reserve liability of shareholders, made in pursuance of clause 5 of " The Bank of New Zealand Share Guarantee Act, 1894." It is considered necessary to the welfare of the bank to call in and cancel one-half of the Bank of New Zealand Estates Company s_-per-cent. debentures, amounting at present to £1,500,000. The directors regret the necessity for this call, but they believe it to be in the true interests of the shareholders and conducive to the success of the bank. I am, &c, C. G. Andrews, Acting General Manager. Instalments will be received at any office of the Bank of New Zealand and remitted, free of charge, to the point where payable. Bank of New Zealand, Wellington, 6th December, 1894. Notice is hereby given that the Bank of New Zealand board of directors, in pursuance of section 5 of " The Bank of New Zealand Share Guarantee Act, 1894," have made a call of £3 6s. Bd. per share on all ordinary shares, as defined by " The Bank of New Zealand Share Guarantee Act, 1894," and that such call will be payable by three instalments at the office of the Bank of New Zealand in Wellington by shareholders on the colonial registers, and at the office of the Bank of New Zealand in London by shareholders on the London register : the first instalment of £1 2s. on Ist February, 1895; the second instalment of £1 2s. on Ist August, 1895; and the third instalment of £1 2s. Bd. on 25th November 1895. C. G. Andrews, Acting General Manager
EXHIBITS Nos. 28 and 29 not printed.
EXHIBIT No. 30. [Handed in by Mr. Booth on 16th August, 1896.] Bank of New Zealand Estates Company (Limited). "A."— Profit and Loss Account for the Year ending 31st March, 1896. Dr. £ s. d. Cr. £ s d To Balance, General Charges Account, "T" 8,532 15 4 By Balance General Revenue, "V" .. 15,266 7 3 Amount suspended on account of A. A. Balance Interest Account, "W" .. 6,157 410 Company's proportion of interest to Profits on trading concerns, "V" .. 33,243 17 11 be paid by Assets Realisation Board on value of properties purchased, "II" 16,842 3 11 54,667 10 0 25,374 19 3 Balance, profit .. .. 29,292 10 9 £54,667 10 0 Balance .. .. ..£29,292 10 9 W. C Cuff (p. Accountant)
EXHIBIT No. 31. [Handed in by Mr. Watson, 20th August, 1896.J Glasgow, Governor. To William Watson, Esquire. In exercise and pursuance of the powers and authorities vested in me by " The Bank of New Zealand Share Guarantee- Act, 1894," I, David, Earl of Glasgow, the Governor of the Colony of New Zealand, do hereby appoint you, William Watson, of Wellington, Esquire, to be President of the Board of Directors of the Bank of New Zealand, to hold the said office during good behaviour and efficiency, so long as such bank carries on the business of banking, and the liability of the colony exists in respect of the two million pounds sterling guaranteed under the said Act ; and I do require you to enter upon and duly discharge the duties of the said office in person, except only in case of sickness or other incapacity, or leave of absence first duly granted. Given under the hand of His Excellency the Eight Honourable David, Earl of Glasgow, &c, and issued under the Seal of the said Colony, at the Government House, at Wellington, this twelfth day of October, one thousand eight hundred and ninetyfour. (n.s.) J. G. Ward, Colonial Treasurer. Approved in Council. —J. F. Andrews, Acting Clerk of the Executive Council. —12th October, 1894.
EXHIBIT No. 32. Colonial Treasurer to President, Bank of New Zealand. . [Handed in by Mr. Watson, 20th August, 1896.] Sir,— Wellington, 12th October, 1894. I have now the pleasure to hand you herewith a warrant of appointment, under the hand of His Excellency the Governor, wherein you have been appointed President of the Bank of New Zealand, in terms of section 12 of "The Bank of New Zealand Share Guarantee Act, 1894." The appointment dates from the 6th instant, during good behaviour and efficiency ; and the salary is to be at the rate of £2,250 per annum, to be paid by the Bank of New Zealand.
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You will understand that, as the appointment has been made entirely in connection with the colony's guarantee of two millions to the bank, which said guarantee ceases at the expiration of ten years from the date of the issue of the guaranteed, stock, the Government do not in any way bind themselves to a continuance of the appointment after the expiration of the term of the beforementioned guarantee ; and of course your appointment will end should the statutory board of directors cease to exist. It is almost unnecessary for me to refer to what, in the opinion of the Government, your duties should be. Section 12 of the Act under which you are appointed recites that you '' shall have and shall exercise all the duties, powers, and responsibilities of a director, and shall also have the power to veto." It is in connection with this power of veto that the Government are most anxious that you should use the utmost discretion, so as to prevent any interference with the legitimate business of the bank. I also desire to draw your attention to section 15 of the Act, which provides that if, upon the report of the Auditor, confirmed by yourself, I shall be of opinion that the affairs of the bank are in any respect being improperly or unsafely conducted, it will be my duty to call the attention of the directors thereto. As the action of the Colonial Treasurer in such case must of necessity be guided by the opinion and advice you will be called upon to offer, I need hardly state that your first duty will be to see that the interests of the colony, as represented by their guarantee of two millions, are always safeguarded ; and it will be imperative upon yourself and co-directors to manage and conduct the affairs of the bank so that on the one hand the best interests of the shareholders shall be preserved, and on the other there shall be no danger of the State making any loss in respect of its guarantee. In case it becomes necessary to appoint a receiver, as provided by section 9 of the beforementioned Act, the duties of the board of directors will cease in the ordinary course, and your office as President of the board will thereupon be determined. I have, &c, William Watson, Esq., Bank of New Zealand, Wellington. J. G. Ward.
EXHIBIT No. 33. . . . [Handed in by Mr. Watson, 21st August, 1896.] General Manager's Office, Bank of New Zealand, (Memorandum.) Wellington, 18th August, 1896. Estimate of Value of Colonial Bank Business to Bank of New Zealand. In consequence of the peculiar and abnormal circumstances attending the business of the Bank of New Zealand during last year it is an impossibility to arrive at the value of the Colonial Bank acquisition by any comparison of profit and loss figures during that period. Consequently, it is difficult to give an estimate of the value of the Colonial Bank business on these lines, and I am forced to fall back upon the less satisfactory estimate based upon various figures absorbed by us in the purchase. This I have done, and the result is much the same as that made known to you on a previous occasion, based upon a three months' comparative estimate of profit and loss. I may here say that I have attempted at various times to arrive at what would be considered a reasonable estimate, for my own satisfaction, —without any knowledge that I should at any time be required to make public my own views on the question,—and with practically little variation in the result. In arriving at my estimate, I have made no allowance for the very small percentage of business which was shown to have gone from us, a percentage, I believe, very much below the estimate of loss made by various parties. On the other hand, in connection with the revival of business in many parts, through mining and other activity, I have not taken into account that portion of business which would naturally have gone to the Colonial Bank, but in which we participate in consequence of the purchase. Neither have I made any allowance for the somewhat keen competition which has been removed by the purchase. In view of the general tendency to the lowering of advance rates, I think I have exercised due care in not overstating the profit on the advances; and I might, perhaps, have taken some credit for the acquisition of considerable deposits, which will doubtless be retained at reduced interest—but have not done so. These are questions which, doubtless, fell to be fully considered in the fixing of the value of the good-will. I have, consequently, dealt with the figures as they stand, after making due allowance for accounts in the "B" list, a proportion only of which can be considered as profit-earning, seeing that many of them may be forced into liquidation, and others driven elsewhere. I have not been unduly pessimistic, and have striven to avoid anything tending to the opposite view of the situation. Without going into details, after looking at the question from various standpoints, I still consider £26,000 as a reasonable estimate. The President, Bank of New Zealand. Bichard W. Gibbs, Accountant.
EXHIBIT No. 34. [Handed in by Mr. Watson, 21st August, 1896.] Bank of New Zealand, Head Office, Wellington, 20th August, 1896. Percentage of Cost of Management to Gross Earnings for Half-years as under :— Per Cent. 31st March, 1896 ... ... ... ... ... 58-02 30th September, 1895 ~, ~. ... ... ... 73-54 Bichard W. Gibbs, Accountant.
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EXHIBIT No. 35. [Handed in by Mr. Foster,. 17th August, 1896.] Deae Sib, —- As requested in your favour of the 11th instant, I now hand you book of station balance-sheets at 31st March, 1896, which you will observe contains two of each station. The first, marked " A," as you will observe by note on front page, shows the Capital Accounts with amount paid in excess of Mr. Hean's valuation (£54,507), distributed pro rata over the various stations, and referred to in special auditors' report. The other, marked " B," shows the Capital Accounts excluding the amount referred to. As this set of balance-sheets is our office record, we shall be glad to have them returned as soon as possible. Yours, &c, Walteb G. Fosteb, The Chairman, Banking Committee, House of Bepresentatives, Colonial Manager. Wellington.
STATIONS BALANCE-SHEETS AND PROFIT AND LOSS ACCOUNTS, FOR THE YEAR ENDING 31st MARCH, 1896. [Balance-sheets marked " A " show positions of station Capital Accounts with proportion of amount paid in excess of Mr. Hean's valuation (£54,507) distributed pro rata oyer the various stations. "B" show positions of Capital Accounts excluding distribution of amount paid in excess of Mr. Hean's valuation (£54,507).] A AWAMATE ESTATE. Deduct adjustment in valua- £ s. d. £ s. d. Balance-sheet fob the Year endino 31st March, 1896. tion ', and implements, decrease.. .. .. 1,401 13 0 Cost at 31st March, 1895— £ s. d. £ s. d. __! , Land and improvements .. .. 22,733 13 2 Sundries 27 026 1 5 Live-stock .. .. .. '5,178 19 2 Estimated value of wool-clip, Implements .. .. .. 39C 0 0 1895-96 .. .. .. 1,508 0 0 Proportion of amount paid Turnips and stock-feed on in excess of Mr. Hean's hand 356 1 8 valuation _.. .. .. 803 0 0 Improvement Suspense Ac- " ~ count .. .. .. 342 0 0 Ada 29,105 12 4 Sundry material and seed on Permanent improvements hand 116 11 1 effected during year .. .. 51 0 0 Accounts outstanding '.'. '.'. 30 0 Land purchased .. .. 74 2 1 Adjustment with Estates 77 Company .. .. .. 15 19 11 29,230 i 4 5 Due by capital on account Deduct adjustment in valua- improvements and land tion, live-stock, decrease .. .. 1,401 13 0 purchased 90 15 11 7 ~ Station Adjustment Account, 27,829 1 o being bank balance at Sundries— 31gt March, 1896, provided Estimatedvalue 1896w001-clip .. 1,508 0 0 for by debentures 1 515 7 4 Turnips and stock-feed on hand .. 356 1 8 Due by capital on account Improvement Suspense Ac- adjustment of stock .. 1,40113 0 count . ,• • , • • • • 342 0 0 Balance of Profit and Loss Sundry material and seed on .. Account 484 11 9 hand • • • • • • 116 11 1 Cost at 31st March, is9o— Accounts outstanding .. .. 3 0 0 Land and improvements .. 22,858 15 3 Adjustment with Estates .. Live-stock .. .. 2,594 5 0 Company .. .. .. 15 19 11 Implements .. .. 377 0 0 Due by capital on account Stock Adjustment Account.. 1,196 1 2 of improvements and land purchased . .. .. 90 15 11 £29,943 1 9 29,943 1 9 Station Adjustment Account, being balance Bank Account at 31st March, 1896, provided for by debentures 1,515 7 4 Due to capital on account of AWAMATF PHTATW adjustment of stock .. 1,40113 0 AWAMAIE ESTATE. Profit and Loss Account Profit and Loss Account for the Year ending 31st balance .. 484 11 9 March, 1896. Cost at 31st March, 1890— ' £ s. d. £ s. d. Land and improvements .. 23,66115 3 To Implements, depreciation.. 20 4 0 Live-stock .. .. 2,594 5 0 Sheep .. .. 833 19 3 Implements .. .. 377 0 0 Rent .. .. 124 12 7 Stock Adjustment Account.. 1,196 1 2 Turnips .. .. 126 0 6 : Pigs .. .. 19 0 £30,746 1 9 30,746 1 9 Interest .. .. 42 16 4 Repairs Account .. 96 17 6 General expenses .. 102 4 10 Wages .. .. 565 9 9 Improvement Suspense, 20 -R AWAMAW WSTATW per cent, depreciation .. 85 9 3 8.-AWAMATE ESTATE. , By Ad j ustment with Esta tes Balance-sheet for the Year ending 31st March, 1896. Company .. .. .. 15 19 11 Cost at 31st March, 1895— £ s. d. £ s. d. j Cattle .. .. .. 53 15 0 Land and improvements .. .. 22,733 13 2 I Horses .. .. .. 10 0 Live-stock .. .. .. 5,178 19 2 | Wool .. .. .. 1,405 9 1 Implements .. .. .. 390 0 0 Horse- and stock-feed .. .. 32 13 3 Material Account .. .. 5 14 0 Add— 28,302 12 4 Permanent improvements 1,514 11 3 effected during year .. .. 51 0 0 Loss ~ .. .. 484 11 9 Land purchased .. .. 74 2 1 ■ £1,999 3 0 1,999 3 0 28,427 14 5 T . ,t
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A.—BEERESCOURT ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 2,430 0 6 Live-stock .. .. .. 607 12 0 Implements .. .. .. 114 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 90 0 0 3,241 12 0 Deduct adjustment of stock at 31st March, 1896, decrease.. .. 164 8 0 3,077 4 6 Sundries — Estimated value, frozen mutton unsold .. .. ■ • 49 0 0 Turnips and stock-feed on hand .. •. • • 47 10 0 Sundry material and seed on hand .. .. •• 3 06 Accounts outstanding .. .. 8 6 6 Adjustment with Estates Company .. .. • ■ 4 4 8 Station Adjustment Account, being bank balance at 31st March, provided for by debentures .. .• 65 18 6 Due to Capital Account, decrease in stock and implements .. .. 164 8 0 Balance, Profit and Loss Account .. •• •• 118 4 10 Cost at 31st March, 1896— Land and improvements .. 2, 520 0 6 Stock .. ■■ 415 6 0 Implements .. .. 129 6 0 Stock Adjustment Account 12 12 0 £3,307 11 0 £3,307 11 0 B.—BEERESCOURT ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 2, 430 0 6 Live stock ' .. .. .. 607 12 0 Implements .. .. .. 114 0 0 3,151 12 6 Deduct adjustment of stock at 31st March, 1896, decrease.. .. 164 8 0 2,987 4 6 Sundries — Estimated value of frozen mutton unsold .. .. 49 0 0 Turnips and stock-feed on hand .. .. •• 47 10 0 Sundry material and seed on hand .. •• •• 3 0 6 Accounts outstanding .. .. 8 6 6 Adjustment with Estates Company .. .. • ■ 4 4 8 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures ... 65 18 6 Due to capital on account decrease in stock and implements . • ■ • 164 8 0 Balance, Profit and Loss Account .. •• •• H8 4 10 Cost at 31st March, 1896— Land and improvements .. 2, 430 0 6 Stock .. •• 415 6 0 Implements .. . ■ 129 6 0 Stock Adjustment Account 12 12 0 £3,217 11 0 £3,217 11 0 BEERESCOURT ESTATE. Profit and Loss Account fob the year ending 31st March, 1896. £ s. d. £ s. d. To Implements, depreciation .. 6 14 6 Pigs .. •• 4 11 9 Repairs .. • • 13 2 9 Turnips .. • • 37 6 2
£ s. d. £ s. d. To Wages .. .. 103 18 4 Interest .. .. 6 17 5 Horse- and stock-feed .. 38 4 8 General expenses .. 21 2 0 Grassing .. .. 19 3 5 By Adjustment with Estates Company .. .. • • 4 4 8 Sheep .. .. • • 40 911 Cattle .. .. •. 28 17 0 Horses .. .. •• 9 10 0 Wool .. .. • ■ 49 5 7 Rent .. .. •• 0 9 0 Loss .. .. • • 118 410 £251 1 0 £251 1 0 A.—CARNARVON ESTATE. Balance-sheet for the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 50,453 18 6 Stock .. .. .. .. 10,959 7 9 Implements .. .. .. 330 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 1,752 0 0 Add— 03,495 6 3 Improvement Suspense Account at 31st March, 1896 .. 941 17 6 Permanent improvements effected during year .. .. 106 0 0 Deduct- 04,543 3 9 Loss on sheep at clearing sale transferred to Realisation Adjustment Account .. 1,302 0 6 Adjustment of stock and implements at 31st March, 1896, decrease .. 5,406 1 6 Land sold .. .. 35,742 13 7 42,450 15 7 Sundries- 22,092 8 2 Estimated value of — Wool-clip, 1895-96 .. •■ 2,678 0 0 Frozen mutton unsold .. .. 215 0 0 Turnips and stock-feed on hand .. .. •■ 156 0 0 Material and seed on hand .. .. 59 10 0 Accounts outstanding ~ .. 186 10 2 Petty cash .. .. .. 0 17 4 Adjustment with Estates Company .. .. .. 30 7 6 Station Adjustment Account, bank balance, 31st March, 1896 ... .. ■• 4,331 8 6 Due by capital on account of improvements and Improvement Suspense Account .. .. •• 1,047 17 6 Due to capital, decrease in stock and implements .. 5,406 1 6 Balance, Profit and Loss Account .. .. 3,299 9 6 Cost at 31st March, 1896— Land and improvements .. 17,511 2 5 Live-stock .. .. 1,063 17 6 Implements .. .. 161 0 0 Stock Adjustment Account 3,356 8 3 £30,797 19 2 £30,797 19 2 B.—CARNARVON ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 50,453 18 6 Stock .. .. •- 10,959 7 9 Implements .. .. . • 330 0 0 Add— 61,743 6 3 Improvement Suspense Account at 31st March, 1896 .. 941 17 6 Permanent improvements effected during year .. .. 106 0 0 62,791 3 9
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Deduct— £ s. d. £ s. d. Loss on sheep at clearing sale transferred to Realisation Adjustment Account .. 1,302 0 6 Adjustment of stock and implements at 31st March, 1896, decrease .. 5,406 1 6 Land sold .. .. 35,742 13 7 — 42,450 15 7 Sundries— 20,340 8 2 Estimated value of— Wool-clip, 1895-96 .. .. 2,678 0 0 Frozen mutton unsold .. .. 215 0 0 Turnips and stock-feed on hand .. .. .. 156 0 0 Material and seed on hand .. .. 59 10 0 Accounts outstanding .. .. 186 10 2 Petty cash .. .. .. 0 17 4 Adjustment with Estates Company .. .. .. 30 7 6 Station Adjustment Account, bank balance, 31st March, 1896 .. .. .. 4,331 8 6 Due by capital on account of improvements and Improvement Suspense Account .. .. .. 1,047 17 6 Due to capital on account of decrease in stock and implements .. .. 5,406 1 6 Balance, Profit and Loss Aocount .. .. 3,299 9 6 Cost at 31st March, 1896— Land and improvements .. 15,759 2 5 Live-stock. .. .. 1,063 17 6 Implements .. .. 161 0 0 Stock Adjustment Account.. 3,356 8 3 £29,045 19 2 29,045 19 2 CARNARVON ESTATE. Profit and Loss Account fob the Yeab ending 31st March, 1896. £ s. d. £ s. d. To Implements, depreciation .. 133 1 9 Cattle .. .. 53 0 3 Pigs .. .. 2 10 0 Turnips .. .. 343 5 6 Repairs .. .. 144 3 2 General expenses .. 292 14 3 Wages .. .. 415 18 1 Material Account .. 5 0 0 Stock- and horse-feed .. 305 16 0 Improvement Suspense Account, 20 per cent, depreciation .. .. 50 15 8 By Sheep .. .. .. 2,473 11 2 Horses .. .. .. 36 8 3 Wool .. .. .. 2,4.12 12 9 Interest .. .. .. 6 5 10 Rent - .. .. .. 99 16 8 Adjustment with Estates Company .. .. .. 16 19 6 Profit .. .. 3,299 9 6 £5,045 14 2 5,045 14 2 A.-KAKARE ESTATE. Balance-sheet foe the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 6,750 13 7 Live-stock ' .'. .. .. 1,385 10 0 Implements .. .. .. 137 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 234 0 0 Add— 8,507 3 7 Permanent improvements effected during year .. .. 277 16 0 Adjustment of stock and implements at 31st March, 1896, increase .. ~ 71 10 6 8,856 10 1 Deduct land sold .. .. .. 600 0 0 8,256 10 1
Sundries— £ s. d. £ s. d. Estimated value of— Wool-clip, 1895-96 .. .. 256 0 0 Frozen mutton unsold .. .. 112 0 0 Turnips and stock-feed on hand .. .. .. 228 13 5 Material and seed on hand.. .. 30 0 0 Improvement Suspense Account .. .. .. 332 0 0 Accounts outstanding .. .. 213 4 8 Due by capital on account adjustment of stock and implements at 31st March, 1896, increase.. .. .. 71 10 6 Due by capital on account permanent improvements .. 277 16 0 Station Adjustment Aocount, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,284 011 Balance, Profit and Loss Account .. .. 237 3 8 Cost at 31st March, 1896— Land and improvements .. 6,662 9 7 Live-stock .. .. 967 14 6 Implements .. .. 129 7 0 Stock Adjustment Account 496 19 0 £9,777 14 8 9,777 14 8 B.—KAKARE ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 6,750 13 7 Live-stock .. .. .. 1,385 10 0 Implements .. .. .. 137 0 0 Add— 8,273 3 7 Permanent improvements effected during the year .. .. 277 16 0 Adjustment of stock and implements at 31st March, 1896, increase .. .. 71 10 6 8,622 10 1 Deduct land sold .. .. .. 600 0 0 8,022 10 1 Sundries — Estimated value of— Wool-clip, 1895-96 .. .. 256 0 0 Frozen mutton unsold .. .. 112 0 0 Turnips and stock-feed on hand .. .. .. 228 13 5 Material and seed on hand.. .. 30 0 0 Improvement Suspense Account ... .. .. 332 0 0 Accounts outstanding .. .. 213 4 8 Due by capital on account adjustment of stock and implements at 31st March, 1896 .. .. .. 71 10 6 Due by capital on account permanent improvements .. 277 16 0 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,284 0 11 Balance Profit and Loss Account .. .. 237 3 8 Cost at 31st March, 1896— Land and improvements .. 6,428 9 7 Live-stock .. .. 967 14 6 Implements .. .. 129 7 0 Stock Adjustment Aocount 496 19 0 £9,543 14 8 9,543 14 8 KAKARE ESTATE. Profit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation.. 9 17 9 Horses .. .. 0 19 4 Wages .. .. 180 15 4 General expenses .. 52 2 6 Repairs Account .. 32 14 6 Horse- and stock-feed .. 49 14 0
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£ s. d. £ s. d. To Interest .. .. 39 8 1 Turnips .. .. 143 0 1 Improvement Suspense, 20 per cent, depreciation .. 82 17 1 By Sheep .. .. .. 389 7 8 Wool .. .. .. 424 0 5 Cattle .. .. .. 4 15 0 Material .. .. .. 10 9 3 Profit .. .. 237 3 8 £828 12 4 828 12 4 A.—LOCKERBIE ESTATE. Balance-sheet foe the Yeab ending 31st Maech, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 83,240 16 8 Stock .. .. .. 17,339 7 0 Implements .. .. .. 923 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 2,883 0 0 104,386 3 8 Add improvements effected during the year .. .. .. 187 7 1 104,573 10 9 Deduct— Adjustment of stock at 31st March, 1896, decrease .. 4,281 0 0 Land sold- '.. .. 393 11 3 . 4,674 11 3 99,898 19 6 Sundries— Estimated value of— Wool-clip, 1895-96 .. .. 5,058 0 0 Frozen mutton unsold .. .. 617 0 0 Sheep boiled down .. .. 75 0 0 Turnips and stock-feed on hand .. .. .. 1,589 3 5 Material and seed on hand.. .. 133 13 3 Improvement Suspense Account .. .. .. 1,222 0 0 Accounts outstanding .. .. 81 4 6 Adjustment with Estates Company .. .. 119 6 1,343 11 5 Due by capital on account improvements .. .. 187 7 1 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,920 7 2 Due to capital for adjustment of stock and implements.. 4,281 0 0 Balance, Profit and Loss Account .. .. 1,103 13 0 Cost at 31st March, 1896— Land and improvements .. 85,917 12 6 Live-stock .. .. 10,801 0 0 Implements .. .. 900 0 0 Stock Adjustment Account.. 2,280 7 0 £110,205 19 2 110,205 19 2 B.- LOCKERBIE ESTATE. Balance-sheet foe the Yeae ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 83,240 16 8 Stock .. .. .. 17,339 7 0 Implements .. .. .. 923 0 0 Add improvements effected 101,503 3 8 during year .. .. .. 187 7 1 101,690 10 9 Deduct— Adjustment of stock and implements at 31st March, 1896, decrease.. .. 4,281 0 0 Land sold .. .. 393 11 3 4,674 11 8 97,015 19 6
£ s. d. £ s. d. Sundries— Estimated value of— Wool-clip, 1895-96 .. .. 5,058 0 0 Frozen mutton unsold .. .. 617 0 0 Sheep boiled down .. .. 75 0 0 Turnips and stock-feed on ' hand .. .. .. 1,589 3 5 Material and seed on hand.. .. 133 13 3 Improvement Suspense Account .. .. .. 1,222 0 0 Accounts outstanding .. .. 81 4 6 Adjustment with Estates Company .. .. 119 6 1,343 11 5 Due by capital on account improvements .. .. 187 7 1 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,920 7 2 Due to capital for adjustment of stock and implements.. 4,281 0 0 Balance, Profit and Loss Account .. .. 1,103 13 0 Cost at 31st March, 1896— Land and improvements .. 83,034 12 6 Live-stock .. .. 10,801 0 0 Implements .. .. 900 0 0 Stock Adjustment Account.. 2,280 7 0 £107,322 19 2 107,322 19 2 LOCKERBIE ESTATE. Profit and Loss Account for the Yeab ending 31st March, 1896. To Improvement Suspense, 20 £ s. d. £ s. d. per cent, depreciation .. 317 10 11 Implements, depreciation .. 32 2 3 Sheep .. .. 1,238 4 2 Horses .. .. 40 18 4 Turnips .. .. 1,263 8 1 Wages .. .. 1,105 11 8 General expenses .. 308 1 8 Repairs Account .. 181 310 Interest .. .. 190 14 2 Rent .. .. 130 0 8 By Cattle .. .. .. 682 9 5 Wool .. .. .. 4,506 10 10 Horse- and stock-feed .. .. 528 7 4 Flax .. .. .. 54 9 9 Adjustment with Estates Company .. .. .. 102 18 2 Material Account .. .. 36 13 3 Profit .. .. 1,103 13 0 £5,911 8 9 £5,911 8 9 A.—MANGATORO ESTATE. Balance-sheet fob the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 163,687 0 0 Live-stock .. .. .. 25,034 7 10 Implements .. .. .. 814 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 5,375 0 0 194,910 7 10 Add— Land purchased .. .. 5,554 8 8 Permanent improvements effected during year .. .. 1,260 7 5 201,731 3 11 Deduct adjustment of stock and implements at 31st March, 1896 .. .. .. 450 14 4 201,280 9 7 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 8,707 0 0 Turnips and stock-feed on hand .. .. .. 1,504 18 1 Material and seed on hand .. 243 7 2 Improvement Suspense Account .. .. .. 1,570 0 0 Accounts outstanding .. 228 511 1,174 7 1
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Adjustment with Estates £ s. d. £ s. d. Company .. .. 119 14 4 44 1 7 Petty cash .. .. .. 0 19 0 Due by capital on account of permanent improvements .. 1,266 7 5 Due by capital on account of land purchased .. .. 45 9 10 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 8,286 7 9 Due to capital on account of adjustment of stock and implements .. .. 450 14 4 Balance, Profit and Loss Account .. .. 5,471 710 Cost at 31st March, 1896Land and improvements ..175,882 16 1 Live-stock .. .. 19,114 1 0 Implements .. .. 867 1 8 Stock Adjustment Account.. 5,416 10 10 £215,836 19 9 215,836 19 9 B.—MANGATORO ESTATE. Balance-sheet fob the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 163,687 0 0 Live-stock .. .. .. 25,034 7 10 Implements .. .. .. 814 0 0 189,535 7 10 Add— Land purchased .. .. 5,554 8 8 Permanent improvements effected during year .. .. 1,266 7 5 196,356 3 11 Deduct adjustment of stock and implements at 31st March, 1896 .. .. .. 450 14 4 195,905 9 7 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 8,707 0 0 Turnips and stock-feed on hand. .. .. .. 1,504 18 1 Material and seed on hand.. .. 243 7 2 Improvement Suspense Account .. .. .. 1,570 0 0 Accounts outstanding .. 228 511 1,174 7 1 Adjustmeut with Estates Company .. .. 119 14 4 44 1 7 Petty cash .. .. .. 019 0 Due by capital on account permanent improvements .. 1, 266 7 5 Due by capital on account land purchased .. .. 45 9 10 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 8,286 7 9 Due to capital on account adjustment of stock and implements .. .. 450 14 4 Balance, Profit and Loss Account .. .. 5,471 710 Cost at 31st March, 1896— Land and improvements ..170,507 16 1 Live-stock .. .. 19,114 1 0 Implements .. .. 867 1 8 Stock Adjustment Account.. 5,416 10 10 £210,461 19 9 210,461 19 9 MANGATORO ESTATE. Peofit and Loss Account foe the Year ending 31st Maeoh, 1896. £ s. d. £ s. d. To Implements, depreciation .. 33 9 0 Horses .. •■ 98 7 6 Horse- and Stock-feed Account .. .. 21 15 0 General expenses .. 1,272 1 8 26—1. 6.
£. s. d. £ s. d. To Turnips .. .. 958 0 0 Wages .. .. 1,761 19 0 Repairs .. .. 160 5 6 Rent .. .. 188 13 8 Interest .. .. 212 17 1 Adjustment with Estates Company .. .. 119 14 4 Improvement Suspense Account, 20 per cent, depreciation .. .. 392 19 5 By Sheep .. .. .. 751 6 0 Cattle .. .. .. 1,093 17 0 Wool .. .. .. 8,825 7 0 Material Account .. .. 21 0 0 Profit .. .. 5,471 710 £10,691 10 0 10,691 10 0 A.—MATAMATA ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 152,769 5 3 Live-stock and implements .. 38,731 4 2 Sundry assets .. .. .. 9,214 1 11 200,714 11 4 Deduct— Land sold .. ~ 95 0 0 Transferred to Waharoa S.S. Account .. .. 4,582 811 Sundry assets as above .. 9,214 1 11 Adjustment of stock and implements at 31st March, 1896, decrease .. 3,719 5 4 17,610 16 2 183,103 15 2 Add Zealandia Milk Condensing Account, Apiary Account, transferred to Capital Account .. .. ~ 416 9 5 Sundries— Estimated value of — Wool-clip, 1895-96 .. .. 8,837 0 0 Frozen mutton unsold .. .. 1,646 0 0 Sheep boiled down ~ .. 79 0 0 Turnips and stock-feed on hand .. .. .. 6,370 16 4 Material and seed on hand.. .. 159 10 0 Improvement Suspense Account .. .. .. 2,616 0 0 Accounts outstanding .. .. 187 15 3 Petty cash .. .. .. 4 12 3 Adjustment with Estates Company ~ .. .. 1,785 18 7 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 2,091 6 4 Due to capital on account adjustment of stock and implements .. .. 3,719 5 4 Due to capital on account adjustment sundry assets 8,862 12 6 Balance of Profit and Loss Account .. .. 7,013 8 3 Cost at 31st March, 1896— Land and improvements 148,091 16 4 Stook and implements .. 30,737 5 0 Zealandia Milk - condensing Account and Apiary Account .. .. 416 9 5 Stock Adjustment Account.. 4,274 13 10 £205,206 17 0 205,206 17 0 B.—MATAMATA ESTATE. Balance-sheet foe the Yeae ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 147,233 5 3 Live-stock and implements .. . 38,731 4 2 Sundry assets .. .. .. 9,214 1 11 195,178 11 4
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184
£ s. d. £ s. d. Deduct— Land sold .. .. 95 0 0 Transferred to S.S. Waharoa Account .. .. 4,582 811 Sundry assets as above .. 9,214 1 11 Adjustment of stock and implements at 31st March, 1896, decrease .. 3,719 5 4 ■ 17,610 16 2 177,567 15 2 Add Zealandia Milk-condensing Account, Apiary Account, transferred to Capital Account .. .. ~ 416 9 5 Sundries— Estimated value of — Wool-clip, 1895-96 .. ~ 8,837 0 0 Frozen mutton unsold .. .. 1,646 0 0 Sheep boiled down .. .. 79 0 0 Turnips and stock-feed on hand .. .. .. - 6,370 16 4 Material and seed on hand .. 159 10 0 Improvement Suspense Account .. .. .. 2,616 0 0 Accounts outstanding .. .. 187 15 3 Petty cash .. .. .. 4 12 3 Adjustment with Estates Company .. .. .. 1,785 18 7 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 2,091 6 4 Due to capital on account adjustment stock and implements .. .. 3,719 5 4 Due to capital on account adjustment sundry assets .. 8,862 12 6 Balance of Profit and Loss Account .. .. 7,013 8 3 Cost at March, 1896— Land and improvements 142,555 16 4 Stock and implements .. 30,737 5 0 Zealandia Milk-condensing Account and Apiary Account .. .. 416 9 5 Stock Adjustment Account.. 4,274 13 10 £199,670 17 0 199,670 17 0 MATAMATA ESTATE. Pbofit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation.. 152 9 9 Horses .. .. 234 11 3 Sheep .. .. 868 16 7 Pigs .. ... ■ 18 0 Repairs .. .. 288 9 1 General expenses .. 681 17 9 Wages .. .. 2,331 8 8 Improvement Suspense, 20 per cent, depreciation .. 653 7 1 By Adjustment with Estates Company .. .. .. 47 14 4 Cattle .. .. ~ 2,387 3 9 Wool .. .. .. 7,886 15 3 Interest .. .. .. 48 3 0 Horse-and stock-feed .. .. 1,643 6 4 Rent .. .. .. 53 3 9 Material Account .. .. 159 10 0 Profit .. .. 7,013 8 3 £12,225 16 5 12,225 16 5 A.—MOTOA ESTATE. Balance-sheet fob the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 63,221 15 7 Live-stock .. .. .. 14,117 3 6 Implements .. .. .. 136 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 2,197 0 0 79,671 19 1
£ s. d. £ s. d. Add permanent improvements effected during the year .. .. 560 9 4 80,232 8 5 Deduct adjustment of stock and implements at March, 1896, decrease .. .. .. 1,103 17 0 ! 79,128 11 5 - Sundries— ! Improvement Suspense Account .. .. .. 348 0 0 Valuation of— Wool-clip, 1895 .. .. 956 0 0 i Frozen mutton unsold .. .. 748 0 0 Turnips and stock-feed on hand .. .. .. 322 19 6 I Material and seed on hand .. .. 115 6 8 i Accounts outstanding .. .. 1,828 4 3 i Petty cash on hand .. .. 0 5 0 Adjustment with Estates Company .. .. .. 103 4 8 i Due by capital on account permanent improvements .. 560 9 4 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,132 3 5 Due to capital on account adjustment of stock and implements .. .. 1,103 17 0 Balance, Profit and Loss Account .. .. 2,746 9 0 Cost at 31st March, 1896— Land and improvements .. 65,979 411 Live-stock .. .. 10,955 7 0 Implements .. .. 179 10 0 Stock Adjustment Account.. 2,014 9 6 £84,111 0 10 84,111 0 10 B.—MOTOA ESTATE. Balance-sheet fob the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 63,221 15 7 Live-stock .. .. .. 14,117 3 6 Implements .. .. .. 136 0 0 77,474 19 1 Add permanent improvements effected during year .. .. 560 9 4 78,035 8 5 Deduct adjustment of stock and implements at March, 1896, decrease .. .. .. 1,103 17 0 76,931 11 5 Sundries— Valuation of — Wool-clip, 1895-96 .. .. 956 0 0 Frozen mutton unsold .. .. 748 0 0 Turnips and stock-feed on hand .. .. .. 322 19 6 Material and seed on hand .. .. 115 6 8 Accounts outstanding .. .. 1,828 4 3 Petty cash .. ~ ~ 0 5 0 Improvement Suspense Account .. .. .. 348 0 0 Adjustment with Estates Company .. ~ .. 103 4 8 Due by capital on account permanent improvements ~ 560 9 4 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,182 3 5 Due to capital on account adjustment of stock and implements .. .. 1,103 17 0 Balance, Profit and Loss Account .. .. 2,746 9 0 Cost at 31st March, 1896— Land and improvements .. 63,782 411 Live-stock .. .. 10,955 7 0 Implements ~ .. 179 10 0 Stock Adjustment Account.. 2,014 9 6 £81,914 0 10 81,914 0 10
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MOTOA ESTATE. Profit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation .. 36 2 2 Horses ... .. 7 0 0 Wages .. .. 634 6 10 General expenses .. 430 7 1 Repairs .. .. 234 14 5 Improvement Suspense, 20 per cent, depreciation 87 18 5 Turnips .. .. 100 19 11 By Adjustment with Estates Company .. .. .. 51 2 0 Sheep .. .. .. 297 17 0 Cattle .. .. .. 1,219 18 5 Wool .. .. .. 2,513 17 11 Flax .. .. .. 132 13 9 Rent .. .. .. 7 0 0 Interest .. .. .. 2 0 10 Horse- and stock-feed .. .. 51 3 0 Material Account .. .. 2 4 11 Profit .. .. 2,746 9 0 £4,277 17 10 4,277 17 10 A.—PAPARAMU ESTATE. Balance-sheet fob the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. 31,270 12 11 Live-stock .. .. 7,867 1 0 Implements .. .. 367 0 0 Less— ■ - 39,504 13 11 J. Hume's equity .. 5,818 0 0 33,686 13 11 Add amount paid in excess of Mr. Hean's valuation .. .. 955 0 0 Deduct adjustment of stock and 34,641 13 11 implements at 31st March, 1896, decrease .. .. •• 1,187 4 0 Sundries- 33,454 9 11 Estimated value of— Wool-clip, 1895-96 .. .. 1,460 0 0 Frozen mutton unsold .. .. 252 0 0 Sheep boiled down .. .. 15 0 0 Turnips and stock-feed on hand .. •• •■ 902 2 10 Material-and seed on hand .. .. 48 10 0 Improvement Suspense Account .. •• •• 520 0 0 Accounts outstanding .. .. 133 18 0 Adjustment with Estates Company .. .. 9 0 7 196 18 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 2,366 10 3 Due to capital, decrease in stock and implements .. 1,187 4 0 Balance of Profit and Loss Account .. .. •• 34 5 10 3,562 14 10 Cost at 31st March, 1896— Land and improvements .. 32,225 12 11 Live-stock .. .. 6,028 5 0 Implements .. .. 360 0 0 Stock Adjustment Account.. 658 12 0 39,272 9 11 Less J. Hume's equity .. 5,818 0 0 33,454 9 11 £37,017 4 9 37,017 4 9 B.—PAPARAMU ESTATE. Balance-sheet fob the Year ending 31st Maboh, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. 31,270 12 11 .Live-stock .. .. 7,867 1 0 Implements .. .. 367 0 0 39,504 13 11 Less J. Hume's equity .. 5,818 0 0 — 33,686 13 11
£ s. d. £ s. d. Deduct adjustment of stock and implements at 31st March, 1896, decrease .. .. 1,187 4 0 Sundries— 32,499 9 11 Estimated value of— Wool-clip, 1895-96 .. .. 1,460 0 0 Frozen mutton unsold .. .. 252 0 0 Sheep boiled down .. .. 15 0 0 Turnips and stock-feed on hand .. .. .. 902 2 10 Material and seed on hand.. .. 48 10 0 Improvement Suspense Account .. .. .. 520 0 0 Accounts outstanding. .. .. 133 18 0 Adjustment with Estates Company .. .. 9 0 7 196 18 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 2,366 10 3 Due to capital on account of adjustment of stock and implements .. .. 1,187 4 0 Balance, Profit and Loss Account .. .. .. 34 5 10 3,562 14 10 Cost at 31st March, 1896— Land and improvements .. 31,270 12 11 Live-stock .. .. 6,028 5 0 Implements .. .. 360 0 0 Stock Adjustment Account.. 658 12 0 38,317 9 11 Less J. Hume's equity .. 5,818 0 0 32,499 9 11 £36,062 4 9 36,062 4 9 PAPARAMU ESTATE. Profit and Loss Account for the Year ending 31st March, 1896. £ s. d. £ a. d. To Implements, depreciation .. 7 0 0 Sheep .. .. 538 7 0 Horses .. .. 143 13 0 Wages .. .. 295 19 7 General expenses .. 90 12 9 Turnips .. .. 477 9 1 Interest .. ... 30 16 9 Horse-feed .. .. 0 12 3 Repairs .. .. 86 16 11 Improvement Suspense, 20 per cent, depreciation 130 1 7 By Cattle .. .. .. 368 9 9 Wool .. .. .. 1,325 14 9 Material Account .. .. 48 10 0 Adjustment with Estates Company .. .. .. 24 8 7 Loss .. .. .. 34 5 10 £1,801 811 1,801 811 A.—RANGIATEA ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 22,794 2 0 Live-stock .. .. .. 5,805 14 0 Implements .. .. .. 500 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 826 0 0 29,925 16 0 Deduct adjustment of stock and implements at 31st March, 1896, decrease .. .. .. 1,305 0 6 28,620 15 6 Sundries— Estimated value of— Wool-dip, 1895-96 .. .. 2,205 0 0 Frozen meat unsold .. .. 551 0 0 Sheep boiled down .. .-, 18 0 0
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186
£ s. d. £ s. d. Turnips and stock-feed on hand .. .. .. 450 10 0 Material and seed on hand.. .. 176 2 6 Improvement Suspense Account .. .. .. 249 0 0 Accounts outstanding .. .. 78 14 5 Adjustment with Estates Company .. .. .. 287 6 7 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. .. 1,956 4 8 Due to capital, decrease in stock and implements .. 1,305 0 6 Balance Profit and Loss Account .. .. 754 8 4 Cost at 31st March, 1896— Land and improvements .. 23,620 2 0 Live-stock .. .. 4,175 2 0 Implements .. .. 420 0 0 Stock Adjustment Account.. 405 11 6 £32,636 9 0 32,636 9 0 B.—RANGIATEA ESTATE. Balance-sheet fob the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 22,794 2 0 Live-stock .. .. .. 5,805 14 0 Implements .. .. .. 500 0 0 - • ' 29,099 16 0 Deduct adjustment of stock and implements at 31st March, 1896, decrease .. .. .. 1,305 0 6 27,794 15 6 Sundries— Estimated value of—■ Wool-clip, 1895-96 .. .. 2,205 0 0 Frozen meat unsold .. .. 551 0 0 Sheep boiled down .. .. 18 0 0 Turnips and stock-feed on hand .. .. .. 450 10 0 Material and seed on hand .. .. 176 2 6 Improvement Suspense Account .. .. .. 249 0 0 Accounts outstanding .. .. 78 14 5 Adjustment with Estates Company .. .. .. 287 6 7 Station Adjustment Aocount, , being bank balance at 31st March, 1896, provided for by debentures.. .. 1,956 4 8 Due to capital on account adjustment of stock and , implements .. .. 1,305 0 6 Balance, Profit and Loss Account .. .. 754 8 4 Cost at 31st March, 1896— , Land and improvements .. 22,794 2 0 Live-stock .. .. 4,175 2 0 Implements .. .. 420 0 0 Stock Adjustment Account.. 405 11 6 £31,810 9 0 31,810 9 0 RANGIATEA ESTATE. Profit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation .. 10 8 3 Sheep .. .. 39 3 1 Wages .. .. 382 7 1 General expenses .. 86 9 2 Repairs .. .. 132 6 6 Horses .. .. 40 10 3 Interest .. .. 49 5 2 Turnips .. .. 563 17 2 Improvement Suspense Account, 20 per cent, depreciation .. .. 62 1 11 By Horse- and stock-feed .. .. 35 8 7 Material Account .. .. 10 2 6 Rent .." .. .. 0 15 0 Cattle .. .. .. 5 16 9 Flax .. .. .. 10 18 10
£ s. d. £ s. d By Wool .. .. .. 2,034 10 4 Adjustment with Estates Company .. .. .. 23 411 Profit .. .. 754 8 4 £2,120 16 ii 2,120 16 11 A.—RANGIURU AND OHAUITI ESTATES. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 55,247 3 3 Live-stock .. .. .. 13,929 19 0 Implements .. ~ ~ 014 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 1,980 0 0 71,771 2 3 Add permanent improvements effected during year .. ~ 668 5 9 Deduct adjustment in valuation 72,439 8 0 of stock and implements at 31st March, decrease .. .. 1,698 16 0 70,740 12 0 Sundries— Turnips and stock - feed on .. 712 13 4 hand Material and seed on hand.. .. 28 0 0 Improvement Suspense Account .. .. ~ 526 0 0 Accounts outstanding .. .. 809 1 0 Adjustment with Estates Company .. .. .. 26 11 11 Due by capital on account of permanent improvements .. 668 5 9 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 10 11 1 Due to capital on account of adjustment of stock and implements .. .. 1,698 16 0 Balance Profit and Loss Account .. .. 1,061 411 Cost at 31st March, 1896— Land and improvements .. 57,895 9 0 Live-stock .. , .. 12,249 9 0 Implements .. ~ 595 14 0 £73,511 4 0 73,511 4 0 B.—RANGIURU AND OHAUITI ESTATES. Balance-sheet fob the Year ending 31st Maeoh, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 55,247 3 3 Live-stock .. .. .. 13,929 19 0 Implements .. .. .. 614 0 0 69,791 2 3 Add permanent improvements effected during year .. .. 668 5 9 70,459 8 0 Deduct adjustment in valuation of stock and implements at 31st March, 1896, decrease .. .. 1,698 16 0 Sundries— 68,760 12 0 Turnips and stock - feed on hand .. .. .. 712 13 4 Material and seed on hand.. .. 28 0 0 Improvement Suspense Account .. .. .. 526 0 0 Accounts outstanding .. .. 809 1 0 Adjustment with Estates Company .. .. .. 26 11 11 Due by capital on account of permanent improvements .. 668 5 9 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 10 11 1 Due to capital on account of adjustment of stock and implements ~ ~ 1,698 16 0
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£ s. d. £ s. d. Balance, Profit and Loss Account .. .. 1,061 411 Cost at 31st March, 1896— Land and improvements .. 55,915 9 0 Live-stock .. .. 12,249 9 0 Implements .. .. 595 14 0 £71,531 4 0 71,531 4 0 RANGIURU AND OHAUITI ESTATES. Profit and Loss Account fob the Yeab ending 31st March, 1896. To Improvement Suspense, 20 £ s. d. £ s. d. per cent, depreciation .. 131 16 4 Implements, depreciation 94 9 6 Turnips .. .. 485 15 3 Wages .. .. 955 4 9 General expenses .. 226 19 1 Repairs .. .. 173 14 6 Horse- and stock-feed .. 139 6 7 Interest .. .. 39 3 11 By Adjustment with Estates Company .. .. .. 26 11 11 Sheep .. .. .. 31 6 0 Cattle .. .. .. 3,226 3 8 Horse Account .. .. 0 3 10 Pigs .. .. .. 8 13 0 Wool .. .. .. 14 16 5 Profit .. .. 1,061 411 £3,307 14 10 3,307 14 10 A.—RICHMOND DOWNS ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 32,102 17 4 Live-stock .. .. .. 8,507 10 6 Implements .. .. .. 500 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 1,166 0 0 42,276 7 10 Deduct adjustment of stock and implements at 31st March, • 1896, decrease .. .. .. 3,175 10 6 39,100 17 4 Sundries — Estimated value of— Wool-clip, 1895-96 .. .. 1,820 0 0 Frozen mutton unsold .. .. 375 0 0 Sheep boiled down .. .. 8 0 0 Turnips and stock - feed on hand .. .. .. 1,222 11 4 Material and seed on hand .. .. 50 0 0 Improvement Suspense Account .. .. .. 939 0 0 Accounts outstanding .. .. 88 18 10 Adjustment with Estates Company .. .. .. 199 12 1 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 1,868 16 0 Due to capital, on account adjustment of stock and implements .. .. 3,175 10 6 Balance, Profit and Loss Account .. .. .. 341 4 3 Cost at 31st March, 1896— Land and improvements .. 33,268 17 4 Live-stock .. .. 4,934 3 0 Implements .. .. 450 0 0 Stock Adjustment Account.. 447 17 0 £44,145 3 10 44,145 3 10 B.—RICHMOND DOWNS ESTATE. Balance-sheet fob the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 32,102 17 4 Live-stock .. .. .. 8,507 10 6 Implements .. .. .. 500 0 0 41,110 7 10
£ s. d. £ s. d. Deduct adjustment of stock and implements at 31st March, 1896, decrease .. .. .. 3,175 10 6 37,934 17 4 Sundries — Estimated value of— Wool-clip, 1895-96 .. .. 1,820 0 0 Frozen mutton unsold .. .. 375 0 0 Sheep boiled down .. .. 8 0 0 Turnips and stock-feed on hand .. .. .. 1,222 11 4 Material and seed on hand.. .. 50 0 0 Improvement Suspense Account .. .. .. 939 0 0 Accounts outstanding .. .. 88 18 10 Adjustment with Estates Company .. .. .. 199 12 1 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 1,868 16 0 Due to capital on account adjustment of stock and implements .. .. 3,175 10 6 Balance, Profit and Loss Account .. .. .. 341 4 3 Cost at 31st March, 1896— Land and improvements .. 32,102 17 4 Live-stock .. .. 4,934 3 0 Implements .. .. 450 0 0 Stock Adjustment Account 447 17 0 £42,979 3 10 42,979 3 10 RICHMOND DOWNS ESTATE. Pbofit and Loss Account for the Year ending 31st March, 1896. £ s. d. £ s. d. To Implements, depreciation.. 12 10 0 . Sheep .. .. 379 4 7 Horses .. .. 109 9 3 Material .. .. 31 4 0 Turnips .. .. 762 2 11 Wages .. .. 453 18 10 General expenses .. 109 17 0 Repairs .. .. 30 15 7 Interest .. .. 68 13 2 Improvement Suspense, 20 per cent, depreciation .. 234 6 11 By Adjustment with Estates Company .. .. .. 318 10 Cattle .. .. .. 137 15 6 Wool .. .. .. 1,634 14 2 Horse- and stock-feed .. .. 74 9 6 Loss .. .. .. 341 4 3 £2,192 2 3 2,192 2 3 A.—WAIMANA ESTATE. Balance-sheet for the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 22,174 7 0 Live-stock .. .. .. 4,844 19 6 Implements .. .. .. 310 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 776 0 0 28,105 6 6 Deduct adjustment valuation of stock and implements at March, 1896, decrease .. ... 2,066 16 3 26,038 10 3 Sundries— Estimated wool-clip, 1895-96 .. 1,207 0 0 Turnips and stock - feed on hand .. .. .. 64 19 6 Material and seed on hand.. .... 83 0 0 Improvement Suspense Account .. .. .. 85 0 0 Accounts outstanding .. .. 486 5 5 Petty cash on hand .. ... 3 14 2 Adjustment with Estates Company .. .. .. 9 14 10
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£ s. d. £ s. d. Station Adjustment Account, bank balance at 31st March, 1896, provided for by debentures.. .. 1,490 11 7 Due to capital, decrease in stock and implements .. 2,066 16 3 Balance of Profit and Loss Account .. .. •• 1,617 13 11 Cost at 31st March, 1896— Land and improvements .. 22,950 7 0 Live-stock .. .. 2,537 19 3 Implements .. .. 295 0 0 Stock Adjustment Account.. 255 4 0 £29,595 18 1 29,595 18 1 B.—WAIMANA ESTATE. Balance-sheet for the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 22,174 7 0 Live-stock .. .. •• 4,844 19 6 Implements .. .. • • 310 0 0 27,329 6 6 Deduct adjustment valuation of stock and implements at 31st March, 1896, decrease.. .. 2,066 16 3 25,262 10 3 Sundries— Estimated value of wool-clip, 1895-96. ... .. .. 1,207 0 0 Turnips and stock-feed on hand .. .. • • 64 19 6 Material and seed on hand .. .. 83 0 0 Improvement Suspense Account .. .. •■ 85 0 0 Accounts outstanding .. .. 486 5 5 Petty cash on hand .. .. 314 2 Adjustment with Estates Company .. .. .. 914 10 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,490 11 7 Due to Capital Account, adjustment of stock and implements .. .. 2,066 16 3 Balance -of Profit and Loss Account .. .. ■• 1,617 13 11 Cost at 31st March, 1896— Land and improvements .. 22,174 7 0 Live-stock .. .. 2,537 19 3 Implements .. .. 295 0 0 Stock Adjustment Account.. 255 4 0 £28,819 18 1 28,819 18 1 WAIMANA ESTATE. Profit and Loss Account fob the Year ending 31st March, 1896. £ s. d. £ s. d. To Implements, depreciation .. 19 15 2 Sheep .. •• 1,401 611 Horses .. .. 25 0 0 Pigs .. .. 1 10 0 Maize .. .. 54 0 7 Horse- and stock-feed .. 252 7 6 Wages .. . • 529 18 7 Material .. .. 20 0 0 General expenses .. 27 2 1 Repairs Account .. 51 9 7 Interest .. .. 51 15 4 Rent .. .. 337 8 7 Turnips .. .. 30 0 0 Improvement Suspense Account, 20 per cent, depreciation .. .. 21 15 3 By Adjustment with Estates Company .. .. .. 914 10 Cattle .. ■• ■■ 161 0 0 Wool .. .. •• 1,027 0 10 Produce .. .. • • 8 0 0 Loss.. .. .. 1,617 13 11 £2,823 9 7 2,823 9 7
WAHAROA SPECIAL SETTLEMENT. Balance-sheet for the Year ending 31st March, 1896. Liabilities. £ s. d. £ s. d. Matamata Land Account .. .. 4,536 8 11 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. .. .. 4,226 0 11 Settlers' current accounts, Cr. .. 88 19 2 Assets. Adjustment with Estates Company .. .. .. 74 3 10 Dairy-factory Construction Account .. .. 804 18 11 Cheese Consignment Aocount 493 0 0 Dairy - factory Working Account, stock, machinery, &c. 700 17 3 Settlers' balances on account land .. .. .. 7,022 6 5 Settlers' accounts, Dr. .. 221 17 6 Balance of Profit and Loss Account .. .. .. 465 14 11 £9,317 311 9,317 311 WAHAROA SETTLEMENT. Profit and Loss Account fob the Yeab ending 31st March, 1896. £ s. d. £ s. d. To Interest .. .. 27 12 4 By Adjustment with Estates Company .. .. .. 74 310 Factory Working Account .. 61 10 3 Rent Account .. .. .. 357 13 2 Revenue .. .. 465 14 11 £493 7 3 493 7 3 A.—AUCKLAND AGRICULTURAL COMPANY (LIMITED). Balance-sheet for the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 392,530 4 8 Live-stock and implements .. 73,195 3 3 Amount paid in excess of Mr. Hean's valuation .. .. 16,184 0 0 Deduct— 481,909 7 11 Land sold .. .. 5 0 0 Recovered from insurance company on account cottage burned .. 90 0 0 Adjustment on account stock at 31st March, 1896, decrease .. .. 14,730 2 3 14,825 2 3 467,084 5 8 Add improvements effected during year .. .. .. 563 14 2 Sundries— 467,647 19 10 Estimated value of— Wool-clip, 1895-96 .. .. 16,126 0 0 Frozen mutton unsold .. ... 2,369 0 0 Sheep boiled down .. .. 80 0 0 Turnips and stock - feed on hand .. .. .. 8,399 19 8 Material and seed on hand .. 569 0 0 Improvement Suspense Account .. .. .. 3,248 0 0 Accounts outstanding .. .. 336 14 1 Adjustment with Estates Company .. .. .. 1,244 11 8 Due by capital on account improvements .. .. .. 563 14 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. 14,514 14 0 Due to capital on account decrease in stock .. 14,730 2 3 Balance, Profit and Loss Account .. .. 3,692 3 4 Cost at 81st March, 1896— Land and improvements .. 409,182 18 10 Live-stock and implements 58,465 1 0 £500,584 19 5 500,584 19 5
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B.—AUCKLAND AGRICULTURAL COMPANY (LIMITED). Balance-sheet fob the Yeab ending 31st Maboh, 1896. Cost at 31st March, 1895— £ s. d. £ s. d Land and improvements .. .. 392,530 4 8 Live-stock and implements .. 73,195 3 3 465,725 7 11 Deduct— Land sold .. .. 5 0 0 Recovered from insuranoe company on account cottage burned .. .. 90 0 0 Adjustment stock at 31st March, 1896, decrease .. 14,730 2 3 14,825 2 3 450,900 5 8 Add improvements effected during year .. .. .. 563 14 2 Sundries— 451,463 19 10 Estimated value of — Wool-clip, 1895-96 .. .. 16,126 0 0 Frozen mutton unsold .. .. 2,369 0 0 Sheep boiled down .. .. 80 0 0 Turnips and stook-feed on hand .. .. .. 8,399 19 8 Improvement Suspense Ac count .. .. .. 3,248 0 0 Material and seed on hand .. 569 0 0 Accounts outstanding .. .. 336 14 1 Adjustment with Estates Company .. .. .. 1,244 11 8 Due- by- capital on account improvements .. .. 563 14 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 14,514 14 0 Due to capital on account decrease in stock and implements .. .. 14,730 2 3 Balance, Profit and Loss Account .. .. 3,692 3 4 Cost at 31st March, 1896— Land and improvements .. 392,998 18 10 Live-stock and implements 58,465 1 0 £484,400 19 5 484,400 19 5 AUCKLAND AGRICULTURAL COMPANY (LIMITED). Peofit and Loss Account fob the Yeae ending 31st Maech, 1896. £ s. d. £ s. d. To Sheep .. .. 5,912 5 10 Implements, depreciation.. 170 2 9 General expenses .. 717 0 8 Wages .. .. 3,587 3 3 Horse- and stock-feed .. 621 1 2 Interest .. .. 588 5 3 Repairs .. .. 702 2 3 Repairs to drains .. 290 7 5 Visitors'and swaggers'meals 14 17 6 Improvement Suspense, 20 per cent, depreciation .. 811 110 By Cattle .. .. .. 2,164 0 6 Horses .. .. .. 277 12 4 Pigs .. .. .. 6 17 6 Rent .. .. .. 87 14 9 Wool .. .. .. 14,467 4 11 Skins and hides .. .. 36 17 9 Material Account .. .. 38 18 6 Adjustment with Estates Company .. .. .. 27 5 0 Profit .. .. 3,692 3 4 £17,106 11 3 17,106 11 3
A.—ALBURY ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 72,108 12 1 Live-stock .. .. .. 19,240 7 11 Implements .. .. .. 496 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 2,606 0 0 94,451 0 0 Deduct land sold .. .. .. 482 19 10 94,018 0 2 Add adjustment of stock and implements at 31st March, 1896, increase .. .. .. 2,559 16 6 96,577 16 8 Sundries— Estimated value of wool-clip, 1895-96 .. .. .. 5,234 0 0 Turnips and stock-feed on hand .. .. .. 2,783 6 2 Material and seed on hand .. .. 78 9 5 Improvement Suspense Account .. .. .. 2,034 0 0 Accounts outstanding .. .. 69 15 11 Adjustment with Estates Company .. .. .. 701 1 4 Due by Capital Account on account adjustment of stock and implements .. ... 2,559 16 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,534 12 10 Balance, Profit and Loss Account .. .. 8,925 16 6 Cost at 31st March, 1896— Land and improvements .. 74,281 12 3 Live-stock .. .. 11,818 17 0 Implements .. .. 463 0 0 Station Adjustment Account 10,014 7 5 £110,038 6 0 110,038 6 0 B.—ALBURY ESTATE. Balance-sheet for the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 72,108 12 1 Live-stock .. .. .. 19,240 7 11 Implements .. .. .. 496 0 0 91,845 0 0 Deduct land sold .. .. .. 432 19 10 91,412 0 2 Add adjustment of stock and implements at 31st March, 1896, increase .. .. .. 2,559 16 6 93,971 16 8 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 5,234 0 0 Turnips and stock-feed on hand .. .. .. 2,783 6 2 Material and seed on hand .. .. 78 9 5 Improvement Suspense Account .. .. .. 2,034 0 0 Accounts outstanding .. .. 69 15 11 Adjustment with Estates company .. .. .. 701 1 4 Due by Capital Account on account adjustment of stock and implements .. .. 2,559 16 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,534 12 10 Balance, Profit and Loss Account .. .. 8,925 16 6 Cost at 31st March, 1896— Land and improvements .. 71,675 12 3 Live-stock .. .. 11,818 17 0 Implements .. .. 463 0 0 Station Adjustment Account 10,014 7 5 £107,432 6 0 107,432 6 0
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ALBURY ESTATE. Peofit and Loss Account foe the Year ending 31st March, 1896. To Improvement Suspense, 20 £ s. d. £ s. d. per cent, depreciation .. 508 10 11 Implements, depreciation .. 147 11 3 Pigs .. .. 7 18 Horses .. .. 26 11 4 Horse- and stock-feed .. 789 14 0 Wages .. .. 852 11 6 General expenses .. 341 5 6 Repairs Account .. 204 6 8 Stores Account .. 161 9 10 Interest .. .. 138 2 1 Rent .. .. 273 4 0 Turnips .. .. 1,375 6 2 Rabbit Account .. 241 13 6 By Adjustment with Estates Company .. .. .. 109 6 6 Sheep .. .. .. 7,696 1 9 Cattle .. .. .. 19 5 0 Wool .. .. .. 4,778 15 3 Grain .. .. .. 1,389 16 5 Profit .. 8,925 16 6 £13,993 4 11 13,993 4 11 A.—AROWHENUA ESTATE (INCLUDING RANGITATA, RIVERSLEA, AND MITCHAM). Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 58,309 12 11 Live-stock .. .. .. 15,569 2 6 Implements .. .. .. 971 0 6 Amount paid in excess of Mr. Hean's valuation .. .. 2,123 0 0 Less— 76,972 15 11 Land sold .. .. 3,388 2 8 Shares in Canterbury Frozen Meat Company sold .. 240 0 0 Deficiency on sale of Mitcham to adjust .. .. 45 0 0 3,673 2 8 Add— 73,299 13 3 Permanent improvements effected during year .. .. 116 5 0 Adjustment of stock and implements at 31st March, 1896, increase.. .. .. 130 17 6 Sundries— 73,546 15 9 Estimated value of— Wool-clip, 1895-96 .. .. 3,514 0 0 Frozen mutton unsold .. .. 950 0 0 Turnips and stock-feed on hand .. .. .. 1,085 10 2 Material aud seed on hand .. .. 176 111 Improvement Suspense Account .. .. .. 1,300 0 0 Accounts outstanding .. .. 23 19 10 Adjustment with Estates Company .. .. 78 2 0 151 18 5 Due by capital on account of adjustment stock and implements, and permanent improvements, as above .. .. 247 2 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 2,130 8 9 Balance, Profit and Loss Account .. .. 5,240 2 1 Cost at 31st March, 1896— Land and improvements .. 56,875 15 3 Live-stock .. .. 8,713 6 9 Implements .. .. 777 11 9 Stock Adjustment Account.. 7,180 2 0 £80,995 8 7 80,995 8 7
B.—AROWHENUA ESTATE (INCLUDING RANGITATA, RIVERSLEA, AND MITCHAM). Balance-sheet fob the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 58,309 12 11 Live-stock .. .. .. 15,569 2 6 Implements .. .. .. 971 0 6 74,849 15 11 Deduct— Land sold .. .. 3,388 2 8 Shares in Canterbury Frozen Meat Company sold .. 240 0 0 Deficiency on sale of Mitcham to adjust .. .. 45 0 0 3,673 2 8 Add— 71,176 13 3 Permanent improvements effected during year .. .. 116 5 0 Adjustment of stock and implements at 31st March, 1896, increase.. ... .. 130 17 6 Sundries— 71,423 15 9 Estimated value of— Wool-clip, 1895-96 .. .. 3,514 0 0 Frozen mutton unsold .. .. 950 0 0 Turnips and stock-feed on hand .. .. .. 1,085 10 2 Material and seed on hand .. .. 176 1 11 Improvement Suspense Account .. .. .. 1,300 0 0 Accounts outstanding .. .. 23 19 10 Adjustment with Estates Company .. .. 78 2 0 151 18 5 Due by capital on account of adjustment of stock and implements and permanent improyements .. .. 247 2 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 2,130 8 9 Balance, Profit and Loss Account .. .. 5,240 2 1 Cost at 31st March, 1896— Land and improvements .. 54,752 15 3 Live-stock .. .. 8,713 6 9 Implements .. .. 777 11 9 Stock Adjustment Account.. 7,180 2 0 £78,872 8 7 78,872 8 7 AROWHENUA ESTATE (INCLUDING RANGITATA RIVERSLEA, AND MITCHAM). Peofit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation .. 52 10 9 Horse- and stock-feed .. 621 14 3 Wages .. .. 933 7 4 General expenses .. 183 13 3 Repairs .. .. 212 11 5 Stores and fuel .. 159 9 1 Interest .. .. 79 7 1 Rent .. .. 718 19 2 Grain .. .. 259 16 6 Turnips .. .. 543 11 0 Improvement Suspense 20 per cent, depreciation .. 324 4 4 By Adjustment with Estates Company .. .. ~ 151 18 5 Sheep .. .. .. 5.738 6 10 Cattle .. .. .. 147 8 6 Horses .. .. .. 31 18 6 Wool .. .. .. 3,253 4 6 Pigs .. .. .. 6 9 6 Profit .. .. 5,240 2 1 £9,329 6 3 9,329 6 3
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A.—AWATERE ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 74,016 3 4 Live-stock .. .. .. 10,031 4 6 Implements .. .. .. 1,040 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 2,413 0 0 Add— 87,500 7 10 Improvements effected during year .. .. .. 51 2 11 Adjustment of stock and implements at 31st March, 1896, increase.. .. .. 3,052 4 6 90,603 15 3 Sundries— Estimated value of wool-clip, 1895-96 .. .. .. 6,520 10 0 Turnips and stock-feed on band .. .. .. 350 0 0 Material and seed on hand.. .. 447 4 1 Improvement Suspense Account .. .. .. 153 0 0 Accounts outstanding .. .. 620 8 3 Adjustment with Estates Company .. .. 258 14 5 43 2 7 Due by capital on account improvements .. .. 51 2 11 Due by capital on account adjustment of stock and implements .. .. .. 3,052 4 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,277 1 1 Balance, Profit and Loss Account .. .. 6,701 16 10 Cost at 31st March, 1896— Land and improvements .. 76,480 6 3 Live-stock .. .. 13,123 9 0 Implements .. .. 1,000 0 0 £101,841 7 7 101,841 7 7 B.—AWATERE ESTATE. Balance-sheet foe the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 74,016 3 4 Live-stock .. .. .. 10,031 4 6 Implements .. .. .. 1,040 0 0 £85,087 7 10 Add— Improvements effected during year .. .. .. 51 2 11 Adjustment of stock and implements at 31st March, 1896, increase .. .. 3,052 4 6 Sundries— 88,190 15 3 Estimated value of wool-clip, 1895-96 .. .. .. 6,520 10 0 Turnips and stock - feed on hand .. .. .. 350 0 0 Material and seed on hand.. .. 447 4 1 Improvement Suspense Account .. .. ~ 153 o 0 Accounts outstanding .. .. 620 8 3 Adjustment with Estates Company .. .. 258 14 5 43 2 7 Due by Capital Account, on account improvements .. .. 51 211 Due by Capital Account, on account adjustment of stock and implements .. .. 3,052 4 6 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,277 1 1 Balance, Profit and Loss Account .. .. 6,701 10 10 Cost at 31st March, 1896— Land and improvements .. 74,067 6 3 Live-stock .. .. 13,123 9 0 Implements .. .. 1,000 0 0 £99,428 7 7 99,428 7 7 27—1. 6.
AWATERE ESTATE. Profit and Loss Account foe the Yeab ending 31st Mabch, 1896. £ s. d. £ s.' d. To Boga Meat Company's call 25 0 0 Implements, depreciation .. 73 19 0 Horses .. .. 46 7 0 Pigs .. .. 4 15 0 Rent .. .. 243 4 8 Interest .. .. 101 15 11 Rabbits .. .. 798 15 10 Turnips .. .. 40 0 9 Wages .. .. 1,688 13 3 General expenses .. 203 3 7 Repairs .. .. 4 16 3 Horse- and stock-feed .. 5 14 5 Store .. .. 179 19 1 Improvement Suspense, 20 per cent, depreciation .. 38 0 3 By Sheep .. .. .. 3,399 16 7 Cattle .. .. .. 65 15 0 Wool .. .. .. 6,548 19 7 Tallow .. .. .-. 98 8 1 Adjustment with Estates Company .. .. .. 43 2 7 Profit .. .. 6,701 16 10 £10,156 1 10 10,156 1 10 A.—BUSHY PARK ESTATE. Balance-sheet for the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 19,955 13 10 Live-stock .. .. .. 3,801 2 5 Implements .. .. .. 213 1 0 Amount paid in excess of Mr. Hean's valuation .. .. 679 0 0 24,648 17 3 Add— Adjustment of valuation of stock and implements at 31st March, 1896, increase .. 285 2 2 Improvements effected during the year .', .. .. 60 0 0 24,993 19 5 Sundries— Estimated value of wool-clip, 1895-96 .. .. .. 833" 0 0 Turnips and stock-feed on hand .. .. .. 516 17 5 Material and seed on hand .. 30 0 0 Improvement Suspense Account .. .. ... 159 0 0 Accounts outstanding .. .. 213 5 Adjustment with Estates Company .. .. ... 14 14 7 Due by capital, increase in stock and implements .. .. 285 2 2 Due by capital on account permanent improvements .. 60 0 0 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,084 3 7 Balance, Profit and Loss Account .. .. 817 4 0 Cost at 31st March, 1896— Land and improvements .. 20,694 13 10 Live-stock .. .. 2,023 1 6 Implements .. .. 156 0 0 Stock Adjustment Account.. 2,120 4 1 £26,895 7 0 26,895 7 0
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B.—BUSHY PARK ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st Marob, 1895— £ s. d. s. d. Land and improvements .. .. 19,955 13 10 Live-stock .. .. .. 3,801 2 5 Implements .. .. .. 213 1 0 23,969 17 3 Add— Adjustment of valuation of stock and implements at 31st March, 1896, increase .. 285 2 2 Improvements effected during year .. .. .. 60 0 0 24,314 19 5 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 833 0 0 Turnips and stock-feed on hand .. .. .. 516 17 5 Material and seed on hand .. .. 30 0 0 Improvement Suspense Account .. .. .. 159 0 0 Accounts outstanding .. .. 213 5 Adjustment with Estates Company .. .. .. 14 14 7 Due by capital on account permanent improvements .. 60 0 0 Due by capital on account adjustment stock and implements .. .. .. 285 2 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 1,084 3 7 Balance, Profit and Loss Account .. .. 817 4 0 Cost at 31st March, 1896— Land and improvements .. 20,015 13 10 Live-stock .. .. 2,023 1 6 Implements .. .. 156 0 0 Stock Adjustment Account.. 2,120 4 1 £26,216 7 0 26,216 7 0 BUSHY PARK ESTATE. Peofit and Loss Account fob the Yeab ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation .. 80 1 2 Cattle .. .. 3 10 0 Horses .. .. 19 0 0 Pigs .. .. 3 6 0 Horse- and stock-feed .. 121 11 6 Wages .. .. 354 16 5 General expenses .. 117 8 6 Repairs .. .. 72 16 3 Stores • .. .. 67 3 8 Interest .. .. 9 0 9 Rent .. .. 23 8 6 Turnips .. .. 100 10 8 Rabbits .. .. 3 4 2 Improvement Suspense, 20 per cent, depreciation .. 39 3 5 By Adjustment with Estates Company .. .. .. 313 4 Sheep .. .. •• 821 6 6 Wool .. • • .. 769 511 Grain .. .. .. 237 19 3 Profit .. .. 817 4 0 £1,832 5 0 1,832 5 0
A.—CLARENCE ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 23,292 3 9 Live-stock .. .. .. 12,170 13 9 Implements .. .. .. 570 0 0 Amount paid in excess of Mr. Hean's valuation .. .. 1,022 0 0 37,054 17 6 Add adjustment of stock and implements at 31st March, 1896, increase .. .. .. 788 5 3 37,843 2 9 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 5,552 0 0 Turnips and stock - feed on hand .. .. .. 462 0 0 Material and seed on hand .. .. 612 12 4 Improvement Suspense Account .. .. .. 56 0 0 Accounts outstanding .. 334 10 4 304 14 3 Adjustment with Estates Company .. .. 787 11 2 106 8 8 Due by capital on account stock adjustment .. .. 788 5 3 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 4,183 11 2 Balance, Profit and Loss Account .. .. 2,576 710 Cost at 31st March, 1896— Land and improvements .. 24,314 3 9 Live-stock .. .. 7,646 0 0 Implements .. .. 600 0 0 Stock Adjustment Account.. 5,282 19 0 £45,725 3 3 45,725 3 3 B.—CLARENCE ESTATE. Balance-sheet foe the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 23,292 3 9 Live-stock .. .. .. 12,170 13 9 Implements .. .. .. 570 0 0 36,032 17 6 Add adjustment of stock and implements at 31st March, 1896, increase.. .. .. 788 5 3 36,821 2 9 Sundries — Estimated value of wool-clip, 1895-96 .. .. .. 5,552 0 0 Turnips and stock - feed on hand .. .. .. 462 0 0 Material and seed on hand.. .. 612 12 4 Improvement Suspense Account .. .. .. 56 0 0 Accounts outstanding .. 334 10 4 304 14 3 Adjustment with Estates Company .. .. 787 11 2 106 8 8 Due by capital on account adjustment of stock and implements .. .. .. 788 5 3 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 4,183 11 2 Balance, Profit and Loss Account .. .. 2,576 710 Cost at 31st March, 1896— Land and improvements .. 23,292 3 9 Live-stock .. .. 7,646 0 0 Implements .. .. 600 0 0 Stock Adjustment Account.. 5,282 19 0 £44,703 3 3 44,703 3 3
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CLARENCE ESTATE. Profit and Loss Account for the Year ending 31st March, 1896. To Adjustment with Estates £ s. d. £ s. d. Company .. .. 318 17 11 Implements' depreciation .. 47 6 10 Horses .. .. 45 12 6 Pigs .. .. 7 0 0 Wages .. .. 1,693 19 10 General expenses .. 125 1 9 Repairs .. .. 56 7 11 Stores .. .. 311 9 6 Interest .. .. 115 15 10 Rent .. .. 597 14 10 Turnips .. .. 4 18 7 Rabbits .. .. 1,391 12 11 Material .. .. 6 3 0 Improvement Suspense, 20 per cent, depreciation .. 14 0 0 By Adjustment with Estates Company .. .. .. 106 8 8 Sheep .. .. .. .. 2,041 11 3 Cattle .. .. .. .. 512 6 Wool .. .. .. .. 4,766 2 2 Horse- and stock-feed .. .. 73 16 9 Carter Bros., on account fencing .. .. .. 318 17 11 Profit |.. .. 2,576 710 £7,312 9 3 7,312 9 3 A.—ESKBANK ESTATE. Balance-sheet fob the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 31,018 15 1 Live-stock .. .. .. 6,762 16 4 Implements .. .. .. 440 6 0 Amount paid in excess of Mr. Hean's valuation .. .. 1,084 0 0 39,305 17 5 Add adjustment on account of stock and implements at 31st March, 1896, increase .. .. 360 0 0 39,665 17 5 Sundries — Estimated value of — Wool-clip for 1895-96 .. .. 2,241 0 0 Frozen mutton unsold .. .. 235 0 0 Turnips and stock-feed on hand .. .. : 1,340 11 0 Material and seed on hand .. .. 10 0 0 Improvement Suspense Account .. .. .. 540 0 0 Accounts outstanding .. .. 15 16 7 Petty cash .. .. .. 110 11 Adjustment with Estates Company .. .. .. 681 5 5 Due by capital on account adjustment stock and implements .. .. .. 360 0 0 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 982 14 6 Balance, Profit and Loss Account .. .. 4,442 9 5 Cost at 31st March, 1896— Land and improvements .. 32,102 15 1 Live-stock .. .. 3,902 0 0 Implements .. .. 3,341 2 0 Stock Adjustment Account.. 320 0 4 £45,091 1 4 45,091 1 4
B.—ESKBANK ESTATE. Balance-sheet foe the Yf.ab ending 31st March, 1896. Cost .at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 31,018 15 1 Live-stock .. .. .. 6,762 16 4 Implements .. .. .. 440 6 0 38,221 17 5 Add adjustment on account stock and implements at 31st March, 1896, increase .. .. 360 0 0 38,581 17 5 Sundries — Estimated value of— Wool-clip, 1895-96 .. .. 2,241 0 0 Frozen mutton unsold .. .. 235 0 0 Turnips and stock-feed on hand .. .. .. 1,340 11 0 Material and seed on band.. .. 10 0 0 Improvement Suspense Account .. .. .. 540 0 0 Accounts outstanding .. .. 15 16 7 Petty cash .. .. .. 1 10 11 Adjustment with Estates Company .. .. .. 681 5 5 Due by capital on account adjustment of stock and implements .. .. .. 360 0 0 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 982 14 6 Balance, Profit and Loss Account .. .. 4,442 9 5 Cost at 31st March, 1896— Land and improvements .. 31,018 15 1 Live-stock .. .. 3,902 0 0 Stock Adjustment Account.. 3,341 2 4 Implements .. .. 320 0 0 £44,007 1 4 44,007 1 4 ESKBANK ESTATE. Peofit and Loss Account fob the Year ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation .. 118 3 6 Horse- and Stock-feed Account .. .. 366 11 4 Wages .. .. 443 1 10 General expenses .. 136 0 4 Repairs .. .. 56 3 11 Stores .. .. 109 16 5 Interest .. .. 64 7 8 Turnips .. .. 192 3 4 Improvement Suspense, 20 per cent, depreciation .. 135 6 0 By Adjustment with Estates Company .. .. .. 370 14 5 Sheep .. .. .. 3,005 13 7 Cattle .. .. .. 10 0 Horses .. .. .. 10 15 6 Wool .. .. .. 2,147 10 0 Pigs .. .. .. 6 17 6 Grain .. .. .. 521 12 9 Profit .. .. 4,442 9 5 £6,064 3 9 6,064 3 9 A.—GLENTUI ESTATE. Balance-sheet fob the Year ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 18,084 19 0 Live-stock .. .. .. 10,668 8 2 Implements .. .. .. 226 15 0 Amount paid in excess of Mr. Hean's valuation .. .. 821 0 0 Deduct adjustment on account 29,801 2 2 of stock and implements at 31st March, 1896, decrease .. .. 918 15 4 Sundries— 28,882 6 10 Estimated value of wool-clip, 1895-96 .. .. .. 3,214 0 0 Turnips and stock - feed on hand .. .. .. 171 16 9 Material arid seed on hand .. .. 72 13 0
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194
Improvement Suspense Ac- £ s. d. £ s. d. count .. .. .. 160 0 0 Accounts outstanding .. 24 11 2 36 15 2 Adjustment with Estates Company .. .. 754 4 6 Due to capital on account of decrease in stock .. 918 15 4 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 2,052 1 2 Balance, Profit and Loss Account .. .. .. 94 7 3 Cost at 31st March, 1896— Land and improvements .. 18,905 19 0 Live-stock .. .. 8,112 13 6 Implements .. .. 184 0 0 Stock Adjustment Account.. 1,679 14 4 £32,631 19 0 32,031 19 0 B.—GLENTUI ESTATE. Balance-sheet fob the Yeae ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 18,084 19 0 Live-stock .. .. .. 10,668 8 2 Implements .. .. .. 226 15 0 Deduct adjustment on account 28,980 2 2 of stock and implements at 31st March, 1896, decrease .. .. 918 15 4 Sundries— 28,061 6 10 Estimated value of wool-clip, 1895-96 .. .. .. 3,214 0 0 Turnips and stock - feed on hand .. .. .. 171 16 9 Material and seed on hand .. .. 72 18 0 Improvement Suspense Account .. .. .. 160 0 0 Accounts outstanding .. 24 11 2 36 15 2 Adjustment with Estates Company .. .. 754 4 6 Due to capital on account of decrease in stock and implements .. .. 918 15 4 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. 2,052 1 2 Balance,- Profit and Loss Account .. .. .. 94 7 3 Cost at 31st March, 1896— Land and improvements .. 18,084 19 0 Live-stock .. .. 8,112 13 6 Implements .. .. 184 0 0 Stock Adjustment Account.. 1,679 14 4 £31,810 19 0 31,810 19 0 GLENTUI ESTATE. Peofit and Loss Account fob the Yeab ending 31st Mabch, 1896. To Adjustment with Estates £ s. d. £ s. d. Company .. .. 301 5 6 Implements, depreciation .. 36 710 Sheep .. .. 402 9 9 Horse- and stock-feed .. 49 13 3 Wages .. .. 920 1 10 General expenses .. 200 3 8 Repairs .. .. 43 14 11 Stores .. .. 139 6 1 Improvement Suspense, 20 per cent, depreciation .. 40 10 1 Interest .. .. 35 0 7 Rent .. .. 745 0 0 Turnips .. .. 4 18 Rabbits .. .. 0 5 4 By Cattle .. .. .. 22 10 0 Horses .. .. .. 4 10 0 Pigs .. ■ .. .. 12 6 Wool .. .. .. 2,795 10 9 2,823 13 3 Loss .. .. .. 94 7 3 £2,918 0 6 2,918 0 6
A.—RETREAT ESTATE. Balance-sheet for the Year ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Laud and improvements .. .. 1,413 18 3 Live-stock .. .. .. 543 11 6 Implements .. .. .. 63 6 6 Amount paid in excess of Mr. Hean's valuation .. .. 57 0 0 Deduct— 2,077 16 3 Amount recovered from New Zealand Insurance Company for loss of stable .. 50 0 0 Adjustment of stock and implements at 31st March, 1896, decrease .. 87 2 0 137 2 0 Sundries— 1,940 14 3 Estimated value of wool-clip, 1895-96 .. .. .. 130 0 0 Material and seed on hand .. .. 13 0 0 Accounts outstanding .. .. 11l Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 216 17 1 Due to capital on account of decrease in stock and implements .. .. ' 87 2 0 Balance, Profit and Loss Account .. .. .. 159 18 0 Cost at 31st March, 1896— Land and improvements .. 1,420 18 3 Live-stock .. .. 449 16 0 Implements .. .. 70 0 0 £2,244 13 4 £2,244 13 4 B.— RETREAT STATION. Balance-sheet fob the Yeab ending 31st March, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 1,413 18 3 Live-stock ... .. .. 543 11 6 Implements .. .. .. 63 6 6 Deduct— 2,020 16 3 Amount recovered from New Zealand Insurance Company for loss of stable .. 50 0 0 Adjustment of stock and implements at 31st March, 1896, decrease.. .. 87 2 0 137 2 0 Sundries— 1,883 14 3 Estimated value of wool-clip, 1895-96 .. .. .. 130 0 0 Material and seed on hand.. .. 13 0 0 Accounts outstanding .. .. 11l Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures.. .. 216 17 1 Due to capital on account of decrease in stock and implements .. .. 87 2 0 Balance, Profit and Loss Account .. .. .. 159 18 0 Cost at 31st March, 1896— Land and improvements .. 1,363 18 3 Live-stock .. .. 449 16 0 Implements .. .. 70 0 0 £2,187 13 4 2,187 13 4
195
1.—6
RETREAT ESTATE. Profit and Loss Account for the Year ending 31st March, 1896. £ s. d. £ s. d. To Implements, depreciation .. 1 14 8 Sheep .. .. 84 2 6 Cattle .. .. 17 6 Horses .. .. 2 3 11 Horse- and stock-feed .. 11 2 3 Wages .. .. 93 7 0 General expenses .. 29 8 9 Repairs .. .. 6 5 3 Stores .. .. 4 11 8 Interest .. .. 6 11 5 Rent .. .. 37 10 0 Rabbits .. .. 9 5 5 By Wool .. .. .. .. 127 12 4 Loss .. .. .. 159 18 0 £287 10 4 £287 10 4 A.—WAIHAORUNGA ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 82,290 3 0 Live-stock .. .. .. 21,119 7 4 Implements '.. .. .. 426 8 6 Amount paid in excess of Mr. Hean's valuation .. .. 2,945 0 0 106,780 18 10 Add adjustment on account of stock and implements at 31st March, increase .. .. 1,283 16 6 108,064 15 4 Sundries— Estimated value of woolclip, 1895-96 .. .. 5,176 0 0 Turnips and stock-feed on hand .. .. .. 1,100 18 3 Material and seed on hand .. 1,054 6 8 Improvement Suspense Account .. .. .. 2,872 0 0 Accounts outstanding .. .. 41 7 4 Due by capital on account increase in stock and implements .. .. .. 1,283 16 6 Adjustment with Estates Company .. .. 1,762 19 0 39 5 2 Station Adjustment Aocount, being bank balance at 31st March, 1896, provided for by debentures .. .. 3,010 2 3 Balance, Profit and Loss Account .. .. 6,794 12 8 Cost at 31st March, 1896— Land and improvements .. 85,235 3 0 Live-stock .. .. 11,274 16 6 Implements .. .. 436 0 0 Stock Adjustment Account 11,118 15 10 £119,632 9 3 119,632 9 3
B.—WAIHAORUNGA ESTATE. Balance-sheet fob the Yeab ending 31st Mabch, 1896. Cost at 31st March, 1895— £ s. d. £ s. d. Land and improvements .. .. 82,290 3 0 Live-stock .. .. .. 21,119 7 4 Implements .. .. .. 426 8 6 103,835 18 10 Add adjustment on account of stock and implements at 31st March, 1896, increase .. .. .. 1,283 16 6 105,119 15 4 Sundries— Estimated value of woolclip, 1895-96 .. .. 5,176 0 0 Turnips and stock-feed on hand .. .. .. 1,100 18 3 Material and seed on hand .. 1,054 6 8 Improvement Suspense Account .. .. .. 2,372 0 0 Accounts outstanding .. .. 41 7 4 Due by capital on account of adjustment stock and implements.. .. ... 1,283 16 6 Adjustment with Estates Company .. .. 1,762 19 0 39 5 2 Station Adjustment Account, being bank balance at 31st March, 1896, provided for by debentures .. .. 3,010 2 3 Balance, Profit and Loss Account .. .. 6,794 12 8 Cost at 31st March, 1896— Land and improvements .. 82,290 3 0 Live-stock .. .. 11,274 16 6 Implements .. .. 436 0 0 Stock Adjustment Account 11,118 15 10 £116,687 9 3 116,687 9 3 WAIHAORUNGA ESTATE. Profit and Loss Account fob the Year ending 31st Mabch, 1896. £ s. d. £ s. d. To Implements, depreciation 44 16 10 Horse-feed .. .. 438 18 2 Wages .. .. 495 3 2 General expenses .. 339 9 7 Repairs .. .. 63 3 0 Stores .. .. 42 13 10 Interest .. .. 189 0 4 Rent .. .. 90 1 2 Turnips .. .. 1,522 6 4 Grain .. .. 58 1 8 Rabbits .. .. 28 17 0 Improvement Suspense, 20 per cent, depreciation .. 717 8 2 By Adjustment with Estates Company .. .. .. 39 5 2 Sheep .. .. .. 5,997 7 2 Cattle .. .. .. 7 5 0 Horses .. .. .. 9 10 Pigs .. .. .. 2 2 6 Wool .. .. .. 4,769 11 1 Profit .. - .. 6,794 12 8 £10,824 11 11 10,824 11 11
1.—6
196
EXHIBIT No. 36. Note.—Exhibit No. 36 is same as Exhibit No. 37, but without the dates of payment in margin.
EXHIBIT No. 37. [Handed in by Mr. Watson, 25th August, 1896.] BANK OF NEW ZEALAND ESTATES COMPANY. Memoeandum of Counsel's Fees and other Solicitoes' Chabges paid to Messrs. Bell, Gully, and Izaed in connection with Validation Court Proceedings at Gisborne. 1894. £ s. d. £ a. a. May ... Fee to Mr. Gully on brief ... ... 78 15 0 „ ... Forty-four days at £12 12s. per diem ... 554 8 0 „ ... Travelling, hotel, and other expenses ... 49 16 10 Paid J 682 19 0 llth August, 1894 ~\ „ ... Fee to Mr. George Hutchison on brief ... 105 0 0 „ ... Forty-four days at £15 15s. per diem ... 693 0 0 „ ... Travelling, hotel, and other expenses ... 49 16 10 { 847 16 10 Paid {Feb. -Sept. Messrs. Hutchison's and Hogg's law 3rd August, 1895 { charges ... ... ... ... 49 2 4 Geneeal Costs Peioe to Sitting of Validation Covet. /Bell, Gully, and Izard ... ... 201 17 5 „„„ „ „ .•,,,,, T lon/ , C. A. De Lautour ... ... ... 448 0 8 £200 0 0 paid llth June, 1894 L,,. , j-dii io-ico 100 0 0 „ 4th Oct., Whitaker and Kussell ... ... 13 16 3 509 6 0 ", 13th Feb. ', 1895 { Hutchison and Hogg ... ... ... 145 11 8 _ 809 6 0 £809 6- 0 • £2,389 5 0 Note.—These items include disbursements as under:— £ s. d. Bell, Gully, and Izard ... ... ... 24 411 C. A. De Lautour ... ... 244 18 3 Hutchison and Hogg ... ... ... 30 15 10 £299 19 0
EXHIBIT No. 38. [Handed in by Mr. William Watson, 25th August, 1896.] BANK OF NEW ZEALAND.
Payments to Directors during Year ended 31st March, 1896.
Note. —From Ist June, 1896, directors will draw bank honorarium, £500 per annum, with travelling-allowance to Mr. Booth, £52 per annum. Richd. A. Gibbs, Accountant. Head Office, Wellington, 24th August, 1896.
Sik, — Bank of New Zealand, Inspector's Office, Wellington, 26th August, 1896. Beferring to a return recently submitted to the Committee, giving particulars of honoraria received by the directors, I have since been informed by Mr. Booth that his honorarium is subject to 10 per cent, reduction for the twelve months from the 31st May, 1895, and will be adjusted when the honorarium at 31st May, 1896, is paid. I send you this explanation at Mr. Booth's request. I am, &c, Bichd. A. Gibbs, Accountant. The Chairman, Banking Committee, House of Representatives,
Directors, Paid by Honorarium, Half-year ended 30th September, 1895. Honorarium, Half-year ended 31s't March, 1896. Travellingallowance for Year ended 31st March, 1896. Totals. £ s. d. 75 0 0 250 0 0 70 O 0 233 6 8 163 6 8 163 6 8 £ s. d. 67 10 0* 250 0 0 67 10 0 225 0 0 225 0 0 225 0 0 £ s. d. 52 0 0 50 0 0 £ s. d. fr. William Booth fon. W. W. Johnston Bank Estates Company.. Bank Estates Company.. Bank 744 10 0 1 595 16 8t [r. Martin Kennedy :r. T. G. Macarthy 388 6 8t 388 6 8f ! 2,117 0 0 955 0 0 1,060 0 0 102 0 0 * Honorarium received, less ;o 31st May, 1896. 10 per cent., from 1st Ocl iober, 1895, only. t Honorarium, less 10 per cent., from 1st June, 1895
197
1.—6
EXHIBIT No. 39. BANK OF NEW ZEALAND ESTATES COMPANY. [Handed in by Mr. Watson, 27th August, 1896]. Memoeandum of Balances of Peofit and Loss Accounts as shown in Balance-sheets of the Bank of New Zealand Estates Company for Years ending 31st March, 1891 to 1896, inclusive. £ s. d. £ s. d. 31st March, 1891. By Balance, profit ... ... 114,350 18 8 1892. „ „ ... ... 43,638 2 6 1893. „ „ ... ... 24,805 12 8 1894. To Balance, loss ... 33,504 6 4 1895. „ „ ... 467,077 0 5 1896. By Balance, profit ... ... 29,292 10 9
BANK OF NEW ZEALAND ESTATES COMPANY. Statement showing Revenue received from Stations for Years ending 31st March, 1891 to 1896, inclusive. £ s. d. 31st March, 1891 (seven months and a half) ... ... 16,265 7 2 1892 ... ... ... ... ... 72,991 14 10 1893 ... ... ... ... ... 39,391 3 5 1894 ... ... ... ... ... 35,895 8 6 1895 ... ... ... ... ... 12,356 4 10 1896 54,801 2 11
EXHIBIT No. 40. [Handed in by Mr. Watson, 27th August, 1896.] BANK OP NEW ZEALAND. Analysis of Deposits on 31st March, 1896. £ New Zealand ... ... ... ... ... ... 7,080,991 New South Wales ... ... ... ... ... ... 168,068 Victoria 120,784 South Australia ... ... ... ... ... ... 112,922 Fiji ... ... ... ... ... ... ... 200,901 London ... ... ... ... ... ... ... 2,211,113 £9,894,779 Head Office, Wellington, 25th August, 1896. Eichd. W. Gibbs, Accountant.
EXHIBIT No. 41. [Handed in by Mr. Watson, 27th August, 1896.] Transfers registered since 30th June, 1894, on the Colonial Share Registers of the Bank of New Zealand, with Calls due on Shares transferred, paid at Date of Instrument of Transfer.
Date of Deed. Date of Registration. Transferor. CO <D U c3 A CO Transferee. Consideration. 1894. May 31 June 26 May 20 „ 31 „ 31 June 21 23 if M%J „ 20 1894. July 6 „ 6 „ 6 „ 6 „ 6 „ 6 ,, 6 „ 6 Cohen (No. 2 account), G. J. ... 50 Campbell, J. L. ... ... 100 O'Neill, Henry ... ... 100 Albery, Mark ... ... ... 25 25 Hull, Francis ... ... ... 10 Kennedy, Martin ... ... 15 Mandleson, Mrs. S., Cohen, B. S.J 25 and Cohen, G. J. Ditto... ... ... ... 100 O'Neill, Henry ... ... 50 ... 12 25 ... 25 ... 25 Cohen (" B " Account), G. J. ... 25 Frater, William ... ... 50 Kilgour, James ... .. 20 Frater, William ... ... 50 Clark, W. H. ... Payne, M. H. ... Howatt, Mrs. M. M. Shepherd, Bobert Bourke, William Timperley, William Fogo, A. L. I ... i £ s. d. 157 10 0 300 0 0 412 10 0 73 8 9 73 8 9 30 15 0 63 15 0 76 17 6 „ 8 May 16 „ 18 „ 18 „ 18 „ 18 June 27 . 30 July 2 June 28 i, 13 ,; 20 „ 20 i, 20 * 20 . 20 „ 20 „ 27 i, 27 „ 27 Smith, H, J. ... Lees, Ambrose... a • • • Mitchell, J. A. S, Wise, ArthurCampbell, J. L. Heron, George Clark, W. H. ... '•'•'.'! 307 10 0 135 0 0 34 10 0 71 17 6 73 2 6 73 2 6 80 0 0 150 0 0 20 0 0 155 0 0
i.^-e.
Transfers registered on the Colonial Share Registers of the Bank of New Zealand— continued.
198
Date of Deed. Date of Registration. Transferor. 33 u Xfl Transferee. Consideration. 1894. „ 25 July 4 „ 4 June 27 „ 2 . 6 May 31 July 21 „ 29 „ 28 „ 25 . 21 June 23 „ 29 April 9 1894. „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 . 27 * 27 ; 27 „ 27 „ 27 „ 27 „ 27 Brown, Thomas Frater, William „ ... ... Taylor, John ... Walker, C. K. Brimblecombe, G. F. Wade, C. G Hull, Francis ... Haywood, M. J. Leary, B. H, and Sproven, Henry Govett, Miss M. L. Bewes, Mrs. M. B. Frater, William Kennedy, Mrs. Mary Pearson, Mrs. B. L., Pearson, W. B., Hamilton, J. F., and Farren, C, F. F. Ditto... Byan, G. A. B. Baker, William Pearce, Ed., and Bethune, J. H. ... Frater, William Boss, Donald ... Frater, William King (deceased), Thomas King, Henry, and King, Newton ... 8 16 10 13 10 15 25 10 10 40 20 50 30 50 10 Pierson, J. M. ... McMahon, James Coe, James Brimblecombe, G. F. „ ... ... Greacen, John... Lees, Andrew ... Blair, J. Lees, Andrew ... Sheppee, G. L.... £ s. d. 34 0 0 20 16 0 14 0 0 39 0 0 14 0 0 22 13 9 67 17 6 27 0 0 30 0 0 118 0 0 61 0 0 152 10 0 91 2 6 208 15 0 30 0 0 a • • • • • • Shepherd, Bobert Beid, James „ 9 June 2 „ 2 „ 16 July 5 „ 10 June 28 „ 20 „ 20 „ 20 . 20 „ 20 „ 28 „ 25 July 9 June 21 . 21 „ 25 „ 29 May 2 July 5 5 „ 5. 5 June 26 „ 26 July 2 „ 3 • 6 „ 5 June 22 „ 2 it a 2 July 16 i, 17 „ 23 „ 27 June 29 „ 28 July 12 * 9 „ 9 i, 9 i 20 9 27 „ 12 „ 21 ; 3i „ 27 „ 27 „ 27 „ 27 ;, 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ 27 „ .27 „ 27 „ 27 „ 27 „ 27 „ 27 i, 27 ,, 27 „ 27 „ 27 „ 27 „ 27 „ 27 July 27 „ 27 „ 27 „ 27 Oct. 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ io „ io „ 10 „ 10 „ io „ io „ io i, io ,/ a it n Frater, William Taylor, John Kennedy, Mrs. Mary Brenner, James a • • • • • • Woods, Mrs. A. C. Chaffey, B. A. ... Graham (deceased), George Bensusan, S. L. a ' • • a • • • Cohen (" B " account), G. J. Cohen (No. 2 account), G, J. Campbell, Edward Kilgour, James Bennick, James 10 4 6 59 50 90 10 64 6 10 6 10 20 12 63 10 6 5 10 53 11 14 25 50 25 50 10 31 17 14 10 9 6 3 27 10 16 26 30 5 5 34 20 8 62 50 50 40 10 a • • • ■ • • a • • • • • ■ a •.. • •. ... Frater, William Greacen, John Dilworth, James Boddington, H. A. King, Henry, and King, Newton ... King, Newton it . • • • • • Henry, J. McK. Malcolm, J. P. Kennedy, Martin Ashwin, Miss H. and Miss M. Fairclough, Bev. P. W. ... n • • • • • Pierson, J. M. ... Graham, Mrs. Sydney ... Cogan, James, and McKerrow, F. J. // a I! II II II 30 0 0 12 0 0 17 5 0 177 0 0 68 15 0 139 10 0 31 5 0 18 0 0 40 0 0 18 0 0 40 0 0 61 0 0 37 10 0 0 10 42 0 0 25 4 0 21 0 0 42 10 0 34 0 0 43 0 0 77 0 0 150 0 0 77 0 0 150 0 0 31 5 0 31 0 0 23 16 0 14 0 0 31 5 0 21 7 0 19 4 0 9 3 0 48 12 0 90 0 0 48 0 0 39 0 0 93 0 0 15 15 0 15 15 0 41 13 0 24 10 0 9 16 0 105 8 0 62 10 0 72 10 0 60 0 0 13 15 0 II It If It Gumming, D. C. Bennick, James Smith, Neil Beid, James Cumming, D. C. Wallace, Miss E. G. Hull, Francis ... Walker, H. C. H. Kensington, W. C. Garland, H. N. Dawson, William Pearce, Edward, and Bethune, J. H. Frater, William Jobson, W. J. Frater, William Campbell, Edward Layland, E. L. „ ... ... a ... ... Nixon, Thomas Bussell, James Frater, William Beid, James Hudson, James Harland, Thomas „ ... ... Hamilton, Andrew it • ' • • ' • Estevenet, Miss Emilie ... Hamilton, Andrew Bobertson, James Beeves, William P. Hull, Francis ... Mabin, A. E., and Mabin, E. E. ... „ ... ... „ ... ... Lawson, John ... Browne, Michael Hull, Francis ... Bussell, James... Wilson, F. J. ...
1.—6.
Transfers registered on the Colonial Share Registers of the Bank of New Zealand — continued.
28—1. 6.
199
. . Date of Date ol ; -n, ■ , Deed. : »<*"*»• tion. Transferor. (8 A W Transferee. Consideration. 1894. July 6 . 21 „ 28 June 21 Aug. 9 9 15 June 29 Aug. 28 „ 31 1894. Oct. 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 „ 10 Latter, E. O, and Harper, L. Hull, Francis ... Black, Harry ... McLeod (deceased), John Watson, John ... Evens, Mrs. E. E. Taylor, B. B. ... Frater, William Fenwicke, Minden Bussell (deceased), J. B. 12 10 7 50 5 128 18 20 12 6 Latter, E.G., and Bhodes, B. H. Kilgour, M. J. ... Mitchell, James McLeod, F. M., and McCredie, A. Kelly, J. H. ... Havnes, Daniel Pardy, W. S. ... Turner, J. B. ... Coe, James Bussell, E. B. N., Campbell, H., and Cochrane, W. S. Baron, H. W. Wynyard, B H. Dilworth, James £ s. d. 0 10 0 17 10 0 23 10 0 6 5 0 128 0 0 13 13 0 59 0 0 9 6 0 July 31 Sept. 1 July 30 „ 27 Sept. 3 „ io „ 10 „ 10 „ 10 „ 10 Gregson, Jesse Hawkins, sen., H. J. Darrow, James Lyster, Andrew Bussell, E. B. N., Campbell, H, and Cochrane, W. S. Wynyard, B. H. Hawkins, sen., H. J. Brown (of Brownsville), John Gregson, Jesse Hawkins, sen., H. J. Yardin, Francis, and Leterrier, John Hawkins, B. T. Mollet, Thomas Wratt, Eliza ... Pardy, W. S. ... Buttle, G. A. ... Joyce, Mrs. Emily Aldred (deceased), Bev. John England, B. W., and Aldred, W. A. Hawkins, sen., H. J. Pardy, W. S. ... ... • ... Fogo, Andrew ... Byrne (deceased), Patrick Kilroy, Mark ... Jeffrey, William Byley, John England, B. W., and Aldred, W. A. Aldred, Mrs. M. A. Corley, James ... England, B. W., and Aldred, W. A. Byley, John Sandison, Bobert Hossack (deceased), Agnes Abraham, B. S. Dawson, Bobert, and Salter, C. E. Dakin (deceased), Bobert Brown (of Brown, Ewing, and Co.), Thomas Sandison, Bobert Clarke, William H. Croft, W. J. ... Howie, John ... Hull, Francis ... Darrow, James Graham, Sydney Brimblecombe, G. F. Bethune (deceased), J. H. Bethune, Frances Brimblecombe, G. F. Graham, Sydney Corley, James ... Sandison, Bobert „ ... ... 25 10 45 18 6 10 37 7 50 20 46 26 14 50 50 84 55 136 21 10 12 20 25 10 15 50 50 82 17 17 10 25 76 5 40 79 50 7 23 15 7 25 25 90 28 25 14 14 28 25 50 90 45 32 10 0 6 0 0 60 0 0 20 0 0 5 11 0 3 3 Aug. 15 „ 31 Sept. 13 July 5 Aug. 31 Sept. 3 „ 8 „ 13 Aug. 27 June 25 April 13 June 28 Sept. 17 „ 14 „ 15 „ 15 „ 15 „ 20 „ 19 „ 20 „ 24 „ 24 „ 28 . 24 „ 19 „ 28 „ 19 Oct. 5 5 Sept. 20 „ 24 „ 10 „ 10 „ 10 . „ 1Q „ 10 „ 10 „ io „ 10 „ 10 „ 10 „ 26 „ 26 Nov. 1 „ 1 „ 1 „ 1 „ 1 "„ 1 „ 1 ,; i „ i i, i „ i i, i „ i „ i „ i „ i „ i „ i ,, i „ i „ i a • • • Boss (of Auckland), Donald Yardin, Francis, and Huault, P. ... Clements, J. B. it • • • • • • Painton, William Jeffrey, William Beid, James Joyce, James John England, B. W., and Aldred, W. A. Schwartz, N. H. A. Boss (of Auckland), Donald a 9 5 0 34 4 6 6 9 6 46 5 0 14 10 0 0 10 0 23 8 0 12 12 0 211 3 0 25 0 0 84 0 0 165 10 0 88 4 0 8 0 0 8 14 0 16 0 0 20 0 0 Byrne, Christopher Boss (of Auckland), Donald Kebbell, G. M. 12 0 0 37 10 0 37 10 0 41 0 0 8 10 0 11 9 6 7 0 0 16 5 0 51 6 0 a ••• ■ - Dilworth, James Ollivier, F. M. ... Somervell, Mrs. Elizabeth Ollivier, F. M.... Sims, Mrs. Jessie Dilworth, James Dilworth, James Dakin, Mrs. Amy Whitburn, James 16 0 0 31 13 9 6 16 6 „ 24 Oct. 13 Aug. 13 July 18 „ 23 Sept. 12 Oct. 17 „ 18 „ 16 „ 13 „ 22 6 Sept. 27 „ 24 „ 21 „ i <t i „ 14 „ 14 „ 14 „ 14 „ 14 „ 14 „ 14 „ 14 i, 14 „ 14 „ 23 „ 23 „ 23 Beid, James Ollivier, F. M. ... Milnes, Joseph... Hull, Francis ... Abbott, B. H. ... McDonnell, Edward Brimblecombe, G. F. Somervell, Mrs. Elizabeth Bethune, Frances Ollivier, F. M.... Waltho, J. E. ... Brimblecombe, G. F. Somervell, Mrs. Elizabeth 15 0 0 5 5 0 8 8 0 75 0 0 39 7 6 100 0 0 4 5 0 15 0 0 7 0 0 14 14 0 13 16 0 32 10 0 63 0 0 45 0 0 „ ... it ...
1,—6.
Transfers registered on the Colonial Share Registers of the Bank of New Zealand— continued.
200
Date of Deed. Date of Registration. Transferor. U1-. to c3 A CO Transferee. Consideration. 1894. Dec. 28 May 31 Sept. 14 Oct. 30 Sept. 19 „ 24 July 30 June 29 Oct. 1 1895. May 10 „ 20 Feb. 8 1895. Jan. 16 „ 23 23 Feb. 6 Mar. 6 i, 6 April 3 Mav 8 „ 15 Murray, John ... Kensington, W. C. ... Brimblecombe, G. F. Gibson, William Jeffrey, William Brimblecombe, G. F. Mollet, Thomas Bethune, J. H. Baron, William 100 7 6 25 25 25 42 41 25 Wilson, William Scott ... Brimblecombe, G. F. Campbell, John Ollivier, F. M. ... Brimblecombe, G. F. Somervell, Mrs. Elizabeth Binney, F. W.... Beeves, C. S., and Adam, W. M. ... Beid, James £ s. d. 0 10 0 28 0 0 6 6 0 2 10 0 27 10 0 25 0 0 88 4 0 133 5 0 11 17 6 „ 22 June 5 July 3 Willcox (deceased), Henry Levin (deceased), W. H. Arnold, W. M. M., and Simpson, E. P. Jones, Frederick Ewington, F. G., and Matthews, S. H. Ditto... 6 12 13 Willcox, E. D.... Hunter, James... De Lauret, Miss Josephine 0 10 0 10 0 July 12 Feb. 1 „ 24 . 24 30 5 Milnes, Joseph... Potter, John 39 15 0 16 13 4 „ 1 1894. Sept. 19 „ 19. 1895. July 13 „ 23 Aug. 2 July 25 J 25 „ 25 Aug. 21 1894. Oct. 31 1895. Sept. 6 „ 24 „ 24 i, 24 „ 24 ,, 24 „ 24 Aug. 28 Nov. 23 April 1 1894. June 25 „ 25 1895. Feb. 12 1894. Aug. 30 Oct. 18 1895. Dec. 20 1894. June 25 1896. April 10 „ 10 Mar. 27 „ 27 „ 27 J une 9 „ 30 1894. Sept. 17 1896. July 4 „ 24 5 Chappell, A. H. 16 13 4 „ 17 .„ 17 Dalrymple, Mrs. M. E. ... Dalrymple, A. M. 10 14 Beid, James 16 16 0 9 16 0 „ ... ... ... „ 31 „ 31 Aug. 28 „ 28 . 28 „ 28 „ 28 Higgins (deceased), Daniel Faulkner (deceased), Henry Fielder, Mrs. A. L. England, B. W.,and Aldred, W. A. 27 21 25 19 4 6 25 Joyce, John, and Kennedy, Mrs. C. Faulkner, Mrs. Eliza Mollet, Thomas Aldred, Mrs. M. A. Cogan, E. A. ... it ■ ■ ■ Akhurst, Frederick 20 0 0 15 4 0 7 10 0 11 5 0 1 5 0 a • • • Milnes, Joseph... Sept. 4 Anderson, Miss A. C. 13 Morkane, James 16 0 „ 11 Oct. 9 „ 9 i, 9 „ 9 „ 9 „ 9 Nov. 24 „ 27 Dec. 4 Cullen, Mrs. Ann Studholme, jun., John ... Studholme, Mrs. E. Moorhouse, Miss M. S. ... Moorhouse, Miss E. C. ... Moorhouse, Miss. A. J. ... Adams, Mrs. Jessie Fenwicke, Minden Horton, A. G. ... Battersbee, Mrs. Lydia ... 43 31 54 20 20 5 20 20 27 37 Horton, A. G. ... Bhodes, Mrs. S. A. a ■ ■ 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 0 5 0 20 0 0 20 0 0 0 10 a ■ ■ ■ ... Blacker, C. E. ... Wilson, J. L. ... Izard, C. B. „ 4 „ 4 Allan, Thomas Bremner, James 1.5 35 Morris, Thomas 46 17 6 109 7 6 a . • • „ 4 1896. Jan. 3 „ 21 Murray, G. A. ... Davidson (deceased), William Hallenstein, Bendix 20 241 100 Goddard, W. C, and Mullens, J. ... Davidson, Mrs. Louisa ... Forbes, W. G. ... 0 10 0 8 15 0 „ 3 Campbell, D. L. 50 Frater, William 0 10 0 „ 3 Frater, William 50 Morris, Thomas 156 5 0 May 13 „ 13 „ 13 „ 13 „ 13 July 1 „ 15 McLaurin (deceased), Peter Low, Mrs. C."e. ... ".'.. 50 50 55 40 30 14 5 Hunter, James Milnes, Joseph Maxton, Charles ... ■ Beatson, Bobert Balfour-Kinnear, James Hull, Francis... Nixon, J. H... 2 10 0 2 10 0 0 5 0 0 5 0 0 5 0 14 0 0 0 10 Bae, Mrs. Catherine Foreman, Miss Sarah „ 23 Brown (of Brown, Ewing, and Co.), Thomas Ditto 10 Blacker, C. E. ... 10 2 6 „ 23 20 Wilkinson, H. K 19 10 0
1.—6.
Transfers registered on the Colonial Share Registers of the Bank of New Zealand—continued.
Transfers registered since 30th June, 1894, on the London Share Register of the Bank of New Zealand, with Calls due on Shares transferred, paid at Date of Instrument of Transfer.
201
Date of Deed. Date of Registration. Transferor. ai Hi u s A CO Transferee. Consideration. 1894. une 11 1894. July 13 Priddle, C. F., and Stephen (deceased), E. M. Bundle (deceased), J. B., and Thompson, J. Thompson, Joseph Gregson, Jesse... 12 Elwell, B. P., and Priddle, B. G. ... £ s. d. 0 10 0 lug. 23 Oct. 10 32 Thompson, Joseph „ 23 Sept. 20 „ 10 Nov. 30 1895. Feb. 26 „ 26 May 15 32 5 Buthven, J. L., and Walker, J. G. Binney, F. W. ... 0 10 0 3 2 6 „ 22 uly 30 Sept. 20 1895. teb. 8 9 9 uly 1 1894. )et. 17 )ec. 31 „ 31 /[ar. 27 Holmes, James Heselton, Thomas Brooks, Henry 50 11 100 If ' ' ' ' " * 31 5 0 23 2 0 62 10 0 July 3 Aug. 7 „ 7 „ 28 Arnold, W. M. M., and Simpson,E. P. Douglas, Mrs. Jessie Beading, Mrs. Tabitha ... Stonier, Miss M. H. 5 40 14 30 De Lauret, Miss Josephine Williams, B. A. ... 0 10 0 0 10 0 0 3 6 23 0 0 Forsaith, Bev. T. S. Sept. 11 „ 18 „ 18 . „. 25. Beattie, J. A. ... Catlett (deceased), Miss E. C. 160 7 6 42 Cahalan, J. V. Catlett, W. H. Bartleet, Mrs. F. E. Stephen, C. B., and Stephen, S. A. Stephen (deceased), E. M., and Stephen, C. B. 1895. Sept. 18 Oct. 30 Suttor, Mrs. M., Suttor, W. H, and Acres (deceased), E. H. Smith (deceased), John ... 30 Suttor, Mrs. M., and Suttor, F. A. 0 10 0 ipril 9 1894. Sept. 12 )ec. 19 Dec. 18 746 Smith, Fergus I., and Smith, L. N. „ 18 „ 18 Walton (deceased), William Priddle, Bev. C. F. D. ... 22 41 Walton, Mrs. Sophia Priddle, C. J., Priddle, F. E., and Priddle, E. G. 0 10 0
1894. Sept. 26 „ 26 „ 26 Oct. 1 Sept. 29 „ 29 . 29 „ 29 Oct. 1 „ 1 Sept. 28 „ 21 „ 21 „ 28 Oct. 11 Sept. 29 Oct. 1 „ 12 ,/ 17 „ 11 „ 11 „ 16 „ 26 „ 26 „ 1 Sept. 28 „ 26 „ 28 Oct. 22 1894. Oct. 17 „ 17 „ 17 „ 17 „ 17 „ 17 ,, 17 i, 17 „ 17 „ 17 „ 17 „ 17 „ 17 „ 17 Nov. 7 „ 7 „ 7 „ 7 „ 7 . 14 ,, 14 „ 14 „ 21 „ 21 Oct. 17 „ 17 „ 17 „ 17 Nov. 7 Chapman (deceased), Charles Catlin, Ann Cox, C. W Davenport, William n • ■ • Kerr, J. H. Laws, Thomas Barron, Montague Taylor (deceased), G. L. Bose, Andrew ... Beard, S. W Atkins (deceased), T. P. Lawes, Thomas Cuthbert, Mary B. Pegge, J. T. ... Barningham, C. C. Ferguson, George Ochsenbein, William Ferguson, George Pegge, J. T. ... Bishop, Anne ... Dawson, Eliza E. Green, Mrs. J. E. W. ... Bose, Andrew ... Gillett, Charles, and Gillett (deceased), Alfred Gillett, Charles Edwin, and Gillett (deceased), Alfred 34 33 33 51 5 2 15 20 5 15 5 20 100 4 5 40 10 10 4 10 5 20 5 5 20 20 12 2 100 Chapman, W. C. N. Chapman, Bev. Charles... Chapman, G. A. Ferguson, George Scoles, Charles Hall, j". B.C. ... Thumwood, Charles a • • • Watson, Thomas Strachan, James Ferguson, George Allinson, T. B. 0 5 0 5 0 5 98 16 10 0 4 0 30 0 40 0 12 10 29 1 10 0 35 0 175 0 8 0 8 15 85 0 22 10 20 0 6 0 21 5 10 12 42 10 10 0 10 0 58 15 60 0 27 0 6 0 0 5 0 0 0 3 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 6 0 0 0 0 0 0 0 0 Lang, John Cheesman, T. M. Scoles, Frederick Wisbey,"Mrs. E. M. A. ... Leadham, Frank Thumwood, C. C. Scoles, Charles Green, George ... Spence, G. H ... Gillett, Charles Edwin, and Gillett, Charles Ditto... „ 22 „ 7 100 0 5 0
1.—6.
Transfers registered on the London Share Register of the Bank of New Zealand— continued.
Richard W. Gibbs, Accountant.
202
Date of Deed. Date of Registration. Transferor. m U c3 A Transferee. Consideration. 1894. Oct. 11 „ 16 „ 22 „ 11 „ 11 Nov. 16 „ 16 „ 16 1894. Nov. 7 „ 7 i, 7 „ 14 „ 21 ,. 21 „ 28 „ 28 1895. Jan. 30 „ 30 „ 30 „ 30 „ 30 „ 30 „ 30 Atkins (deceased), T. P.... Ochsenbein, C. W. Low, Fanny C. Atkins (deceased), T. P.... 4 15 50 1 5 12 6 10 Lawrence, Sir James Clarke Ferguson, George Low, Mrs. Jean Barron, Montague Leedham, Frank Cheesman, T. M. Bowland, A. B. Wilbraham, Mrs. M. J. ... £ s. d. 14 0 0 43 2 6 300 0 0 3 0 0 15 6 3 36 0 0 19 10 0 30 0 0 Whitlock, G."F. T. Dec. 29 „ 24 „ 24 „ 15 „ 29 „ 29 „ 13 1895. Jan. 7 „ 25 „ 25 9 „ 18 „ 5 „ 5 1894. Dec. 14 „ 13 1895. Feb. 11 Mar. 5 1894. Nov. 29 „ 28 1895. Jan. 31 1894. Dec. 28 „ 13 „ 12 „ 12 Nov. 15 „ 30 „ 14 1895. Mar. 21 1894. Oct. 12 „ 16 Nov. 14 „ 30 1895. Berkeley, Ada ... Black, C. B. ... Boswell, C. A.... Foxwell, J. K.... Fox well, Bose E. McLoughlin, Edwd., and McLoughlin, Louisa E. Hatherly, G. D. 1 20 10 5 2 2 30 Lawrence, Sir James Clarke 0 1 0 0 10 0 15 0 0 7 10 0 0 2 0 0 2 0 0 15 0 „ ... „ ... „ 30 „ 30 „ 30 „ 30 „ 30 „ 30 „ 30 // • ■ ' • " • // - • - ■ ■ ■ Rowland, A. R. ... ... Stone, Julia F. 50 10 60 30 6 55 35 a • . a ... „ ... a 2 10 0 0 10 0 0 5 0 1 10 0 0 5 0 2 15 0 52 10 0 a rt // * • ■ * • • Mar. 27 „ 27 Black, C. B. ... Ferguson, George 20 20 Beatson, Bobert Kinnear, James Balfour... 35 0 0 35 0 0 „ 27 „ 27 Leach, Abraham Cheesman, T. M. 150 4 Lawrence, Sir James Clarke 0 5 0 n „ 27 „ 27 Ferguson, George Norgate, Frank, and Norgate, Fred. 3 13 Scoles, Charles 5 12 6 24 7 6 „ ... ... „ 27 Stratford (deceased),-John 9 16 17 6 „ 27 „ 27 „ 27 „ 27 April 3 „ 3 „ 3 Chapman, Bev. Charles Ferguson, George Moore, Ada Moore, Henry Graves, Catherine A. Liberty, Arthur Wynyard, B. H. 33 9 5 6 5 10 10 Cheesman, T. M. Maxton, Charles ... ' „ ... ... Greer, Bev. W. B. 1 13 0 13 10 0 7 10 0 9 0 0 10 0 0 20 0 0 20 0 0 „ 3 Paris, Ellen A. 39 Seabrook, J. P. 0 5 0 Mav 22 ,: 22 June 12 „ 12 Cuthbert, Mary B. Pegge, G. T. ' Ferguson, George Cheesman, T. M. 5 25 20 5 Mockett, G. T. Greer, Bev. W. B. 10 0 0 50 0 0 40 0 0 30 0 0 June 4 7 Sept. 21 Sept. 25 „ 25 Oct. 23 Greig, William McG. ... Macduff (deceased), A. C. McNicol (deceased), Donald 50 40 12 Stokes, A W. Ferguson, George McNicol, James, McNicol, Donald, McNicol, Nicol, and McNicol, W. S. 12 10 0 0 5 0 15 0 0 1894. Nov. 14 „ 14 „ 23 „ 23 Ferguson, George Norgate, Frank, and Norgate, Frederick 30 25 Thumwood, Charles 60 0 0 43 15 0
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EXHIBIT No. 42. [Handed in by Mr. Watson, 27th August, 1896.] List of Persons who became Shareholders in the Bank of New Zealand since 30th June, 1894, and who have not paid Calls.
Shareholder. w Date of £ Transfer j3 Instruct ment. Date of Kegistration. Instalment. Amount of First Call unpaid. Amount of First Instalment of Second Call unpaid. Total of Calls due unpaid. 1894. 26 June 20 May 23 June 8 June 18 May 18 May 28 July 27 June 25 June 29 June 1894. 6 July 6 July 6 July 13 July 20 July 20 July 10 Oct. 20 July 27 July 27 July £ s. d. £ s. d. 83 6 8 83 6 8 12 10 0 83 6 8 £ s. d. 83 6 8 196 13 4 12 10 0 196 13 4 Payne, M. H. Howat, Mrs. M. M. .. Timperley, William Smith, Henry James Mitchell, James 100 100 15 100 25 25 7 25 8 10 3rd .. 113 6 8 3rd .. 113 6 8 { J 47 10 0 47 10 0 Wise, Arthur Pierson, J. M. 20 16 8 20 16 8 All 3 ( 2nd £17 12 0 I 3rd £18 2 8 60 "o 0 15 "o 0 75 "o 0 McMahon, John 10 4 July 27 July I 35 14 8 I 13 6 8 49 1 4 Coe, James 10 12 4 July 28 Aug. 27 July 10 Oct. 18"6 8 18 6 8 Brimblecombe, G. F. *9 2 June 27 July ( On 8 shares J 2nd £8 16 0 (3rd £9 1 4 [ 17 17 4 7 10 0 25 7 4 Reid, James 10 10 4 6 14 26 84 23 9 April 9 April 2 June 2 June 5 July 27 July 27 Aug. 24 Sept. 27 July 27 July 27 July 27 July 27 July 10 Oct. 26 Oct. 1 Nov. 1895. 15 May 17 July 17 July 1894. 27 July 27 July 27 July 27 July » ,, u » 25 10 14 lOct. 19 Sept. 19 Sept. 188"6 8 188 "6 8 Prater, William Boddington, H. A. .. King, Henry, and King, Newton Henry, J. McK. Ashwin, Miss H., and Ashwin, Miss M. .. Fairclough, Rev. P. W. *9 10 *32 20 16 June 28 June 20 June 28 June 3rd (balance of) 5"6 8 7 10 0 8 6 8 26 13 4 16 13 4 7 10 0 13 13 4 26 13 4 16 13 4 10 6 5 21 June 21 June 25 June 27 July 27 July 27 July 8 6 8 8 6 8 Logan, John, and McKerrow, Thomas J. Ditto 3rd .. 12 9 4 9 3 4 21 i.2 8 Cumming, D. C. 11 14 25 50 25 50 10 10 7 6 3 5 5 July 5 July 5 July 5 July 26 June 26 June 2 July 22 June 2 June 2 June 2 June 28 June 27 July 27 July 27 July 27 July 27 July 27 July 27 July 27 July 27 July 27 July 27 July 10 Oct. | 1st £192 10 0 i- 2nd £192 10 0 j A113rd£198 6 8 ■ 583 6 8 145 16 8 16 13 4 729 3 i 16 13 4 Wallace', Miss E. G. .. 13 "e 8 13 6 8 Harland, Thomas ( 2nd £11 0 0 ( 3rd £11 6 8 ! 3rd.. On 20 shares .. 5 12 July 10 Oct. i 22 6 8 I 8 6 8 30 13 4 Lawson, John Hull, Francis Russell, James 62 \34 60 40 5 20 July 12 July 17 July 21 July 9 Aug. 10 Oct. 10 Oct. 10 Oct. 10 Oct. 10 Oct. 70 5 4 51 13 4 16 13 4 121 18 8 16 13 4 Kelly, J. H. Yardin, Rev. Francis, and Huault, Rev. Placide Joyce, John James Ollivier, F. M. 5 13 4 83' 6 8 4 3 4 83"6 8 9 16 8 I 3rd.. 46 55 17 76 15 14 5 July 25 June 28 Sept. 28 Sept. 13 Oct. 13 Oct. 10 Oct. 26 Oct. INov. 1 Nov. 1 Nov. 14 Nov. 1895. 6 Feb. 38 6 8 45 16 8 38 6 8 45 16 8 On 122 shares 1st £134 4 0 [ 2nd £134 4 0 i I 3rd £138 5 4 1 406 13 4 122 10 0 529 3 4 25 30 Oct. Sims, Mrs. Jessie 5 19 Sept. 1894. 1 Nov. f 2nd £5 10 0 \ 3rd £5 13 4 i 3rd.. | 11 3 4 4 3 4 15 6 8 Dakin, Mrs. Amy Abbott, R. H. 50 25 20 Sept. 23 July 1 Nov. 14 Nov. 1895. 23 Jan. 56 13 4 41 13 4 20 10 8 98 6 8 20 16 8 Campbell, John 6 14 Sept. j 2nd £45 2 0 | 3rd £46 9 4 5 0 0 5 0 0 Reeves, C. S., and Adam, W. M. 41 29 June 8 May j 91 11 4 34 3 4 125 14 8 * Balance held.
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List of Persons who became Shareholders in the Bank of New Zealand, &c.— continued.
Richaed W. Gibbs, Accountant.
Transfers on the Share Registers of the Bank of New Zealand on which, at Date of Instrument of Transfer, Calls due were unpaid, showing Amount of such Overdue Calls at that Date.
21st August, 1896. Richaed W. Gibbs, Accountant.
EXHIBIT No. 43. [Handed in by Mb. Watson, 27th August, 1896.] Deae Sic, — Bank of New Zealand, Head Office, Wellington, 15th November, 1895. The services rendered by yourself and Mr. Litchfield in connection with the recent investigation with a view to purchase of the Colonial Bank's business and assets have been under the consideration of the board, and I have now the pleasure to communicate to,you the following resolution passed at a meeting of the board held yesterday : — " Resolved, That this board records its cordial appreciation of the services rendered by its inspectors, Messrs. Buller and Litchfield, in connection with the purchase of the business of the Colonial Bank, and, in recognition of the arduous and extra work done by them, the board willingly agrees to assure to them the status and emoluments they now enjoy in the service of the bank for a period of three years from Ist October, 1895, always assuming good behaviour during their time of service. This resolution is not intended to affect the continuity of their employment after the expiration of the above period, when they will revert to the same tenure of office they occupied prior to this resolution taking effect." I am, &c, C. G. Andeews, W. B. Buller, Esq., Christchurch. Acting General Manager.
Dear Sic, — Bank of New Zealand, Head Office, Wellington, 15th November, 1895. The services rendered by yourself and Mr. Buller in connection with the recent investigation with a view to purchase of the Colonial Bank's business and assets have been under the consideration of the board, and I have now the pleasure to communicate to you the following resolution passed at a meeting of the board held yesterday: — "Resolved, That this board records its cordial appreciation of the services rendered by its inspectors, Messrs. Buller and Litchfield, in connection with the purchase of the business of the Colonial Bank, and in recognition of the arduous and extra work done by them the board willingly agrees to assure to them the status and emoluments they now enjoy in the service of the bank for a period of three years from the Ist October, 1895, always assuming good behaviour during their time of service. This resolution is not intended to affect the continuity of their employment after the expiration of the above period, when they will revert to the same tenure of office they occupied prior to this resolution taking effect." I am, &c, C. G. Andeews, B. M. Litchfield, Esq., Wellington. Acting General Manager.
Shareholder. a, <0 U 3 A W Date of Transfer Instrument. Date of Begistration. Instrument. Amount of First Call unpaid. Amount of First Instalment of Second Call unpaid. Total of Calls due unpaid. Schwartz, Mrs. E. M. Schourup, Mrs. S. L. Potter, John 21 30 5 1895. 25 April 30 April lFeb. 1894. 31 Oct. 1894. 29 May 29 May 24 July £ s. d. 17 10 0 25 0 0 4 3 4 £ s. d. 17 10 0 25 0 0 4 3 4 Morkane, James Ruthven, J. L., and Walker, J. G. 13 32 23 Aug. 4 Sept. 1894. 10 Oct. 1895. 11 Sept. 1894. 17 Oct. 17 Oct. 17 Oct. 1895. 23 Oct. 23 Oct. 10 16 8 26 13 4 10 16 8 26 13 4 Cahalan, J. P. 160 17 Oct. 133 6 8 133 6 8 Thumwood, Charles 15 5 20 1 Oct. 28 Sept. 21 Sept. 30 25 14 Nov. 14 Nov. 3rd on 70 shares 79 "o 8 79 3 4 158 10 0 a 1,685 1 4 1,599 3 4 3,284 4 8
25 April, 1895 29 May, 1895 30 April, 1895 29 May, 1895 23 Sept., 1895 23 Oct., 1895 29 June, 1896 23 July, 1896 Date of Deed. Date of Registration. Transferor. j Shares. Transferee. C °tF on era " "oSuf £ s. d. £ s. d. Schwartz (deceased), A. H. A. 21 Schwartz, Mrs. E. M. .. .. 23 2 0 Bergh (deceased), Ludvig,and 30 Schouruf, Mrs. S. L. .. .. 33 0 0 Schwartz (deceased), Neils Frater, Wm. .. .. 80 Campbell, J. L. .. 0 10 0 33 0 0 Price, A. H. .. .. 4 Price, Miss E.G. .. 13 6 8 3 6 8 Considera- Unpaid tion. Calls.
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205
Dear Sir, — Bank of New Zealand, Head Office, Wellington, 23rd September, 1895. I have the pleasure to hand you herewith, duly executed by the board of directors of the bank, an agreement, under date 18th September, 1895 (Seal No. 4042), setting out the understanding arrived at as to your acceptance of the appointment of Auditor of the bank, in terms of clause 13 of "The Bank of New Zealand Share Guarantee Act, 1894." I am, &c, C. G. Andrews, J. M. Butt, Esq., Bank of New Zealand, Wellington. Acting General Manager. This deed, made the 18th day of September, 1895, between the Bank of New Zealand, hereinafter called "the bank," of the one part, and John Maeten Butt, of Wellington, in the Colony of New Zealand, of the other part. Whereas, up to the Ist day of November, 1894, the said John Marten Butt had been for many years in the service of the bank, and had for some time held the office of inspector in the service of the bank at a salary of £1,500 per annum : And whereas by " The Bank of New Zealand Share Guarantee Act, 1894," it was, inter alia, provided that the Governor, by an Orderin Council, might appoint some fitting person who should be an expert in banking business to act as Auditor in respect to the business of the bank in the Australasian Colonies, and whose salary or remuneration should be paid by the bank, the amount thereof to be fixed by the directors in conference with the Colonial Treasurer, and not thereafter be liable to alteration by the bank without the consent in writing of the Colonial Treasurer : And whereas the Governor offered to appoint the said John Marten Butt to be such Auditor if he would accept the appointment, and the said John Marten Butt thereupon inquired of the board of directors of the bank if, in order to enable him to accept the said appointment, the bank would agree to accept his resignation as a servant of the bank, and would also agree that upon the said appointment coming to an end, or being determined by effluxion of time or resignation, or any cause other than his own personal misconduct, the bank would re-employ the said John Marten Butt as a servant thereof, at the salary which he should be receiving at the date of such resignation : And whereas the bank agreed -to accept such resignation of the said John Marten Butt, and also agreed to re-employ him as aforesaid in the events mentioned: And whereas on the Ist day of November, 1894, the said John Marten Butt, in reliance on the said agreements, resigned his employment in the service of the bank, and with the concurrence of the board accepted the said appointment of Auditor : And whereas at the date of such resignation the said John Marten Butt was receiving from the bank the salary of £1,500 per annum: And whereas by an Order in Council dated the 12th day of November, 1894, the said John Marten Butt was appointed in terms of the said Act to act as Auditor in respect to the business of the bank in the Australasian Colonies, at a salary which was fixed in terms of the said Act at £1,750 per annum, from the Ist day of November, 1894, inclusive : And whereas the terms of the said appointment were communicated to the said John Marten Butt by a letter from the Colonial Treasurer, of which the following is an extract:—- -" I have the honour to inform you that, under the authority of an Order in Council dated the 12th instant, you have been appointed by His Excellency the Governor to act as Auditor in respect of the business of the Bank of New Zealand in the Australasian Colonies. The salary attached to your office as Auditor has been fixed by the directors, in conference with myself, at £1,750 per annum, to be paid monthly by the Bank of New Zealand, and to date from and be inclusive of the Ist instant, and to be for a term of three years from that date, subject to good behaviour and efficiency. The Government do not in any way bind themselves to a continuance of the appointment after the expiration of the term already named, and it must be further understood that, as the appointment has been made in connection with and for the purposes of safeguarding the guarantee afforded to the Bank of New Zealand by the Government, such appointment will at once cease and be determined at any time during the currency of this agreement should the business of the bank be wound up, or the statutory board of directors of the bank cease to exist." And whereas it has been considered desirable that these presents should be executed : Now, this deed witnesseth that, in consideration of the premises, the bank hereby covenants with the said John Marten Butt, his executors and administrators, that so long as his said appointment of Auditor shall subsist, and the said John Marten Butt shall act as the Auditor thereby appointed, the bank will, as required by the said Act, pay to him the said yearly salary of £1,750 by equal calendar monthly payments, of which (those due having already been made) the next shall be made on the 30th day of September current : And the bank hereby further covenants with the said John Marten Butt, his executors and administrators, that in the event of the determination or coming to an end of his said appointment as Auditor, whether by effluxion of time or his resignation, or by the happening of any of the events mentioned in that behalf in the said letter, or from any cause whavever other than his personal misconduct, then and in any such event, and provided the said John Marten Butt enters no other employment, the bank will immediately thereupon re-employ the said John Marten Butt as its servant, and the said John Marten Butt shall again become the servant of the bank exclusively, and at the said salary which he was receiving at the date of his said resignation, but so that such re-employment may be terminated in the same manner as his employment in the service of the bank before the date of such resignation might have been terminated. In witness whereof these presents have been executed by or on behalf of the parties hereto the day and year first before written. The common seal of the Bank of New Zealand was hereunto] affixed at a meeting of the board of directors of the saidl (Bank seal.) bank in the presence of— ) Wm. Booth, \ M. Kennedy, I Directors. Thos. G. Macarthy, J C. G. Andrews, Acting General Manager. J. M. Butt. (1.5.) Witness to signature of J. M. Butt— A. E. Mills, Bank Clerk, Wellington.
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This deed, made the 18tb day of September, 1895, between the Bank of New Zealand, hereinafter called " the hank," of the one part, and William Watson, of Wellington, in the Colony of New Zealand, of the other part. Whekeas by "The Bank of New Zealand Share Guarantee Act, 1894," it was, inter alia, provided that of the new board of directors of the bank thereby directed to be elected the President should be appointed by the Governor in Council, and that such President need not be a shareholder in the bank, but should have and should exercise all the duties, powers, and responsibilities of a director, and should also have the power of veto : And whereas the Governor in Council proposed to appoint the said William Watson to be such President, and the said William Watson agreed to accept the appointment, provided he should have a salary of £2,250 per annum, and be appointed for the period hereinafter mentioned : And whereas, in pursuance of the said Act, the Governor in Council did, by warrant dated the 12th day of October, 1894, appoint the said William Watson to be such President as aforesaid, to hold the said office during good behaviour and efficiency so long as such bank carries on the business of banking and the liability of the colony exists in respect of the two million pounds sterling guaranteed under the said Act, and by the said warrant the said William Watson was required to enter upon and duly discharge the duties of the said office in person, except only in case of sickness or other incapacity, or leave of absence first duly granted : And whereas the terms of the said appointment were expressed in a letter from the Colonial Treasurer to the said William Watson, dated the 12th day of October, 1894, of which the following in an extract: — "I have now the pleasure to hand you herewith a warrant of appointment under the hand of His Excellency the Governor wherein you have been appointed President of the Bank of New Zealand in terms of section 12 of " The Bank of New Zealand Share Guarantee Act, 1894." The appointment dates from the 6th instant, during good behaviour and efficiency, and the salary is to be at the rate of £2,250 per annum, to be paid by the Bank of New Zealand. You will understand that, as the appointment has been made entirely in connection with the colony's guarantee of two millions, which said guarantee ceases at the expiration of ten years from the date of the issue of the guaranteed stock, the Government do not in any way bind themselves to a continuance of the appointment after the expiration of the term of the before-mentioned guarantee, and, of course, your appointment will end should the statutory board of directors cease to exist. In case it becomes necessary to appoint a receiver, as provided by section 9 of the before-mentioned Act, the duties of the board of directors will cease in the ordinary course, and your office as President of the board will thereupon be determined." And whereas the said William Watson accepted the said appointment at the salary aforesaid for the period and otherwise upon the terms thereof: And whereas, at a meeting of the board held on the 12th day of October, 1894, it was resolved, on the reading of the said warrant and letter, that the board cordially approved of the appointment of the said William Watson to the Presidency of the bank, and agreed to provide for the said salary : And whereas, by a regulation passed at a meeting of the proprietors of the bank, held at Wellington, on the 17th day of October, 1894, amending the bank's deed of settlement, it was provided that a President of the bank may be appointed by the Governor in Council, and should receive such salary as might from time to time be agreed upon between the Colonial Treasurer and the directors of the bank and the President so appointed : And whereas it is considered desirable that these presents shall be executed: Now, this deed witnesseth that, in consideration of the premises, it is agreed and declared that the said William Watson shall act as President of the bank, at the salary and for the period aforesaid and otherwise upon the terms of the said appointment: And the bank covenants with the said William Watson, his executors and administrators, that, so long as the said William Watson shall act as such President as aforesaid under and in terms of the aforesaid appointment, the bank will pay to him the said salary of £2,250 by equal calendar monthly payments, of which (those due having already been paid) the next shall be made on the 30th day of September next. In witness whereof these presents have been executed by or on behalf of the parties hereto the day and year first before written. The common seal of the Bank of New Zealand was hereunto] affixed at a meeting of the board of directors of the saidl (Bank seal.) bank in the presence of— J M. Kennedy, Thos. G. Macarthy, Directors. Wm. Booth, C. G. Andrews, Acting General Manager. W. Watson. (1.5.) Witness to signature of W. Watson— A. E. Mills, Bank Clerk, Wellington.
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EXHIBIT No. 44. [Handed in by Mr. Watson, 27th August, 1896.] Combined Statement of Position of Australian Branches, Bank of New Zealand, 29th June, 1896.
24th July, 1896. R. W. G, Accountant.
EXHIBIT No. 45. BANK OF NEW ZEALAND ESTATES COMPANY (LIMITED). Memorandum of Trading Concerns held by the Company at 28th August, 1896.
EXHIBIT No. 46. Transfers of Bank of New Zealand Shares, London Register. Transfers of shares on the London register are passed by the bank's attorneys in London, Mr. R. H. Glyn and Mr. C. G. Tegetmeier, or either of them. The power of attorney under which they act is dated 25th September, 1894, and was given by the late board of the bank in London prior to their resignation, upon the transfer of the head office from London to the colony. The clause of the power of attorney under which transfers are made is as follows : " For and on behalf of the board of directors of the bank for the time being to consent to the transfer of any share or shares in the capital of the bank from any shareholder or proprietor thereof to such person or persons as the said attorneys or attorney may deem fit and proper." The power of restraint upon transfers, vested in the President by " The Bank of New Zealand Share Guarantee Act, 1894," was delegated by the President, in so far as London register transfers are concerned, to Mr. C. G. Tegetmeier, with the condition that every transfer, after being approved of by Mr. Tegetmeier, should be submitted for the approval of Mr. R. H. Glyn, the chairman of the bank's London board, and, after having been passed by him, should be placed before the Agent-General for New Zealand for his sanction. Each of the parties is required to indicate his approval by writing upon the transfer, and without such indication of combined assent no transfer is placed on the register. The Colonial Treasurer's approvalof this arrangement was signified at the time it was made, in October, 1894. 29—1. 6.
Accounts. New South Wales. j Victoria. I j South Australia. Total. Assets. Bills discounted Current accounts £ s. d. 45,349 11 6 292,518 18 2 £ s. d. 24,322 12 5 418,287 6 8 £ s. d. 2,163 15 4 6,276 18 9 £ s. d. 71,835 19 3 717,083 3 7 Total advances 337,868 9 8 161,684 13 11 63,595 15 1 1,389 0 1 14,653 9 10 23,124 15 4 442,609 19 1 107,351 2 9 1,383 5 4 2,166 2 10 10,410 0 6 9,081 15 5 8,440 14 112,447 2 21,980 18 1,903 10 325 10 3,610 2 1 6 2 3 6 4 788,919 2 10 381,482 19 2 86,959 18 7 5,458 13 2 25,389 0 10 35,816 13 1 Coin Bank property and premises Furniture and stationery Due by other banks Bills receivable Total 602,316 3 11 573,002 5 11 148,707 17 10 1,324,026 7 8 Liabilities. Notes in circulation Deposits not bearing interest Deposits bearing interest Deposits, General Government... Bills payable... Due to other banks 6,635 0 0 96,876 4 11 74,123 4 10 123,199 7 5,658 0 9 8 6,211 0 0 16,978 2 11 3,615 0 0 119,326 15 8 89 4 10 50,242 0 10 12,846 0 237,053 15 83,396 5 119,326 15 4,399 15 51,806 18 0 7 6 8 0 5 3,565 17 0 1,130 5 3 744 13 434 12 2 4 Total 182,330 12 0 130,036 13 11 196,462 4 3 508,829 10 2
Book-cost. Bank's Latest Ascertained Value* I?otal at 31st March, 1895 Since sold £ 567,658 116,416 £ 421,062 103,242 Bemaining at 28th August, 1896 £451,242 £317,820 Earnings for year ending 31st March, 1896, £29,614 6-56 per cent. 9-31 per cent. * " Bank's latest ascertained value " is the est: imate submitted to Committee, 1895.
208
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EXHIBIT No. 47. [Handed in by Mr. Watson, 31st August, 1896.] Staff. Since the 18th November, 1895, forty-two officers of the Bank of New Zealand staff have retired from the service : of these, twelve were compulsorily retired; seven out of the twelve compulsorily retired were retired upon immediate or prospective pensions. Bank of New Zealand, Bichaed W. Gibbs, Head Office, Wellington, 31st August, 1896. Accountant.
Analysis. Misconduct, retired for ... ... ... ... ... ... 5 Pension ... ... ... , ... ... ... •• ••• 7 To better their positions . ... ... ... ... ... 30 Total ... ... ... ... ... 42 Total number of employes: About six hundred employes.
Exhibit No. 48 included in Exhibit No. 56.
EXHIBIT No. 48a. [Handed in by the Hon. Mr. Seddon, Ist September, 1396.] CONFIDENTIAL PAPEES BELATING TO THE PBOPOSED AMALGAMATION OP THE COLONIAL BANK OP NEW ZEALAND WITH THE BANK OF NEW ZEALAND IN 1894. Mr. J. Murray and the Hon. G. McLean to the Hon. the Colonial Teeasueee. Sir, — Wellington, llth September, 1894. We have the honour to hand you the enclosed two documents embodying the agreement between us for an amalgamation of the Colonial bank of New Zealand with the Bank of New Zealand, subject to the approval of the Government and of the shareholders of the respective banks. We have, &c, John Murray. The Hon. J. G. Ward, Colonial Treasurer. Geoege McLean.
1. Negotiations have taken place for the amalgamation of the Bank of New Zealand and the Colonial Bank of New Zealand, and conditions have been provisionally defined. These are embodied in the accompanying memorandum, and are now respectfully submitted for the sanction of the Government as a necessary preliminary to their being laid before shareholders of the respective banks for their confirmation. 2. It is confidently claimed that this arrangement, if carried into effect, will greatly contribute to the soundness and stability of banking in the colony, and, by reason of the materially-increased net profits which will accrue to the Sank of New Zealand from the accession of the Colonial Bank's business, it would strengthen the security of the State in respect of its guarantee for the Bank of New Zealand. 3. The presence on the Bank of New Zealand's balance-sheet of a large item representing shares in the Bank of New Zealand Estates Company is a source of weakness to the bank, and the Colonial Bank reasonably make it a condition of amalgamation either that it be entirelyremoved or that the Government undertake to make good the ultimate deficiency, if any, which might remain after liquidation of the assets and of the collateral cover held by the Government, viz :— (1.) The paid-up capital of the bank, which, under the proposed £ agreement, is to be written down to ... ... ... 600,000 (2.) Beserve liability of shareholders ... ... ... ... 1,500,000 (3.) The interest of the Bank of New Zealand shareholders in the future profits of the bank, which, if the amalgamation be carried out, can hardly fail in ten years to accumulate to ... 500,000 Say ... ... ... ... ... £2,600,000 4. This undertaking in point of fact already exists, because the two millions capital guaranteed by the State is liable to creditors to make good this item with the others in the balance-sheet. The complete separation of the Estates Company from the bank, and the assumption by the Government of a share in its management and liquidation, would be a measure wise in itself, and which the country desires to see carried out. 5. It is respectfully suggested that a small Board or commission be set up; half to be nominated by the Government, half by the bank, with an administrative head to be jointly appointed. 6. And it is submitted that, in order to economy, and thereby the better security of the State, arrangements be made for the redemption of the £1,500,000 s|-per-cent. debentures, which are now a first charge on the assets, which impose a heavy and quite unnecessary burden of interest,
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and so lessen the resources to which the colony has to look for the protection of its guarantee, and which stand in the way of a satisfactory rearrangement of the administration. It is believed that this can be effected without raising any more money by loan. If part of the money already raised be used for extinguishing so much of these debentures there will, on the contrary, be an actual reduction in the amount owing. But this means, by the resumption of some of the estates under the Land for Settlements Act, and by assistance from the bank itself, the incubus referred to can be got rid of. Wellington, llth September, 1894. John Murray.
The undersigned, being of opinion that an amalgamation between the Bank of New Zealand and the Colonial Bank of New Zealand would be mutually advantageous and in the interests of the colony, agree, as regards the Bank of New Zealand, to recommend to the approval of the Government, and, as regards both banks, to recommend to their respective directors and shareholders, the following terms : — 1. The assets of each bank to be reviewed by a Board or other tribunal, upon which the other bank's representatives shall be preponderant. Upon these Boards respectively being satisfied that the assets of each bank are so far sound that any deficiency can be made good by the provisions available therefor, the Bank of New Zealand to assume the liabilities of the Colonial Bank and take over its assets, as hereinafter provided. 2. The Bank of New Zealand to take the necessary measures to increase its capital by the creation of new shares, of the nominal value of one million pounds sterling, to be designated B shares. Of these, four hundred thousand pounds to be issued to the shareholders of the Colonial Bank in lieu of, and in exchange for, the present paid-up capital of that bank ; the shares so issued to be considered as fully-paid-up shares, and to carry no further liability whatever. The remaining six hundred thousand pounds in shares to be vested in the President of the bank for the time being, and to be held for the present as unissued, but to be at the disposal of the shareholders of-the Bank of New Zealand or their transferees at a period to be appointed by the directors of the bank for the time being, but not later than the end of the year 1903. The subscriptions to be pro rata to the holdings of the C shares hereinafter mentioned, and six months to be given to subscribers in which to pay for the shares by instalments. When all the instalments are paid, the shares to carry no further liability. Such of those shares as are not subscribed for by those having a right to do so shall thereafter be absolutely the property of the bank as then constituted, and free from any restriction as to issue. The Bank of New Zealand to write down its present paid-up capital of nine hundred thousand pounds to six hundred thousands pounds, the sum of three hundred thousand pounds so released to be used as hereinafter provided. The old shares so written down to be designated C shares. The capital of the bank after amalgamation thus to be, — £ Guaranteed preference stock (A) ... ... ... ... 2,000,000 B shares, fully paid up ... ... ... ... ... 400,000 C shares, fully paid up ... ... ... ... ... 600,000 3,000,000 B shares unissued ... ... ... ... ... ... 600,000 £3,600,000 3. The first board of directors shall consist of seven members, of which four shall be elected by the present shareholders of the Bank of New Zealand, and three shall be elected by the present shareholders of the Colonial Bank, or their respective transferees. It is of the essence of this agreement that the Bank of New Zealand shall have a preponderance of one member on the new board of directors. Therefore if the Government should appoint as President of the bank a person heretofore connected with either bank, such President shall stand for one of the directors to be nominated by that bank. 4. With the exceptions of the principal executive officers —-namely, the joint general managers, chief inspector, and London manager (regarding which a separate agreement has been entered into) —the officers of the bank shall be selected by the new board of directors from the present staffs of both banks, and appointed to their various posts. These selections, so far as may be practicable, shall be made in accordance with the numbers and positions of the present officers of the two present staffs relatively, departure from this condition being only made where deemed necessary in the interests of the bank. The Colonial Bank officers coming in shall have no rights in the present Bank of New Zealand Guarantee and Provident Fund. Officers dispensed with to be compensated by the bank to which they at present belong. 5. The liabilities and assets of the Colonial Bank shall be taken over by the Bank of New Zealand, as provided in clause 1, excepting such assets or advance business which by the new board of directors (having a preponderating number elected by the Bank of New Zealand) shall be considered unfit and not proper to be so taken. Such amounts as may be so rejected, but which it may not be thought expedient to wind up, or not to wind up speedily, also such amounts as are determined to be subjected to speedy realisation, shall be liquidated or otherwise treated by the bank under the new Board for behoof of the present shareholders of the Colonial Bank or their transferees, but under direction and according to the wishes of appointees of the said shareholders. The reserve funds and undivided profits of the Colonial Bank shall be used in the first instance to make good any deficiency resulting from liquidation as above. If any surplus
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remains after making good such deficiency, such surplus shall be divided equitably amongst the shareholders of the Colonial Bank; if the reserve fund and profits be insufficient to make good the deficiency, then a call shall be struck on the Colonial Bank shares, and shall go to make good such dificieney before the final exemption of the shareholders from liability. The limit of time allowed for acceptance or rejection of advance business as above shall he four calendar months from the date of amalgamation, and no such account shall be carried on for more than twelve months, unless with deposit of a reserve against it to the satisfaction of the Board. 6. The new board of directors shall pass in like review the assets and liabilities of the Bank of New Zealand in existence prior to amalgamation ; but if any representative of the Colonial Bank on the Board shall take exception to any asset so reviewed, then the tribunal must be narrowed by so many of the representatives of the Bank of New Zealand withdrawing as shall leave a preponderating number of Colonial Bank appointees to decide whether such asset shall be taken over or rejected. Within four months from date of amalgamation there shall be set aside for liquidation or other treatment all such assets and accounts as may be considered unfit and not proper to be continued as business of the bank. Such accounts as may be so set aside shall be liquidated or otherwise treated by the new Board in the same manner as those of the Colonial Bank, but under the direction and according to the wishes of the appointees of the present shareholders of the Bank of New Zealand. The three hundred thousand pounds released from the capital of the bank as per clause 2, the reserve funds, and the undivided profits of the Bank of New Zealand shall be used in the first instance to make good any deficiency resulting from liquidation as above. If any surplus remains after making good such deficiency, such surplus shall be credited to the account of the Bank of New Zealand Estates Company (Limited) with the bank. If the said released capital, reserve funds, and undivided profits be insufficient to make good the deficiency, then the dividends and profits which shall accrue on the six hundred thousand pounds C shares shall be used in the first instance to make good such deficiency, and shall be so applied until the deficiency be wiped off.7. The present premises of both the Bank of New Zealand and the Colonial Bank to be valued by the new Board on the basis that they are going concerns ; and if these values be agreeable to the appointees of the relative banks, then such values be adopted, and the premises so agreed upon be taken over by the amalgamated bank. If the appointees of either bank disagree with any such valuation of the new Board, then the Board and the appointees so disagreeing shall in each case appoint an umpire, whose valuation shall be final. But it shall be reserved for the appointees of each bank to decide whether the amount of any valuation should be accepted from the amalgamated bank, or that in preference any particular premises should be liquidated as specified in clauses 5 and 6 hereof. Should the valuations of the present premises of the Bank of New Zealand amount to a sum exceeding that at which the whole of the premises now stands in the books of the said bank, such surplus shall be credited to the liquidation account for the ultimate behoof of the Bank of New Zealand Estates Company (Limited), as per clause 6, and any surplus in like manner arising by valuation of the premises of the Colonial Bank shall be credited to the liquidation account mentioned in clause 5. If instead of a surplus there should arise a deficiency to either bank on account of premises, such deficiency shall be treated, in the case of the Bank of New Zealand, as provided for deficiencies on other assets in clause 6, and in the case of the Colonial Bank, as likewise provided in clause 5. 8. It is an integral part of this agreement that before amalgamation takes place legislation shall be passed by the Parliament of New Zealand by means of which the Bank of New Zealand Estates Company (Limited) will be entirely separated from the bank, so that the present shareholders of the Colonial Bank who are about to transfer their capital, and the future creditors of the Bank of New Zealand, may run no risk whatever from the bank's connection with the said Estates Company or future advances to it. 9. It is hereby agreed that, after payment of four per cent, per annum on the guaranteed preference stock, and six per cent, per annum dividend on the other paid-up capital of the bank, and after placmg twenty thousand pounds per annum to a new reserve fund, all other profits and dividends earned and payable (after due provision for bad and doubtful debts) shall be applied to reduce the ultimate deficiency of the Bank of New Zealand Estates Company (Limited). 10. The bank shall afford to the Bank of New Zealand Estates Company the necessary banking facilities, under suitable guarantee, for carrying on and liquidating the business and assets of the company, and the concerns belonging to it. Amounts at credit of the company with the bank are to be placed for interest purposes against amounts at debit, and interest at the rate of four per cent, per annum is to be charged or allowed on the daily balances on either side until the company shall be either liquidated or placed in a solvent condition. 11. The said amalgamation shall take effect within fourteen' days after the shareholders of the respective banks shall have adopted a resolution approving of such amalgamation; but the parties may by mutual consent extend such period of fourteen days for a further period not exceeding two months. John Mueeay. Dated at Wellington, the llth day of September, 1894. Geoege McLean.
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The Hon. the Colonial Treasueer to the Hon. the Peemiee. Colonial Treasurer's Office, Wellington, The Hon. the Premier. 12th September, 1894. I received last night the attached proposals for an amalgamation between the Bank of New Zealand and the Colonial Bank. Since the colony guaranteed £2,000,000 to the Bank of New Zealand the whole matter has given me the greatest concern and anxiety, not so much on account of the guarantee to the bank proper, but on account of the position of the Bank of New Zealand Estates Company. Attached to the bank as it now is, it will, in my opinion, render it impossible for the bank to extricate itself, even with the colony's guarantee, and must, if not now dealt with, call in the future for further substantial aid from the colony. If the Estates Company is left under the same control as the bank itself, the duties of the President, Auditor, and Colonial Treasurer will be greatly interfered with, —and, indeed, I may add that, in my humble opinion, the Treasurer's life would not be worth living. To insure himself against the possibilities of disaster in the guarding of the £2,000,000, he would require to know almost every detail of the way in which the two concerns —namely, the Estates Company and the bank itself—were operated upon, otherwise the possibility of a loss in either of being transferred or even absorbed by the other would be not only easy to do, but exceedingly difficult over so huge a concern to detect. No President or Treasurer would feel safe (where two large businesses, conducted ostensibly as two establishments, but in reality one) in assenting to the investment of the funds guaranteed by the State. I recognised at the time, and stated so in the House, that the Government would take steps this session to separate the Estates Company from the bank. How to effect this has been the difficulty to solve, and day by day since the House passed the bank legislation it has engaged my attention. The result of the considerations that have occupied the attention of the executive of the bank and myself are embodied in the attached proposals. They are, — 1. An amalgamation between the Bank of New Zealand and the Colonial Bank. 2. The clearing of both of all bad or doubtful accounts. 3. Each proprietary to be held responsible for and to provide for any losses made on any accounts now held by either. 4. The capital of the combined banks to be £3,600,000. 5. All profits after certain provisions named in the proposal hereto to be paid to liquidate the Assets Company. 6. The Estates Company to be separated from the bank, the colony undertaking, should any deficiency ultimately arise, to make good such. This is virtually the position now. 7. The collateral securities against the Assets Company to be held by the Government to be £2,100,000. The profits from the bank to be paid into the Assets Company estimated to realise at least another £500,000. Total, £2,600,000. I am of opinion that, to guard the interests of the colony, the Agent-General should be appointed to the London Board ; not if the Estates Company remains attached to the bank. The colony, with a clean and sound bank, would gain by having such a representative on the London Board. There should also be a small advising Board in Melbourne or Sydney to control and advise upon the Australian business. The policy in each of the Australian Colonies should be to reduce business gradually, and to confine the business of the bank there entirely to one of a liquid character. Advances there on property or real estate should generally be avoided. The Government to control the Estates Company by the appointing of a president or chairman to it, and also two directors. The bank shareholders, who would be liable for £1,500,000, also to appoint two directors. The Government Bank of New Zealand Auditor also to be auditor of the Estates Company. The name of the Estates Company to be changed by the excision of the words " Bank " and " New Zealand." It would be well, in my opinion, to completely change its name. The past odium attaching to it would thus not continue to live daily in the history of the bank, and the colony could well afford not to have its name attached to it either. The position is both a difficult and a serious one. In the absence of the proposal now under consideration being adopted, the next best course, and one which could be adopted, would be to separate the Estates Company from the bank, and guarantee its outcome, holding the uncalled capital of the Bank of New Zealand against any loss that might arise. In the event of this course being adopted, the colony should control the Estates Company as suggested under the amalgamation scheme. If this course is thought to be preferable to an amalgamation, it will be essential to retire the £1,500,000 of 5-J-per-cent. Estates Company debentures, and to do this an issue of 3-J-per-cent. Government stock would be necessary. So far as my opinion is worth anything, the latter scheme has much less to recommend it than an amalgamation. The whole matter, however, requires the most careful consideration of all the Ministers. Wellington, 12th September, 1894. J. G. Ward.
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EXHIBIT No. 49. ["Handed in by Mr. Seddon during Mr. Watson's evidence, Ist September, 1896.] CONFIDENTIAL PAPERS RELATING TO THE LEGISLATION IN 1895 ON BEHALF OF THE BANK OF NEW ZEALAND. The President, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir,— Bank of New Zealand, Wellington, 23rd July, 1895. I have the honour to hand you herewith balance-sheets of the Bank of New Zealand, the Bank of New Zealand Estates Company, and the Auckland Agricultural Company, as of 31st March, 1895. You are aware that the Bank of New Zealand Estates Company is entirely owned by the Bank of New Zealand, and the £750,000 debentures of the Estates Company guaranteed by the bank. In like manner the Auckland Agricultural Company is owned by the Estates Company, and the debentures of the Agricultural Company guaranteed by the bank. In the remainder of this letter, therefore, the term "Estates Company" will include the Auckland Agricultural Company. I have also, with much regret, to enclose a letter, dated yesterday, which I have received from the Government Auditor of the bank for the colonies, and to state, with the concurrence of the other directors, the true position of the bank, involved as it is with the affairs of the Estates Company. In the bank itself there are £3,085,296 represented as assets which are entirely unremunerative, £1,850,000 of this amount being shares of the Estates Company, and £1,235,296 consisting of other debts, of which £376,898 are irrecoverable, and others are of so doubtful a character that the board consider provision to the extent of £200,000 should be made for them to place the bank in a thoroughly sound position. In the Estates Company there is a deficiency of £472,938, which sum is not represented by assets at all, and is altogether apart from the book-values of the properties and other assets. Besides the amount of £3,085,296 above mentioned, there is amongst the debts due to the bank a& 31gt March the large sum of £1,442,000 due by the Estates Company, on whose debit balances it has hitherto been the custom to charge interest at the rate of 5 per cent.—a charge which, owing to the recurring yearly deficits accruing from the working of the Estates Company, the board do not feel justified in continuing any longer. The severest economies have been introduced into both the bank and Estates Company — economies which, with other adjunctive measures instituted, are calculated to produce, without impairing efficiency, no less than £85,000 annually to better the results of the two concerns ; but, whilst the magnificent portion of the business which is sound might enable the bank to stagger along under its load, the entanglement with the Estates Company is such that, without severance from it, the bank can no longer carry on. The board of the bank have given lengthy and careful consideration to the whole matter, and, in view of the report which they will have to present to shareholders at the annual general meeting in August, have decided to request the Government to take steps to prevent disaster. In the opinion of the board it is imperatively necessary that action should be taken by the Government by way of further legislation, to be declared before the shareholders' meeting takes place; otherwise the necessary disclosures would imperil the existence of the bank and the safety to the colony of the £2,000,000 stock guaranteed by the Government, besides rendering any subsequent efforts to save the bank and the good-will of its really valuable business very problematical. The board consider it their duty to point out to you the widespread ruin and disaster which, by deterioration of values and impossibility of sales, would be caused to kindred institutions and all classes of the community, let alone numerous shareholders of the bank, if the business and assets of the bank and the Estates Company should be exposed to immediate or even protracted liquidation. Such a calamity, they think, would result as has never yet been experienced by any British colony, and such they are convinced that prompt and judicious legislation would now avert and render altogether unnecessary. To this end I and the other directors are anxious to confer with the Government on the matter, and beg to request that you will arrange for a conference at the earliest possible time which will be convenient to the Government, and inform me, so that the board may duly attend. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
Aggregate Balance-sheet of Bank of New Zealand at 31st March, 1895. (Pro formd.) Dr. Liabilities. Assets. Cr. Capital— £ s. d. £ s. d. 4-per-cent. guaranteed stock .. 2,000,000 0 0 Coin and cash balances at banker's .. 1,302,009 0 0 100,000 shares of £5 ss. each .. 525,000 0 0 Bullion on hand and in transit .. 92,185 0 0 50,000 shares of £7 10s. each .. 375,000 0 0 Investments .. .. .. 880,213 0 0 Call of 1895 account .. .. 159,745 0 0 Bills receivable and bills discounted .. 2,112,348 0 0 Notes in circulation .. .. 468,195 0 0 Other advances and securities, and Bills payable in circulation .. .. 1,486,891 0 0 debts due to the bank, including Deposits and other liabilities .. 7,141,755 0 0 £1,372,661 due by the Bank of New Zealand Estates Company .. 5,123,002 0 0 Bank of New Zealand Estates Company's shares (par value) .. .. 1,850,000 0 0 Landed property, bank premises, <fee. 419,931 0 0 Deficiency.. .. .. .. 376,898 0 0 £12,136,586 0 0 £12,156,586 0 0
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Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. Dr. Liabilities. Assets. Or. Capital paid vp — £ Stations in New Zealand— £ Estates Company .. .. .. 1,850,000 Lands and improvements .. .. 1,586,537 Auckland Agricultural Company.. .. 148,110 Stock and implements .. .. .. 335,454 Debentures — Difference between Mr. Hean's valuation Redeemable in 1910 at £103 .. .. 750,000 and amount at which globo assets were Redeemable up to 1902 .. .. .. 282,960 purchased from the bank .. .. 54,507 Debts due to the bank .. .. .. 1,426,702 Sundry freehold properties in New Zealand .. 602,790 Accrued interest on debentures .. .. 26,225 Interest in Thames Valley Land Company Reserve for loss on Onehunga Ironworks stocks 3,316 represented by land and stock .. .. 137,142 Sundry creditors .. .. .. .. 4,688 Coal-mine and land, Waikato .. .. 17,674 Sundry accounts held in suspense .. .. 1,238 Freehold land beyond New Zealand .. 50,776 Leaseholds .. .. .. .. 75,721 Trading ooncems.. .. .. .. 567,658 Amounts due by purchasers .. .. 132,103 Sundry balances due to company .. .. 65,551 Shares .. 214,080 Mortgages .. .. .. .. 111,411 Sundries .. .. .. .. 53,344 Funds in hands of trustees .. .. 21,414 Deficiency .. .. .. .. 467,077 £4,493,239 £4,493,239
Combined Balance-sheet of the Bank of New Zealand Estates Company (Limited) and the Auckland Agricultural Company (Limited), as at 31st March, 1895. (Pro formd.) Dr. Liabilities. Assets. Cr. Capital paid, up— £ Stations — £ Estates Company .. .. .. 1,850,000 Land and improvements .. .. 1,083,959 Auckland Agricultural Company.. .. 148,110 Stock and implements.. .. .. 335,453 Debentures— Sundry freeholds in New Zealand .. .. 399,496 Redeemable in 1910 .. .. .. 750,000 Interest in Thames "Valley Land Company reRedeemable up to 1902 .. .. .. 282,960 presented by land and stock .. .. 50,256 Debts due to the bank .. .. .. 1,426,702 Coal-mine and land, Waikato .. .. 12,977 Accrued interest on debentures .. .. 26,225 l Freeholds beyond New Zealand .. .. 20,571 Reserve for loss, Onehunga Ironworks stocks.. 3,316 Leaseholds .. .. .. .. 52,508 Sundry accounts in suspense .. .. 1,238 Trading concerns .. .. .. .. 421,062 Sundry creditors .. .. .. .. 4,688 Shares .. .. .. .. .. 16,792 Mortgages .. .. .. .. 101,569 Sundries .. .. .. .. 21,020 Amounts due by purchasers .. .. 132,089 Sundry balances due to company .. .. 59,690 Funds in hands of trustees .. .. 21,414 Deficiency .. .. .. .. 1,764,383 £4,493,239 £4,493,239 The above is an estimate of the position after writing down the book-cost of the properties to the level of the latest valuations received.
The Auditor, Bank of New Zealand, to the Peesident. Deae Sir, — Bank of New Zealand, Wellington, 22nd July, 1895. When writing you on the 12th instant on the subject of the bank's balance-sheet to 30th March last, I did not refer to the fact —with which you are, however, familiar—that the bank received no dividend during the year covered by the balance-sheet upon its £1,850,000 of shares in the Bank of New Zealand Estates Company. I have since been looking into the company's books and returns, and have come to the conclusion that not only can no aid to the bank's profits be expected from the company unless a radical alteration in the position of its affairs can be effected, but that the existing state of things imperils the very life of the bank. Apart from the fact that the company's operations are being carried on at a loss, there is the serious feature that items of account totalling some hundreds of thousands of pounds appear in its balance-sheet against which no assets exist. These must be written off; and the only available fund for that purpose is the paid-up capital of the bank. The amount required is so large that, in conjunction with the provision needed to clear the bank's own bad debts, it practically sweeps away the whole of the £900,000 of paid-up sharecapital. The report of this state of affairs, which you will no doubt deem it your duty to make to shareholders, must, in my opinion, prove fatal to the bank, unless you are in a position to at the same time announce that measures calculated to strengthen it and place it upon an undoubtedly sound footing are in progress. In view of the magnitude of the colony's stake in the welfare of the bank, no time should be lost in acquainting the Colonial Treasurer with the serious difficulties that confront us. Yours, &c, The President. J. M. Butt, Auditor.
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Hon. the Colonial Teeasurer to the President, Bank of New Zealand. Sir, — 25th July. I have received your letter dated the 23rd instant with deep regret. The subject-matter was of so much importance that I felt it my duty to at once place the letter before my colleagues; and Government have decided to afford your board an opportunity of further explanation at an interview some time next week : the precise date and hour I shall inform you of as soon as possible. In the meantime, I must ask you to furnish me as speedily as you can with a statement showing in detail the separate value of each property held by the Estates Company—such statement to show the value of the land, of the buildings thereon, and of the stock belonging to each property. The valuations should be the latest, and such as have been accepted by your board. I am, &c, J. G. Ward, W. Watson, Esq., Bank of New Zealand, Wellington. Colonial Treasurer.
The Peesident, Bank of New Zealand, to the Hon. the Colonial Teeasurer. Sic, — Bank of New Zealand, Wellington, sth August, 1895. I have the honour to hand you, as verbally requested, balance-sheets of the bank and the Bank of New Zealand Estates Company, drawn up by the Government Auditor, according to his estimates of the actual positions at 31st March, 1895. I have also to convey to you the following suggestions and recommendations for urgent legislation, which have been carefully considered by the board of the bank : — 1. That the present paid-up capital of £900,000 and the proceeds of the call of £3 6s. Bd. per share (estimated at £450,000; total, £1,350,000) be written off, and applied to deficiencies, as follows :— (a.) Bad debts of bank, after application of £45,000 reserve fund ... £376,900 (b.) Contingency fund against doubtful debts of bank ... ... 200,000 (c.) B aia n oe to writing off in the bank's books a corresponding amount from the nominal value of the Estates Company's shares, which will reduce these shares to estimated real value ... 773,100 £1,350,000 2. That the Government take over, to be worked by a joint board of administration, the landed properties, plant, and stock of the Estates Company in New Zealand only (other than trading concerns and shares, excepting the shares of the Thames Valley Land Company), amounting, per book-values of 31st March last, to £2,734,104, and hand to the bank that amount in Government bonds or inscribed stock, bearing 3-| per cent, interest. As security for any deficiency on realisation of these properties, the bank to hypothecate to Government the reserve liability of shareholders, amounting to £1,000,000, and, further, to issue to Government £500,000 in deferred shares, to rank pari passu with £900,000 in deferred shares to be issued to the present shareholders; all deferred shares to be fully paid up, and carry no further liability. Such portion of the £1,000,000 reserve liability as may not be required to meet deficiency to be set free and cancelled, and such portion of the £500,000 deferred shares not required to be cancelled. Any surplus on realisation of properties to be paid to the bank. 3. A new issue of £1,000,000 preference shares, fully paid and without reserve liability, to be made by the bank, for which the Government shall subscribe. These shares to carry a fixed preferential dividend of 3£ per cent., and to be paid up by instalments as may be agreed upon between the Government and the bank. 4. Future net earnings of the bank, after providing for bad and doubtful debts, 4 per cent, interest on the guaranteed stock, and 3f per cent, interest on the preference shares, to be devoted to payment of such dividend on the deferred shares as the board of the bank may determine, subject, whilst the guarantee for the £2,000,000 stock lasts, to the approval of the Government. 5. That the disability, in so far as purchase of the business of any other bank is concerned, caused by Act 64 of 1894 be removed. It is computed that, if the measures herein suggested be carried into effect, no loss will accrue to the colony from the guarantee for the £2,000,000 stock, and that the shareholders of the bank will receive 5 per cent, per annum on their £900,000 deferred shares. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
General Manager's Office, Bank of New Zealand, Dear Sic, — Wellington, sth August, 1895. In accordance with your instructions, I have taken out and now hand you a pro formd combined balance-sheet of the Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited) as at 31st March last, after adjustment of valuations, and including the Matamata and joint interest acquired by the Estates Company since the balance date, with valuations also adjusted. The valuations adopted were those made by the Land- and Income-tax Department whereveravailable, with 10 per cent, added. In the majority of other cases the valuations given by the managers of the bank in the district where the assets lie have been taken; in a few minor instances I have had to fix values in consultation with the local officers of the Estates Company. Trading concerns have been roughly valued on a 5-per-cent. basis.
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The valuation of the live-stock has been based on the average price of stock during the years 1891-93. It is perhaps a little on the high side, although, I think, not much. The Auckland Agricultural Company holds 1,606 ordinary shares in the New Zealand Loan and Mercantile Agency Company, on which there is a liability of £8 10s. per share = £13,651. I also enclose, as requested, a pro formd balance-sheet of the bank as at 31st March, 1895, after writing off the estimated bad debts. I have, &c, The President, Bank of New Zealand. J. M. Butt, Auditor.
Aggregate Balance-sheet of Bank of New Zealand at 31st March, 1895. (Pro formd.) Dr. Liabilities. Assets. Cr. Capital— £ £ 4-per-cent. guaranteed stock .. .. 2,000,000 Coin and cash balances at banker's .. 1,302,009 100,000 shares of £5 ss. each .. .. 525,000 Bullion on hand and in transit .. .. 92,185 50,000 shares of £7 10s. each .. .. 375,000 Investments .. .. .. .. 880,213 Call of 1895 account .. .. .. 159,745 Bills receivable and bills discounted .. 2,112,348 Notes in circulation .. .. .. 468,195 Other advances and securities, and debts due Bills payable in circulation .. .. 1,486,891 to the bank, including £1,372,661 due by Deposits and other liabilities .. ~ 7,141,755 the Bank of New Zealand Estates Company 5,123,002 Bank of New Zealand Estates Company's shares (par-value) .. .. .. 1,850,000 Landed property, bank premises, &c. .. 419,931 Deficiency .. .. .. .. 376,898 £12,156,586 £12,156,586 Pro forma balance-sheet of the Bank of New Zealand after writing off bad and doubtful debts in accordance with Auditor's estimate. sth August, 1895. . J. M. Butt.
Combined Balance-sheet, Bank of New Zealand Estates Company (Limited) and Auckland Agricultural Company (Limited), as at 31st March, 1895. (Book-values.) Dr. Liabilities. Assets. Cr. Capital paid up— £ Stations-- £ Estates Company .. .. .. 1,850,000: Land and improvements .. .. 1,586,537 Auckland Agricultural Company .. .. 148,110 Stock and implements .. .. .. 335,454 Debentures— Difference between Mr. Hean's valuation Redeemable in 1910 at £103 .. .. 750,000 and amount at which globo assets were Redeemable up to 1902 .. .. .. 282,960 purchased from bank .. .. .. 54,507 Debts due to Bank of New Zealand .. 1,426,702 Sundry freehold properties in New Zealand .. 600,496 Accrued interest on debentures .. .. 26,225 Interest in Thames Valley Land Company Reserve for loss on Onehunga Ironworks (represented by land and stock) .. .. 137,142 Htocks .. .. .. .. .. 3,316 Coal-mine and land, Waikato .. .. 17,674 Sundry creditors .. .. .. .. 4,688 Freehold lands beyond New Zealand .. 53,070 Sundry account held in suspense .. .. 1,238 ! Leaseholds .. .. .. .. 75,721 Trading concerns .. .. .. 567^653 Amounts due by purchasers .. .. 132,103 Sundry balances due to company .. .. 65,551 Shares .. .. .. .. .. 214!080 Mortgages .. .. .. .. 111,411 Sundries .. .. .. .. .. 53,344 Funds in hands of trustees .. .. .. 21,414 , Deficiency .. .. .. .. 467^077 £4,493,239 Compiled under my direction. J. M. Butt, Bank Auditor.
Combined Balance-sheet, Bank of New Zealand Estates Company and Auckland Agricultural Company, as at 31st March, 1895. (Pro formd.) Assets. Cr. Dr. Liabilities. Stations— £ Capital paid up— £ Land and improvements .. .. 1,083,959 Estates Company .. .. .. 1,850,000 Stock and implements .. .. .. 335,453 Auckland Agricultural Company .. 148,110 Sundry freeholds in New Zealand .. .. 396,460 Debentures — Interest in Thames Valley Land Company, Redeemable in 1910 at £103 .. .. 750,000 represented by land and stocks .. .. 50,256 Redeemable up to 1902 .. .. .. 282,960 Coal-mine and land, Waikato .. .. 12,977 Debts due to the bank .. .. .. 1,426,702 Freeholds beyond New Zealand .. .. 23,607 Accrued interest on debentures .. .. 26,225 Leaseholds .. .. .. .. 52,508 Reserve for loss on Onehunga Ironworks Trading concerns .. .. .. .. 421,062 stocks.. .. .. .. .. 3,316 Shares.. .. .. .. .. 16,792 Sundry accounts in suspense .. .. 1,238 Mortgages .. .. .. .. 101,569 Sundry creditors .. .. .. .. 4,688 Sundries .. .. .. .. 21,020 Amounts due by purchasers .. .. 132,089 Sundry balances due to company .. .. 59,690 Funds in hands of trustees .. .. 21,414 Deficiency .. .. .. .. 1,764,383 £4,493,239 £4,493,239 The above is an estimate of the position after writing down the book-cost of the properties to the level of the latest valuations received, Compiled under my direction. J. M. Butt, Bank Auditor,
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Balance-sheet of Bank of New Zealand Estates Company (Limited) at 31st March, 1895. Dr. Liabilities. Assets. Cr. Share-capital,— £ s. d. Properties— £ s. d. Authorised— Balance, representing unrealised pro--75,000 6-per-cent. cumulative pre- parties at date .. .. .. 3,021,58119 6 ference shares £10 each. Amounts due from purchasers .. 128,360 2 8 125,000 ordinary shares, £10 each. Advances to trading concerns—workIssued— ing capital supplied .. .. 21,000 0 0 60,000 preference shares .. 600,000 0 0 Bank of New Zealand .. .. 27,661 11 4 125,000 ordinary shares .. .. 1,250,000 0 0 Cash in hand .. .. .. 132 10 0 Debentures redeemable in 1910 at £103 750,000 0 0 Bills receivable .. .. .. 100 0 0 Bank of New Zealand .. .. 1,112,535 12 10 Adjusting account of revenue .. 6,150 0 0 Accrued interest on debentures .. 21,225 0 0 Debts due to the company .. 10,506 10 1 Onehunga Ironworks stock reserve .. 3,316 111 Balance, Profit and Loss Account .. 521,584 0 5 £3,737,076 14 9 £3,737,076 14 9 N.B.—Assets, in terms of section 16 of " The Bank of New Zealand Share Guarantee Act, 1894," are taken as at par- or book-value. This is to certify that, having examined the above balance-sheet and accounts, and compared them with the relative books, returns, and vouchers, we have found the same to be correct. This certificate, however, is qualified by our special report of even date. " Profit and Loss Account" attached herewith. J. B. Hobaet. Wellington, 24th July, 1895. B. W. Gibbs.
Balance-sheet of Auckland Ageicultueal Company (Limited) at 31st March, 1895. Liabilities. Assets. Cr. Dr. £ s. d. Stations, &c. — £ 8. d. Share capital .. .. .. 148,110 0 0 Land and improvements .. .. 493,470 2 2 Stations- 1 - ' Stock and implements .. .. 73,195 3 3 Sundry creditors, Bank of New Zealand Horse- and stock-feed, grass - seed, Estates Company, &c. .. .. 4,645 15 10 manure, and sundries on hand .. 4,302 0 7 Accident Insurance Account .. 42 4 2 General— Bank of New Zealand, Cambridge Mortgages and agreements ..£34,669 Station, Working Account .. 13,012 19 5 Less Pah mortgage .. 28,490 Bank of New Zealand— 6,179 0 0 Ordinary Account .. .. .. 90,185 14 0 (Property being also shown as an No. 1 Account .. .. .. 90,968 3 5 asset below.) Debentures outstanding— Surrey Hills—Unpaid balances .. 3,743 16 0 Old issue .. .. .. £4,950 Pah Estate and other properties taken New issue.. .. .. 278,010 over from Williamson .. .. 28,708 2 4 282,960 0 0 Shares in various companies taken Accrued interest on debentures .. 5,000 0 0 over from Williamson .. .. 5,150 0 0 Sundry accounts held in suspense .. 1,238 0 2 Funds in hands of trustees .. .. 21,414 12 8 £636,162 17 0 £636,162 17 0 W. C. Cuff, Secretary.
EXHIBIT No. 49a. [Handed in by Hon. Mr. Seddon during Mr. Butt's examination.—l6th September, 1896.] Copy of the Ageeement between the. Colonial Bank of New Zealand and the Bank of New Zealand. [Certified as a correct copy of the original agreement.—Jas. B. Heywood, Secretary to the Treasury, 18th October, 1895.] An ageeement made the eighteenth day of October, 1895, between the Colonial Bank of New Zealand (hereinafter called " the selling bank ") of the one part and the Bank of New Zealand (hereinafter called " the purchasing bank ") of the other part, whereby it is agreed as follows : — 1. The selling bank agrees to sell, and the purchasing bank agrees to purchase, the business and assets of the selling bank, except the uncalled capital and reserve liability of shareholders and the assets and debts mentioned in a certain list, marked " D," which has been prepared, and is identified by being signed by three directors of the selling bank and the purchasing bank respectively, and except also as hereinafter mentioned. 2. The business and assets of the selling bank, as disclosed in its balance-sheet hereinafter mentioned, a copy of which balance-sheet has been signed by such directors as aforesaid, shall, for the purposes of this agreement, be considered as the basis of the contract entered into between the said parties. 3. For the purposes of this agreement -the face value of the consideration is estimated at £461,211; but from this sum shall be deducted and retained by the purchasing bank the sum of £327,305, as security pending the taking-over, realisation, or adjustment of the accounts in the " B " and " C " lists respectively, as hereinafter mentioned. The sum of £133,906 shall be paid in cash by the purchasing bank to the selling bank on the ratification and approval of this agreement, as hereinafter mentioned. 4. Three lists of debts and accounts have been prepared, and marked respectively " A," "B," and " C " lists, which are identified by being signed by such directors as aforesaid. 5. The debts and accounts mentioned in the " A" list shall be taken over by the purchasing bank as of the value set opposite to the same respectively in such list.
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6. The said sum of £327,305, part of the said purchase-money, represents sums in the righthand columns of the said " B " and " C " lists as marginal sums to be held by way of security pending the taking-over, realisation, or adjustment of the accounts in the said " B " and "C " lists respectively, and shall, subject to the provisions hereinafter contained, be retained by the purchasing bank for- such purpose. 7. The assets and debts mentioned in the said " D " list shall not pass under this agreement, or become the property of the purchasing bank, but shall remain the property of the selling bank. 8. The business and the assets hereby agreed to be sold shall be retained by the selling bank up to the date hereinafter fixed for the transfer of the said business, and as from the 31st day of May last in London, and as from the 31st clay of August last in New Zealand, up to such date so fixed the selling bank shall be deemed to have been and to be carrying on business on behalf of the purchasing-bank, and shall accordingly account to the purchasing bank for all benefits received, and be indemnified by the purchasing bank against all liabilities, obligations, and expenses (unless arising from the wrongful or negligent act of the selling bank or its officers) incurred in carrying on the business of the bank. All rates, taxes, and fire insurance premiums in respect of the premises and assets hereby agreed to be sold up to the said 31st day of August last shall be discharged by the selling bank, and thereafter by the purchasing bank, and all such rates, taxes, and premiums shall, if necessary, be apportioned. 9. The purchasing bank shall manage, realise, and adjust the accounts mentioned in the " B " and " C " lists respectively under the supervision of the selling bank, to whom monthly returns shall be furnished by the purchasing bank, and no increase of indebtedness shall be allowed in respect of any such accounts, except by mutual agreement between the selling bank and the purchasing bank; but if any such indebtedness is increased by mutual consent the selling bank, if required, shall provide a further guarantee to secure such increased indebtedness; and, if the purchasing bank shall allow any increase which may not be so mutually agreed upon, such increase of indebtedness shall be at the sole risk of the purchasing bank. 10. The purchasing bank shall be entitled to apply any surplus arising from any of the said marginal sums in the " B " list in aid of any deficiency which may arise in any other accounts in such-list until the whole of such accounts in such list shall have been taken over, liquidated, or adjusted. There shall be no liability on the part of the selling bank to the purchasing bank beyond the said marginal sums in respect of the said accounts or any of them. 11. If the selling bank shall consider that any steps or proceedings are necessary for the protection of the said accounts or any of them in the said " B " and " C " lists respectively, the purchasing bank shall, on receiving written instructions from the selling bank, take such steps and proceedings, but at the risk and expense of the selling bank. 12. If the purchasing bank shall represent to the selling bank that any account or accounts in the "B" list is or are in its opinion becoming bad, or in the event of a customer failing to pay interest on any such account, the purchasing bank may require that such account or accounts shall be closed and realised after one month's notice to the selling bank, but the selling bank shall have the option of withdrawing such account from the assets hereby sold on paying to the purchasing bank the amount then due thereon, and thereupon the amount standing opposite such account in the right-hand column shall be paid to the selling bank, and in the event of the selling bank declining to exercise such option within such month, then the purchasing bank may deal with the same in such manner as it thinks fit. 13. If at any time on the rendering of the monthly accounts or returns aforesaid it shall be found that the total amounts standing in the right-hand column of the "B" list shall exceed the total amount of debts to which they stand opposite in such list, then, and so often as the same shall occur, such excess of the total amount in such right-hand column shall be paid to the selling bank. 14. On the expiration of six months from the date of the transfer of the said business, and on the expiration of every six months thereafter, a statement shall be prepared by the purchasing bank and furnished to the selling bank of such accounts in the "B" and " C" lists as may have been taken over by the purchasing bank, liquidated, or adjusted, as also a statement of the position of the amounts in the said right-hand column of the " B " list. 15. An equitable adjustment shall be made of the interest due and to be allowed to the selling bank on any amount standing in the said right-hand column of the said " B " list which may ultimately be found to be in excess of the amount necessary for securing the debts mentioned in the said "B" list, and the rate of such interest shall be based on the current rates of interest for fixed deposits for twelve months paid by the purchasing bank. 16. After the expiration of two years from the 31st day of August last the selling bank may require the purchasing bank to pay over to the selling bank the whole of the amounts in the righthand column of the said " B " list, and surrender all securities held in respect of the debts or accounts mentioned in such list, on payment of the total amount of the balance then owing on such debts or accounts ; but the parties hereto may arrange fronr time to time to continue the liquidation of any of the accounts mentioned in the said "B" list for a further term. In the absence of any such arrangement the purchasing bank may proceed to liquidate all or any of the accounts mentioned in the said " B "list. 17. The purchasing bank shall not, so long as it retains any part of the said marginal sums as security as aforesaid, realise or discharge (except on payment) any security heid by the purchasing bank for or in respect of such accounts, nor realise or compound for such accounts, without the consent of the selling bank. 18. With respect to the accounts appearing in the said "C" list, the selling bank shall indemnify and protect the purchasing bank against any loss or deficiency on the realisation of such accounts respectively, provided that the purchasing bank shall, immediately on this contract taking
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effect, write off the amounts standing in the right-hand column of the "C " list, and credit the respective accounts in such lists with the amounts so written off. The purchasing bank shall have the option, within three months from the date of this contract taking effect, to take over all or any of the said accounts in the said " C " list, and in the event of the purchasing bank deciding to take over any such account the selling bank shall stand released from it agreement to indemnify and protect as aforesaid. The selling bank may at any time require the purchasing bank to elect whether such bank shall take over all or any of the accounts in the "C" list or reject the same, and in the event of the purchasing bank refusing to take over all or any of such accounts the selling bank shall be entitled to take over the accounts so rejected, with all securities in respect thereof, on payment of the amount owing on such accounts or account respectively, or require the purchasing bank to realise or liquidate the account or accounts which the purchasing bank refuses to take over, and any deficiency arising on such liquidation shall be made good by the selling bank. 19. The assets agreed to be sold as aforesaid shall be subject to all tenancies, liens, and equities subsisting or affecting the same, or any part thereof. 20. The purchasing bank shall pay, satisfy, and discharge all deposits, bank-notes, credit balances, bills, drafts, letters of credit, and circular notes for or in respect of which the selling bank shall be liable, and which are disclosed in the selling bank's books at the time appointed for the'transfer of the business of the selling bank, and shall also pay and satisfy all liabilities and obligations of the selling bank incurred or undertaken in carrying on its ordinary business, and which shall be disclosed in the books of such bank, but, nevertheless, without prejudice to the provision contained in the next clause; and also will, from time to time, pay the rents payable, and observe and perform the covenants and conditions to be fulfilled or observed by the selling bank under any lease or tenancy held by the selling bank, and agreed to be sold by it; but nothing in this clause contained shall render the purchasing bank liable in respect of any contract entered into by the selling bank with any of its officers or servants, or for any loss arising from the improper conduct or neglect of any such officers or servants. 21. Notwithstanding anything contained in the last-preceding clause, the selling bank shall guarantee the purchasing bank against all loss which it may sustain in respect of any letters of credit granted by the selling bank prior to the time of the said business being transferred ; but the purchasing hank shall elect within fourteen days thereafter whether it will stop or continue any credit in respect of such letters, or any of them, and after the expiration of such fourteen days the liability of the selling bank under this clause shall cease and determine in respect of any operation thereafter on any such letters of credit. 22. A list of the officers and servants of the selling bank shall be furnished to the purchasing bank, and their names shall be placed on such bank's register of applications for employment, and as many of such officers and servants shall be taken into the employ of such last-mentioned bank as the exigencies or interests thereof may require. 23. The purchasing bank shall be entitled at any time within six months from the time appointed for the transfer of the said business to reject any securities which it may consider contain onerous conditions. 24. The selling bank shall, if a written request in that behalf be made to it by the purchasing bank within nine months from the date appointed for the transfer of the said business at the cost and charges of the selling bank, complete any incomplete security (according to the nature of the security intended) for any of the assets sold and purchased as aforesaid, and in the event of the selling bank neglecting for a reasonable time to complete such security the purchasing bank may do so at the cost of the selling bank. 25. The selling bank shall guarantee— (a.) That the balance-sheet made up to the 31st day of May last in London, and up to the 31st day of August last in New.Zealand, contains a true statement of the position of the selling bank at those dates, except as any variation thereof appears in this agreement. (b.) That all items (not included in the " A," " B," and " C " lists, and any securities, held for the accounts therein) submitted to the purchasing bank during the negotiations for the sale and purchase were of the value which they were represented to be, but the landed property and bank premises appearing in such balance-sheet shall be taken at the values appearing in the said balance-sheet. The furniture and stationery mentioned in the said balance-sheet, after deducting an allowance in respect of working the business in London, has been assessed at £6,250. (c.) The accounts in the " A " and " B " lists, taken over by the purchasing bank, which have not in the meantime been paid off or reduced, shall, at the time appointed for the transfer of the business, be in as safe or substantially good position, having regard to the nature of the accounts and the circumstances of the debtors, as they were respectively in on the 31st day of August last. (d.) That the items shown in the balance-sheet as being in transitu between the various branches of the selling bank were of the values which they were represented to be in such balance-sheet. (c.) If any account taken over by the purchasing bank shall be wholly or partly secured by shares of the selling bank, such last-mentioned bank shall make good any deficiency which may arise in realising any such security to the extent to which such security was estimated in taking over such accounts, or any of them. (/.) That the selling bank will, if required by the purchasing bank within six months from the time when this contract takes effect, make good any defect in title to all or any of the assets sold which have been represented to consist of freehold land belonging to such bank as its own property, and not held by way of security only, and, as
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to leasehold properties, that all rents have been paid and all covenants performed in respect thereof up to the 31st of August last. If the selling bank is unable or unwilling to make good any such defect in title within a reasonable time after being so requested so to do as aforesaid, compensation shall be allowed to the purchasing bank for any deficiency in value of any freehold property prejudicially affected by any such defect in title, such compensation to be settled by arbitration in case of disagreement between the parties hereto as to the amount thereof. 26. Agency work in connection with the liquidation of the selling bank shall be undertaken for such bank by the purchasing bank free of expense, except such charges as the purchasing bank may actually pay in respect thereof, but such last-mentioned bank shall not be under any obligation to carry out any agency work which it may consider detrimental to its own business. 27. There shall be excepted from the said contract for sale, the share-register, transfer-books, board minute-books, transfers of shares, and other documents relating to the ownership of shares in the selling bank, and also its seal, all of which shall remain the property of the selling bank. All other books of the selling bank shall become the property of the purchasing bank; but, until the dissolution of the selling bank, the purchasing bank shall produce and show, at such times and to such persons as the selling bank shall from time to time reasonably require, such books, documents, and papers of the selling bank passing to the purchasing bank; but the selling bank shall pay any actual outlay occasioned by such production. 28. It is agreed that the selling bank shall guarantee the due payment of all amounts payable under or in respect of any security mentioned in the memorandum at the foot of the said " C " list as being held by the purchasing bank, and given or executed by any person or company whose name appears as a debtor in the said " C " list; but the said selling bank shall be entitled at any time to pay off and take a transfer of all or any of the said securities. 29. Subject to the payment of the said sum hereinbefore agreed to be paid in cash, the time or date appointed for the transfer of the business of the selling bank shall be the second Monday after the ratification and approval of this agreement, as provided by " The Bank of New Zealand and Banking Act, 1895." 30. If any difference shall arise between the selling bank and the purchasing bank touching these presents, or the construction thereof, or any clause or thing herein contained, or any matter in any way connected with these presents, or the rights, duties, and liabilities of either party in connection with the premises, then, and in either or any such case, the matter in difference shall be referred to two arbitrators, one to be appointed by each of the parties in difference, or by an umpire to be appointed by the said arbitrators. 31. The expression " the selling bank," or any words importing the same meaning, shall extend to and include the liquidator or liquidators for the time being of the selling bank. 32. This agreement for sale and purchase as aforesaid is conditional upon— (a.) The subsequent ratification thereof by resolution passed by the proprietors or shareholders of the selling bank in the manner provided by " The Bank of New Zealand and Banking Act, 1895 " ; and (b.) The approval of the Parliament of New Zealand, to be signified as prescribed in the last-mentioned Act. In witness whereof the selling bank and purchasing bank have caused their respective common seals to be affixed to this agreement, written on fifteen sheets of paper, each sheet of which has been signed by three directors of such banks respectively the day and year firstly hereinbefore written. The common seal of the Colonial Bank of New) Geo. McLean. Zealand was hereunto affixed by authority of thel William H. Beynolds. board of directors of such bank, in the presence of J W. Downie Stewart. H. Mackenzie, General Manager. The common seal of the bank of New Zealand) W. Watson. was hereunto affixed by authority of the board oft Walter W. Johnston. directors of such bank, in the presence of— j Wm. Booth. C. G. Andrews, Directors. Acting General Manager,
EXHIBIT No. 50. [Handed in by Hon. Mr. Seddon during Mr. Watson's examination, Ist September, 1896.] FURTHER PAPERS RELATING TO THE PURCHASE OF THE COLONIAL BANK OF NEW ZEALAND BY THE BANK OP NEW ZEALAND IN 1895. The Peesident, Bank of New Zealand, to the Colonial Teeasurer, Sir, — Bank of New Zealand, Wellington, 23rd October, 1895. As requested, I have now the honour to report as under on the agreement between the Colonial Bank of New Zealand and the Bank of New Zealand for the purchase by the latter of the Colonial Bank's business and assets. 1. The amount of the assets referred to in the "A" list, and to be taken over, is £926,197 ; in the " B " list, £604,695 ; in the " C " list, £98,382. 2. The total amount of assets to be purchased as good by the Bank of New Zealand is £2,643,190, and the total amount of liabilities to be taken over is £2,509,284. The difference between these amounts —£133,906 —is to be paid in cash to the Colonial Bank.
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3. As stated in the agreement, the Bank of New Zealand is to hold the sum of £327,305 (being part of the assets shown in the books of the Colonial Bank) pending the taking-over, realisation, or adjustment of certain accounts set forth in the " B " and " C " lists. 4. The assets mentioned in list "D " amount to £102,274. They are not to be purchased by the Bank of New Zealand, but are eliminated in accordance with the Act. 5. The Colonial Bank directors and staff afforded every facility to the purchasing bank for a thorough investigation of their business. The examination by the directors, Auditor, and officers of the Bank of New Zealand was of a most searching and exhaustive character, and I may here state that the directors of the Colonial Bank anticipate that, in addition to the £133,906 agreed to be paid in cash, they will receive out of the £327,305 a further sum for distribution amongst their shareholders. 6. I am of opinion that the Bank of New Zealand will receive sound value in the assets, aggregating £2,643,190, it has undertaken to purchase ; and that, with prudent management on the part of the purchasing bank, the increased earning-power from this source, as stated in the report of the Banking Committee, should be fully realised; also, that the purchase on the basis of the agreement will be beneficial to the interests of the colony and to the shareholders of the Bank of New Zealand. I have, &c, W. Watson, The Hon. the Colonial Treasurer, Wellington. President.
Haggitt Bros, and Brent, Solicitors, to the Secretary to the Treasury. Sir, — Dunedin, 12th November, 1895. We are instructed by the Colonial Bank of New Zealand to forward you the enclosed certificate of the Chairman of the special meeting of the said bank, held on the Bth November instant, for publication in the New Zealand Gazette, in terms of section 8 of " The Bank of New Zealand and Banking Act Amendment Act, 1895." We have, &c, Haggitt Bros, and Brent. The Secretary to the Treasury, Wellington, New Zealand.
In the matter of " The Bank of New Zealand and Banking Act, 1895," and of " The Bank of New Zealand and Banking Act Amendment Act, 1895." Certificate pursuant to Section 8 of " The Bank of New Zealand and Banking Act Amendment Act, 1895." I, George McLean. President of the Colonial Bank of New Zealand and Chairman of the special or extraordinary general meeting held on the Bth day of November, 1895, of the proprietors or shareholders of the Colonial Bank of New Zealand, called for the purpose of considering, ratifying, or rejecting the contract for the sale and purchase mentioned or referred to in the preamble of " The Bank of New Zealand and Banking Act Amendment Act, 1895," do hereby certify that at such meeting a majority of the proprietors or shareholders of the said Colonial Bank of New Zealand,-for the time being entitled, according to the deed of settlement of the said bank, to vote, were present in person or by proxy, and that at such meeting a resolution ratifying the said contract and the sale and purchase thereby contracted for, notice of the intention to propose which resolution at such meeting had been duly given, was carried and duly passed, and that the following is a true copy of such resolution, that is to say : " That the contract of sale and purchase, bearing date the 18th day of October, 1895, executed by and between the Colonial Bank of New Zealand, as the selling bank, and the Bank of New Zealand, as the purchasing bank, and laid upon the table of each House of the General Assembly on the 18th day of October, 1895, and the sale and purchase thereby contracted for, be and the same are hereby ratified and confirmed." Given under my hand, this 12th day of November, 1895. George McLean, Chairman.
The Seceetaey to the Teeasury to Messrs. Haggitt Bros, and Brent, Solicitors. Sir, — The Treasury, Wellington, 18th November, 1895. I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the 12th instant enclosing, for publication in the Gazette, certificate of the Chairman of the special meeting of the shareholders of the Colonial Bank of New Zealand held for ratifying the sale of the bank's business, and to inform you that the certificate will appear in the Gazette to be published on the 21st instant. I have, &c, Jas. B. Heywood, Secretary to the Treasury. Messrs. Haggitt Brothers and Brent, Solicitors, Dunedin.
The Secretary to the Treasury to the President, Bank of New Zealand. Deab Sic, —• The Treasury, Wellington, 19th November, 1895. The certificate of the Chairman of the meeting of shareholders of the Colonial Bank of New Zealand, that the resolution ratifying the sale of the property was duly carried, has been received, and will appear in next Thursday's Gazette. I have, &c, The President, Bank of New Zealand, Jas. B. Heywood, Customhouse Quay. Secretary to the Treasury,
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The Peesident, Bank of New Zealand, to the Seceetaey to the Teeasuey. Deae Sir, — Bank of New Zealand, Head Office, Wellington, 20th November, 1895. I have to acknowledge receipt of your letter of 19th instant, advising me that the certificate of the Chairman of the meeting of shareholders of the Colonial Bank of New Zealand, to the effect that the resolution ratifying the sale of their property had been duly carried, has been received, and will appear in to-morrow's Gazette. I am, &c, The Secretary to the Treasury, Wellington. W. Watson, President.
The General Manager, Bank of New Zealand, to the Secretary to the Treasury. Sir, — Bank of New Zealand, Head Office, Wellington, 29th November, 1895. I have the honour to enclose herewith copy of certificate in pursuance of section 43 of " The Bank of New Zealand and Banking Act, 1895," as to the date appointed for transfer of the Colonial Bank's business to this bank. As you were good enough to arrange for the insertion of the previous advertisement relating to the confirmation of the contract for sale, perhaps you will also kindly see to the publication of this certificate in an early Gazette. I have, &c, H. Mackenzie, The Secretary to the Treasury, Wellington. General Manager.
In the matter of "The Bank of New Zealand and Banking Act, 1895," and " The Bank of New Zealand and Banking Act Amendment Act, 1895." Certificate in pursuance of " The Bank of Neio Zealand and Banking Act, 1895." Wheeeas the contract for sale and purchase mentioned or referred to in the preamble to "The Bank of New Zealand and Banking Act Amendment Act, 1895," being a contract dated the 18th day of October, 1895, and made between the Colonial Bank of New Zealand, as the selling bank, of the one part, and the Bank of New Zealand, as the purchasing bank, of the other part, for the sale to and purchase by the Bank of New Zealand of the business and certain of the assets of the Colonial Bank of New Zealand, was, on the Bth day of November, 1895, duly ratified by resolution passed by the proprietors or shareholders of the Colonial Bank of New Zealand in the manner provided by " The Bank of New Zealand and Banking Act, 1895 " : And whereas the time or date appointed by the said contract for sale and purchase for the transfer of the business of the selling bank was the second Monday after the ratification of the said contract : And whereas, by section 43 of "The Bank of New Zealand and Banking Act, 1895," it is provided that a certificate in writing, purporting to be made in pursuance of that Act, and under the hands of three directors of the Bank of New Zealand and of three directors or of the Liquidator or Liquidators of the selling bank, certifying what is or was the date appointed for the transfer of the business, shall be conclusive evidence thereof : Now, we, the undersigned, George McLean, Percival Clay Neill, and William Hunter Beynolds, three directors of the Colonial Bank of New Zealand, and we, the undersigned, Martin Kennedy, Thomas George Macarthy, and William Booth, three directors of the Bank of New Zealand, do hereby respectively certify, in terms of said section 43 of " The Bank of New Zealand and Banking Act, 1895," that Monday, the eighteenth day of November, one thousand eight hundred and ninety-five, was the date appointed for the transfer of the business of the Colonial Bank of New Zealand to the Bank of New Zealand. Given under our hands, this twenty-seventh day of November,[one thousand eight hundred and ninety-five. [Common Seal of the Geo. McLean, | Directorg o{ the Colonial Bauk Colonial Bank P. (J. NEILL, [ ,XT „ , -, of New Zealand.] WILLIAM H. BEYNOLDS,] ° f NeW ZealailcL [Common Seal of the Bank m' „ n •.» ' , ____ Directors of the Bank of New of New Zealand.] wT ' J Zealand
EXHIBIT No. 51. [Handed in by Hon. Mr. Seddon during Mr. Watson's examination, Ist September, 1896.] FURTHER PAPERS RELATING TO THE BANKING LEGISLATION IN 1895. The Seceetaey to the Teeasury to the Government Auditor, Bank of New Zealand. Sir,— 18th November, 1895. Beferring to section 14 of " The Bank of New Zealand Share Guarantee Act, 1894," I am instructed to ask you to be good enough to prepare draft regulations to be made by the Colonial Treasurer defining the duties and powers which you may deem necessary to carry out the work devolving upon you as Government Auditor. I have, &c, Jas. B. Heywood, J. M. Butt, Esq., Secretary to the Treasury. Government Auditor, Bank of New Zealand.
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The Secretary to the Treasury to the Government Auditor, Bank of New Zealand. Sir,— 18th November, 1895. I have the honour, by direction of the Premier, to request that you will regularly forward to this office a monthly return, showing, as far as possible, in concrete form, the position of the bank at the close of business at end of each month. I am to request that such returns may be furnished with the fullest possible detail compatible with retaining inviolate information relating to the personal accounts of the bank's customers. I am also directed to ask you to furnish a similar monthly statement relating to the business of the Assets Board. I have, &c, Jas. B. Heywood, J. M. Butt, Esq., Secretary to the Treasury. Government Auditor, Bank of New Zealand, Wellington.
The Secretary to the Treasury to the President, Bank of New Zealand. Sic,— 19th November, 1895. Beferring to section 32 of " The Bank of New Zealand and Banking Act, 1895," I have the honour to request that you will be good enough to prepare as soon as possible a draft set of regulations with regard to the Assets Board and the assets under its control, in order that the same may be approved and submitted to the Governor in Council, as the Act provides. I have, &c, The President, Bank of New Zealand, Jas. B. Heywood, Wellington. Secretary to the Treasury.
The Government Auditor, Bank of New Zealand, to the Secretary to the Treasury. Sir, — Bank of New Zealand, Head Office, Wellington 20th November, 1895. I received yesterday your letters, No. 542 and No. 543, dated the 18th instant, the former acquainting, me with the instructions of the Premier that a monthly return, showing the position of the bank at the close of business at the end of each month, is to be furnished; the latter instructing me to prepare draft regulations to be made by the Colonial Treasurer defining the duties and powers of the present Auditor. Both these matters have my attention, and I hope to wait upon you in regard to them almost immediately. I have, &c, The Secretary to the Treasury, J. M. Butt, Wellington. Government Auditor.
The Colonial Treasurer to the Hon. W. W. Johnston. Sir,— 18th December, 1895. With reference to section 15 of " The Bank of New Zealand and Banking Act, 1895," which provides for the appointment of a director of the bank by the Governor, I have the honour, on behalf of the Government, to inform you that they will be glad if you will accept the position. Upon your notifying to me your willingness to act as the representative of the Government upon the board of directors, His Excellency the Governor will be recommended to appoint you. I have, &c, J. G. Ward, The Hon. Walter W. Johnston, Wellington. Colonial Treasurer.
The Hon. W. W. Johnston to the Colonial Treasurer. Sir, — Wellington, 18th December, 1895. I have the honour to acknowledge the receipt of your letter of to-day. I beg to notify to you my willingness to act as the representative of the Government upon the board of directors of the Bank of New Zealand. I have, &c, The Hon. the Colonial Treasurer, Wellington. Walter W. Johnston.
The President, Bank of New Zealand, to the Colonial Treasueee. Deae Sir, — Bank of New Zealand, Wellington, 21st December, 1895. I have the honour to inform you that I hold the resignation of the Hon. W. W. Johnston as a director of this bank, in anticipation of his being appointed by the Government as their nominee on the board. - I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
The Colonial Treasurer to the Hon. W. W. Johnston. Sir, — 6th January, 1896. I have the honour to hand you herewith a warrant under the hand of His Excellency the Governor appointing you to be a director of the Bank of New Zealand, to represent the Government on the board, as provided in " The Bank of New Zealand and Banking Act, 1895." The appointment is for three years, subject to the power of the Governor as provided by section 15 of the Act. I have, &c, J. G. Ward, The Hon. W. W. Johnston, Wellington. Colonial Treasurer,
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Glasgow, Governor. In pursuance and exercise of the power and authority vested in me by section fifteen of "The Bank of New Zealand and Banking Act, 1895," I, David, Earl of Glasgow, the Governor of the Colony of New Zealand, do hereby appoint you, The Honourable Walter Woods Johnston, to be a Director of the Bank of New Zealand; and to hold office in terms of the aforesaid section, and otherwise under and subject to the provisions of the said Act. Given under the hand of His Excellency the Governor, this first day of January, one thousand eight hundred and ninety-six. B. J. Seddon.
The Seceetary to the Treasury to the President, Bank of New Zealand. Sir,— _ 7th December, 1895 I have the honour, by direction of the Premier, to point out that by the provisions of the Bank of New Zealand and Banking Act of last session certain action had to be taken by your bank, and I am desired to ask if such action as is required by the Act has been duly taken. Inter alia, By section 3, £376,900 requires to be written off the assets of the bank, and £200,000 transferred to a Contingency Fund Account. By section 15, one director has to resign. By section 50, the deed of settlement of the bank is to be amended so as to bring it into conformity with the provisions of the Act. I have, &c, Jas. B. Heywood, The President, Bank of New Zealand, Wellington. Secretary to the Treasury.
The President, Bank of New Zealand, to the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, 12th December, 1895. ' I have the honour to acknowledge receipt of your letter No. T95/1767 of the 7th instant, drawing attention to certain action required to be taken by the bank in order to comply with the provisions of " The Bank of New Zealand and Banking Act, 1895," and inquiring if the requisite action has been taken. In reply, I have the honour to state : — 1. The'surn of £376,900 required by section 3 of the Act to be written off the assets of the bank has been written off, and £200,000 has been transferred to Contingency Fund Account. 2. On llth September last, Mr. B. H. Glyn, one of the directors of the bank, retired from the board. 3. At a meeting of the bank's shareholders, held on the 19th ultimo, resolutions amending the deed of settlement so as to bring it into conformity with the provisions of the Act were passed by a majority of more than three-fourths of the shareholders, present in person or by proxy, and entitled to vote. This complies with the requirements of the deed of settlement in regard to resolutions amending the deed passed at the first meeting to consider amendments. A further meeting to confirm the resolutions has been called for the 19th instant. As at that meeting the resolutions have to be confirmed by merely a majority of the shareholders, present in person or by proxy, and entitled to vote, there is no doubt they will be duly confirmed, and thereupon the deed of settlement will be amended in terms of the resolutions. 4. The sum of £323,100, being the balance of the £900,000 capital written off, after providing for the £376,900 and the £200,000 above referred to, has been applied in writing down the nominal value of the shares held by the bank in the Bank of New Zealand Estates Company. The proceeds of the first call on the reserve liability made on 29th November, 1894, amounting at 9th instant to £365,340 18s. Bd., have been similarly applied, as will also be future payments received on account of the 1894 call. 5. The only other actions required to be taken by the bank under the Act appear to be the making of the second call of £3 6s. Bd. per share, in terms of clause 9, and the nomination of a member of the Assets Bealisation Board, under clause 38. The former will be duly attended to in terms of the deed of settlement when the proper time arrives. The latter is now under the consideration ofthe board. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President. The Secretary to the Treasury to the President, Bank of New Zealand. Sic,— Wellington, 28th January, 1896. With reference to your letter of the 12 th ultimo, reporting the action taken by the directors of your bank towards carrying out various provisions of " The Bank of New Zealand and Banking Act, 1895," I have the honour, by direction of the Colonial Treasurer, to thank you for the information, and to ask you to supplement it by informing him of the subsequent action which the bank has taken in the various matters. In the concluding paragraph of your letter you speak of making the second call in terms of the deed of settlement, whereas it has to be made under the above-named Act; but this you have evidently observed, as it is noticed that the notice of call appearing in the Gazette, of the 23rd instant, is given under the Act. I have, &c, Jas. B. Heywood, The President, Bank of New Zealand, Wellington. Secretary to the Treasury. 31—1. 6.
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The President, Bank of New Zealand, to the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, 3rd February, 1896. I have the honour to acknowledge receipt of the Secretary to the Treasury's letter dated 28th ultimo. In order to satisfactorily reply to your request for further information regarding the action taken by the bank to comply with the various provisions of " The Bank of New Zealand and Banking Act, 1895," it will perhaps be well that I briefly traverse the various clauses of the statute calling for action on the part of the bank. Clause 3 : The capital reserves and proceeds of the first call have, as already advised you, been written off and applied in the manner directed by the Act. Clause 4: New capital of £500,000 in the form of preferred shares has been authorised by resolution of the board passed on the 27th November last, and certificates for the same have, we are advised by cable, been handed to the Agent-General for New Zealand in London, in exchange for an equivalent amount of New Zealand Government inscribed stock. Clause 7 : No sales of stock have yet been effected, to yield a premium for credit of a reserve fund, but whatever profit results from the sale of the debentures, after paying issue expenses, will be applied as required by this clause. Clause 9 : The second call of £3 6s. Bd. on the reserve liability was made, in terms of this clause, by resolution of the board passed on the 15th January ultimo, and notification thereof was duly made in the Gazette No. 5, of the 23rd January. Touching the remark in the last paragraph of the Secretary to the Treasury's letter, I would point out that the Act impresses upon the directors the obligation of making the call, but the call itself must be in terms of the provisions of the deed of settlement, by which all shareholders are bound. Clause 15 : The Hon. W. W. Johnston, one of the directors of the bank, resigned his seat at the board, in terms of this clause, and has been reappointed as the nominee of the Government upon the board. Clause 16: The adjustment of accounts between the Assets Board and the Estates Company and Auckland Agricultural Company is now in progress, preparatory to the handing over of the assets .to the Assets Board in exchange for debentures for the amount ascertained by the adjustment to be due therefor, in terms of the Act. Clause 18: Control of the assets has not yet been assumed by the Assets Board. It is proposed that it be assumed on Ist March prox. Clause 28: The directors of the bank have appointed Mr. William Fraser, M.H.8., as the board's representative on the Assets Bealisation Board. Clause 32 : The regulations referred to are now under consideration. Clauses 36 to 42 : Purchase by the Bank of New Zealand of the Colonial Bank's business has, as you are aware, been effected. Clause 43: A certificate, in terms of this clause, has been given under the hands of the directors of the respective banks, and was published in the Gazette No. 89, of sth December, 1895. Clause 50 : A meeting of shareholders of the bank, to amend the deed of settlement so as to bring it into conformity with the provisions of the Act, was held on the 19th November, and resolutions amending the deed of settlement were duly passed. A meeting to confirm such amendments, in terms of the deed of settlement, was called for 19th December, 1895, and at that meeting the amendments of the deed of settlement made at the 19th November meeting were duly confirmed. Clause 51 : The transfer to this bank of the Government stock inscription business in London, which this clause was framed to effect, has, as you are aware not been brought about as yet, there 'oeing obstacles in the way. I have, &c, The Hon. the Colonial Treasurer, Wellington. . * W. Watson, President.
The Secretary to the Treasury to the President, Bank of New Zealand. Sir,— 7th February, 1896. I have the honour, by direction of the Colonial Treasurer, to acknowledge, with thanks, the receipt of your letter of the 3rd instant, stating the action taken by your board of directors towards carrying out the provisions of " The Bank of New Zealand and Banking Act, 1895." I have, &c, Jas, B. Heywood, The President, Bank of New Zealand, Wellington. Secretary to the Treasury.
The General Managee, Bank of New Zealand, to the Premier. Sir, — Bank of New Zealand, Head Office, Wellington, llth February, 1896. I have the honour to draw your attention to two letters which have appeared in the Economist newspaper of London, one under date 26th October, and the other under date 21st December, 1895, reflecting in very unjust terms on this bank, and specially stating that the members of the Government can obtain information respecting individual accounts in the bank's books. I enclose cuttings from the papers in question. May I request you to be so good as to draw the Agent-General's attention in London to this, and ask him to take such steps as he considers, under the circumstances, to be advisable. As the Agent-General can easily obtain in London copies of the articles referred to, may I ask that you will be good enough, after perusal, to return the cuttings to me, as I wish to make further use of them. I have, &c, H. Mackenzie, The Hon. the Premier, Wellington, General Manager,
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The Premier to the President, Bank of New Zealand. Sic,— 13th February, 1896. Your letter of the llth is before me, and I very much regret the necessity which has arisen for calling my attention to the letters which have appeared in the Economist paper under dates of the 26th October and the 21st December last. I shall certainly draw the attention of the Agent-General to these letters, and ask him to deny as forcibly as he can that the Government, or any of the Ministry, upon any pretext whatever, can have access to the personal accounts of your bank's customers; and I further feel sure you will readily acknowledge that neither the Government as a whole, nor any Minister thereof, have in the slightest degree attempted to elicit information concerning the personal dealings or business of the customers of your bank. The idea of such action is too dishonourable to either party to be entertained for one moment. It is much to be regretted that an influential paper such as the Economist should have allowed its columns to be made use of for the purpose of a political attack upon the Government, and also with the object of doing as much damage as possible to an institution with which a large proportion of our New Zealand colonists are more or less intimately connected. I return the cuttings you were good enough to enclose for my perusal. I have, &c, The President, Bank of New Zealand, Wellington. B. J. Seddon.
The Colonial Treasurer to the Agent-General. Sir, — The Treasury, Wellington, 14th February, 1896. My attention has been drawn to letters which have appeared in the Economist of the 26th October and the 21st December last, from its own correspondent in Melbourne, commenting adversely on the affairs of the Bank of New Zealand, and insinuating that the Government of New Zealand has access to the personal accounts of customers in the books of the bank. . I am not aware if you noticed the letters and took any action towards refuting the calumnies of the writer; but, if not, I shall be glad if you will do so in whatever way you consider best, and as forcibly as you can. I need hardly state that neither the Government as a whole nor any Minister of the Crown can, upon any pretext whatever, have access to the personal accounts of the bank's customers, nor has any attempt been made to elicit information concerning their personal dealings or business. Such conduct would be so utterly dishonourable to both those who sought the information and those who supplied it, that I am surprised the editor of a paper of the standing of the Economist allowed its columns to contain such a base calumny. The bias of the " Own Correspondent" is so manifest in the letters as to make it appear that he used his position as a vantage ground from which to attack the Administration which, by coming to the aid of the bank, saved the colony from a terrible financial disaster. I have, &c, J. G. Ward, The Agent-General for New Zealand, London. Colonial Treasurer.
The Agent-Geneeal to the Colonial Teeasueee. Westminster Chambers, 13, Victoria Street, London, S.W., Sic,— llth April, 1896. Beferring to your letter (T96/193), No. 8 of the llth February last, I beg to inform you that I took an early opportunity of conferring with the directors of the Bank of New Zealand concerning the letters which appeared in the Economist of the 25th October and 21st December last, and they expressed an opinion that as the insinuations made therein had resulted in no injury to the interests of the bank, and were generally regarded at the time as unjustifiable and baseless, it would be unnecessary and inexpedient at this distance of time, to resuscitate the matter in any way. After careful consideration I came to the same conclusion, and shall not therefore make any communication to the Economist with respect to it. I have, &c, W. P. Beeves.
Begulations under "The Bank of New Zealand Shaee Guarantee Act, 1894," as to Duties and Powers of Auditors. The Treasury, Wellington, 19th February, 1896. Whereas by " The Bank of New Zealand Share Guarantee Act, 1894 " (hereinafter called " the said Act"), it is enacted that, in lieu of the Auditors provided to be appointed under the deed of settlement of the Bank of New Zealand, the Governor, by Order in Council, may appoint some fitting person (hereinafter called "the Colonial Auditor") to act as Auditor in respect of the business of the bank in the Australasian Colonies, or in whatever place or places out of the United Kingdom the bank may carry on business : And whereas by the said Act it is further enacted that the Agent-General of New Zealand in London shall in like manner appoint an Auditor (hereinafter called " the London Auditor ") in respect of the business of the bank within the United Kingdom : And whereas by the said Act it is further enacted that the Colonial Treasurer may from time to time make, alter, or revoke regulations for the purpose of defining the duties and powers of the said Auditors : Now, therefore, I, Joseph George Ward, the Colonial Treasurer of the Colony of New Zealand, in exercise of the power conferred upon me by the said Act and of all other powers
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and authorities me enabling in this behalf, do hereby for the purposes aforesaid make the following regulations, that is to say : — I. General. 1. (1.) In respect of the business and affairs of the bank outside the United Kingdom, the Colonial Auditor, and in respect of such business and affairs within the United Kingdom, the London Auditor, shall at all times scrutinise such business and affairs, and shall audit and certify to the correctness or otherwise of the accounts of the bank, and of all reports and balance-sheets of the bank, and for those purposes shall have all the powers, functions, and duties usually devolving on auditors, and, in addition thereto, the powers, functions, and duties hereinafter mentioned. (2.) All salaries and other expenses paid by the bank in connection with the audit of its accounts, business, and affairs shall be charged to a separate account called the " Audit Expenses Account." 11. As to the Colonial Auditor. 2. The Colonial Auditor shall at all times have full and free access to all officers, offices, safes, premises, cash, securities, funds, books, records, vouchers, correspondence, reports, returns, balancesheets, documents, and other matters and things relating to the ordinary business and affairs of the bank. 3. He shall also have the right at all times to apply to any officer for all such information, certificates, or returns as he requires concerning any matter relating to the business or affairs of the bank. And it shall be incumbent on such officer to fully and faithfully supply the same in so far as lies in his power. 4. With the consent of the President, he shall also have the right at any time to require any branch or agency, or the accounts.of any officer of the bank, to be inspected and reported on to him by the inspecting staff of the bank. If such consent is delayed or refused, the Colonial Auditor shall forthwith report the fact to the Colonial Treasurer. 5. Whenever requested by the President or the board of directors of the bank so to do he shall attend and be present at any ordinary meeting of the board of directors, without, however, taking taking any part in the proceedings otherwise than by replying to any question or advising upon any matter submitted to him for that purpose by the directors. 6. He shall at all times have full and free access to the minute-book, correspondence, and all other records and papers relating to the proceedings of the board. 7. All inspectors' reports, and all periodical and other reports and returns from all branches and agencies of the bank (including the reports and returns from the London office), shall be submitted to him as and when received at the head office, and it shall be his duty to promptly check and examine the same, and, if he deems it necessary so to do, forthwith report in writing, through the President, to the Colonial Treasurer whatever he deems unsatisfactory therein. 8. As soon as practicable after the close of business on the last Monday in each month, or at such other dates as the Colonial Treasurer from time to time directs, the Colonial Auditor shall prepare and forward to the President for transmission, after confirmation or otherwise, to the Colonial Treasurer, — (a.) A balance-sheet, made up in respect of the New Zealand business of the bank from the balances and figures as appearing in the books and returns at the close of the business on the day or date aforesaid, and in respect of business outside New Zealand from the balances and figures appearing in the latest available returns and reports. Such balance-sheet shall be in such form and contain such details as to truthfully disclose the position of the bank, but shall be so framed as to make it absolutely impossible to identify the names or amounts of individual accounts other than those of the Assets Bealisation Board or the Bank of New Zealand Estates Company (Limited). (b.) A report on such balance-sheet, and also on the progress of the bank since the date of the previous balance-sheet, and its position as compared with the position at the date of the previous balance-sheet, and on such other points as he thinks fit. Every such balance-sheet and report shall be treated as strictly confidential. 9. If at any time by reason of absence or other sufficient cause the Colonial Auditor is himself unable to prepare and furnish such monthly balance-sheet and report as aforesaid, he shall communicate the fact to the Colonial Treasurer and the President, and submit the name of some officer of the bank as competent to perform the duty, whereupon, with the consent of the President, the Colonial Treasurer shall appoint such officer, or some other competent officer, to prepare and furnish such monthly balance-sheet and report in the temporary stead of the Colonial Auditor, and for that purpose the officer so appointed shall possess all the powers of the Colonial Auditor. 10. He shall carefully examine and audit every half-yearly and other balance-sheet and statement of profit and loss or other statement of accounts prepared by the bank for publication or for submission to the Government, and shall certify thereon, in writing under his hand, that he has so examined and audited them, and that they are correct or otherwise as the case may be. In the latter case he shall specify fully the points wherein they are incorrect. 11. Before making such certificate he shall require such balance-sheet and statement of accounts to be certified to as correct or otherwise by the General Manager and the accountant of the bank, or such other officer as the General Manager authorises so to do. Such certificates shall be in the form or to the effect set forth in the Schedule hereto, and no such balance-sheet or statement of the bank shall be deemed to be complete without such certificates. 12. He may, whenever he thinks expedient, and he shall whenever requested by the Colonial Treasurer, or the President, or the General Manager so to do, visit and inspect any branch or agency of the bank in New Zealand, Australia, or Fiji, and shall in each instance make a full
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report in writing to the Colonial Treasurer, through the President, on the result of such visit and inspection. 13. In every case where, in his opinion, the business or affairs of the bank are being improperly or unsafely conducted he shall forthwith make full report thereof in writing to the Colonial Treasurer, but (except in the case of the accounts of the Assets Bealisation Board or the Bank of New Zealand Estates Company, Limited), avoiding reference to the name or amount of any individual account. 14. In every case where, in his opinion, any individual account is being unsafely conducted, he shall forthwith make full report thereof to the President, who shall forthwith submit the report to the Board of Directors. 15. He shall make a special report on the business and affairs of the bank or on any specified part thereof whenever requested by the Colonial Treasurer or the President so to do. 16. In every case where he makes a report or furnishes a balance-sheet to the Colonial Treasurer or the Government the Colonial Auditor shall avoid referring to the name or amount of any individual account (except the accounts of the Assets Bealisation Board or the Bank of New Zealand Estates Company, Limited). 17. In addition to the formal reports hereinbefore referred to, it is his duty from time to time to call the attention of the President, either verbally or in writing as he deems expedient, to any matter or thing relating to the business or affairs of the bank which in his opinion requires alteration or attention, and if such matter or thing is not satisfactorily altered or attended to he shall make it the subject of a formal report to the President for transmission, after confirmation or otherwise, to the Colonial Treasurer. 18. He shall call on the bank to supply him with whatever office-room, materials, and clerical and other assistance he deems necessary for the efficient discharge of his duties, and the bank shall supply the same at its own cost. 19. He shall also be paid by the bank his travelling-expenses whilst absent from Wellington in the discharge of his duties. Such travelling-expenses shall consist of all sums actually paid by him for fares by rail, boat, or coach, together with a sum not exceeding one guinea per day during such absence, including the day on which he leaves Wellington, but excluding the day on which he returns there. 111. As to the London Auditor. 20. In respect of the business and affairs of the bank within the United Kingdon, the London Auditor shall have the same powers, functions, and duties as those conferred and imposed on the Colonial Auditor by Nos. 2 to 19, inclusive, of these regulations in so far as the same are applicable to the circumstances of the case within the United Kingdom, and those regulations shall, mutatis mutandis, apply accordingly. 21. When authorised by the Colonial Treasurer so to do, the Agent-General of New Zealand n London shall exercise, as regards the London Auditor and the business and affairs of the bank within the United Kingdom, all the powers and functions which by these regulations are conferred upon the Colonial Treasurer as regards the Colonial Auditor and the business and affairs of the bank outside of the United Kingdom. But this regulation shall not affect the right of the Colonial Treasurer to himself exercise such powers and functions within the United Kingdom. 22. The London Auditor shall make all such reports and returns, and furnish all such balancesheets and certificates, to the Colonial Auditor as the latter may from time to time request. 23. When furnishing any report, return, balance-sheet, or certificate to the bank, or the President, or the Colonial Treasurer, or the Agent-General, the London Auditor shall forward a copy thereof to the Colonial Auditor, and also to the manager for the time being of the bank in London. 24. Nos. 4 and 17 of these regulations shall, as regards the London Auditor, apply to the Chairman of the London Board instead of to the President. Schedule. We hereby certify that, having carefully examined the foregoing balance-sheet and statements, we are satisfied that they have been correctly compiled from the books and accounts of the bank, and that the balance-sheet is a full and fair balance-sheet, properly drawn up, and exhibits a true and correct view of the state of the bank's affairs at the date thereof [or otherwise as the case may be]. Dated this day of . A.8., General Manager. CD., Accountant (or other authorised officer). I, E.F., the Auditor appointed by the Governor in Council under " The Bank of New Zealand Share Guarantee Act, 1894," do hereby certify,— 1. That, having carefully examined the foregoing balance-sheet and statements, I am satisfied that they have been correctly compiled from the books and accounts of the bank. 2. That I am also satisfied that the said balance-sheet is a full and fair balance-sheet, properly drawn up, and exhibits a true and correct view of the state of the bank's affairs at the date thereof [or otherwise if the balance sheet and statement are incorrect, setting forth in such case the details]. 3. That I have verified so much of the cash, investments, securities, and assets of the bank as at the date of the said balance-sheet were held at the head office in Wellington, and have had access to certified returns of so much thereof as were then held at the various branches and agencies of the bank, or were then in transit. Dated this day of . E.F. J. G. Waed, Colonial Treasurer.
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EXHIBIT No. 52. [Handed in by the Hon. Mr. Seddon during Mr. Watson's examination, Ist September, 1896.] CORRESPONDENCE RELATING TO THE ISSUE, IN TERMS OF SECTION 20 OF " THE BANK OF NEW ZEALAND AND BANKING ACT, 1895," OF THE COLONIAL AUDITOR'S CERTIFICATE IN CONNECTION WITH THE ADJUSTMENT OF THE PURCHASE-MONEY PAYABLE BY THE ASSETS REALISATION BOARD TO THE BANK OF NEW ZEALAND ESTATES COMPANY UNDER SECTIONS 16 AND 19 OF THE ABOVE-NAMED ACT. The Colonial Auditor to the Colonial Treasurer. Sic,— Bank of New Zealand, Wellington, 14th May, 1896. I have the honour to inform you that the Assets Bealisation Board, constituted under " The Bank of New Zealand and Banking Act, 1895," assumed control, at close of business on the 31st day of March last, of the assets purchased by it from the Bank of New Zealand Estates Company (Limited), in pursuance of the said Act. Also, that, to comply with section 16 of the said Act, I have made a due adjustment of the station accounts as on the 31st day of March, 1895, and of the incomings and outgoings between that date and the date upon which the Assets Bealisation Board assumed control, and that I find the amount of the adjusted purchase-money to be £2,810,496 7s. 2d. I enclose my certificate as to the amount of the adjusted purchase-money, and have the honour to request your approval, as provided in section 20 of the Act. I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Colonial Auditor.
Certificate of the Amount of the Adjusted Purchase-money given in terms of Section 20 of "The Bank of New-Zealand and Banking Act, 1895." I, John Marten Butt, the Auditor appointed by the Governor under " The Bank of New Zealand Share Guarantee Act, 1894," hereby certify that I have made the adjustment required by section 16 of " The' Bank of New Zealand and Banking Act, 1895," and that the amount of the adjusted purchase-money to be paid by the Assets Bealisation Board to the Bank of New Zealand Estates Company (Limited) is two million eight hundred and ten thousand four hundred and ninety-six pounds seven shillings and twopence (£2,810,496 7s. 2d.). As witness my hand, this fourteenth day of May, one thousand eight hundred and ninety-six. J. M. Butt. Signed by the said John Marten Butt in the presence of—A. E. Mills, Bank Officer, Wellington.
The Secretary to the Treasury to the Colonial Auditor. Sir,— 23rd May, 1896. I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the llth instant reporting that the Assets Bealisation Board assumed control at the close of business on the 31st March last, and enclosing your certificate of the amount of adjusted purchase-money found to be payable to the Bank of New Zealand Estates Company (Limited), and requesting his approval thereto. lam also to acknowledge the receipt of a duplicate of your certificate, supplied upon oral request, and to inform you that, before approving the certificate, the Colonial Treasurer would like to be furnished with details of the adjustment. I have, &c, J. M. Butt, Esq., Colonial Auditor, Jas. B. Heywood, Assets Bealisation Board, Wellington. Secretary to the Treasury.
The Goveenment Auditoe to the Colonial Treasurer. Sir,— Bank of New Zealand, Head Office, Wellington, 27th May, 1896. I have the honour, in compliance with the request contained in T 96/733, of the 23rd instant, to forward you a statement containing details of the adjustment of the price to be paid by the Assets Bealisation Board to the Bank of New Zealand Estates Company (Limited), referred to in my letter of the 14th instant. I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Government Auditor.
The Assets Bealisation Boaed in account with the Bank of New Zealand Estates Company (Limited). Debenture Settlement. Dr. £ s, d. I Cr. £ a. d. To Purchase of properties in terms of ! By " incomings " from 31st March, " The Bank of New Zealand and 1895, to 31st March, 1896 .. 125,571 7 3 Banking Act, 1895 " .. .. 2,731,706 0 0 Balance, being the sum-total of deBalance payable on adjustment of bentures to be issued by the accounts by Colonial Auditor to Assets Realisation Board to the 31st March, 1895 45,701 2 1 Bank of New Zealand Estates " Outgoings " from 31st March 1895, Company 2,8i0,496 7 2 to 31st March, 1896 .. .. 158,660 12 4 £2,936,067 14 5 . £2,936,067 14 5 Balance as per contra .. ~£2,810,496 7 2 ===== Bank of New Zealand, Wellington, 27th May, 1896. J. M. Butt, Colonial Auditor,
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The Seceetaey to the Teeasuey to the Government Auditor. Sib,— 4th June, 1896, I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the 27th ultimo, forwarding a statement containing details of the adjustment of the price to be paid by the Assets Board to the Estates Company, and to request yon to supply some further particulars of the balance of £45,701 2s. Id., payable on account of adjustment to 31st March, 1895 —of what does it consist ?—and an explanation of the serious difference between the " outgoings " and " incomings," resulting in a loss of over £33,000. I have, &c, James B. Heywood, The Government Auditor, Assets Bealisation Board, Secretary to the Treasury. Customhouse Quay, Wellington.
The Colonial Auditor to the Colonial Teeasueee. Sic, — Bank of New Zealand, Wellington, 4th June, 1896. In compliance with the request conveyed in your letter T 96/808, of this date, I have the honour to lay before you a statement containing further particulars of the balance of £45,701 2s. Id., payable on account of the adjustments made between the Assets Bealisation Board and the Bank of New Zealand Estates Company (Limited), as at 31st March, 1895, showing that the balance consists principally of the overdrafts of the stations with the Bank of New Zealand at 31st March, 1895. The explanation of the circumstance that the " outgoings" from March, 1895, to March, 1896, exceeded the " incomings " for the same period is that a large portion of the year's revenue in the shape of wool and frozen-meat proceeds had not come to credit when the Assets Bealisation Board assumed control of the properties. It is estimated that these proceeds, when realisation of them has been completed, will bring in to the coffers of the Board a sum of upwards of £80,000. The books of the Bank of New Zealand Estates Company (Limited) and of the bank are being kept open until the amount of the Assets Bealisation Board debenture-issue has been settled. After the books are closed the preparation of the balance-sheets to the 31st March last will occupy some time. Assuming that Parliament meets on the llth instant, it will require some effort to have the balance-sheet of the bank ready to be laid before Parliament within the ten days after the commencement of the session required by section 53 of "The Bank of New Zealand and Banking Act, 1895." I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Colonial Auditor.
Summary of Adjustments between the Assets Realisation Board and the Bank of New Zealand Estates Company (Limited) as at the 31st March, 1895.
Bank of New Zealand, Wellington, 4th June, 1896. J. M. Butt, Colonial Auditor.
The Secretary to the Treasury to the Colonial Auditoe. Sic,— 9th June, 1896. I am directed by the Minister acting for the Colonial Treasurer to acknowledge receipt of your letter dated the 4th instant, enclosing a statement of the particulars of the balance of £45,701 2s. Id., and also explaning the circumstances which caused the" outgoings " to exceed the "incomings " during the year ended the 31st March last. The Minister is of opinion that the explanation is not satisfactory, as he fails to see why, in an adjustment made for the purpose of ascertaining the proper amount against which debentures can be issued, there should be included a sum of upwards of £80,000, which, it is stated by you, will bring in that amount to the coffers of the Board. It appears to the Government that it is not correct for the Board to issue debentures against the proceeds of the produce you mention (which
Stations — Overdraft of stations at Bank of New Zealand Bank of New Zealand, London Sundry accounts outstanding Accident Insurance Company £ s. d. 40,267 7 2 1,061 4 11 5,849 11 11 222 13 2 £ s. i d. Less amount due by Bank of New Zealand Estates Company on balance of accounts ... 47,400 17 2 . 4,908 12 1 Freeholds— Bent accrued Less rates, &c, accrued 42,492 5 1 2,084 30 3 10 2 2 2,054 1 8 Waikato Coal and Shipping Company — Overdraft at Bank of New Zeafand Other liabilities 715 13 439 2 0 4 1,154 15 4 £45,701 2 1
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is the position disclosed by yourexplanation). The Estates Company, it is thought, should have drawn against the shipments and credited the amount to the " outgoings," in which case the adjustment would have been relieved to the extent of the £80,000 or thereabouts. The Government will be glad to be informed why the produce was not drawn against, and to receive any other information you may be able to offer. The Minister is of course aware of the necessity of coming as soon as possible to some final adjustment on the matters of the Board's assets, but it must be observed that a large amount of responsibility is cast upon the Colonial Treasurer in approving or rejecting the adjustment, and consequently the Minister is anxious to have the fullest information afforded to him. I have, &c, Jas. B. Heywood, Secretary to the Treasury. J. M. Butt, Esq., Colonial Auditor, Assets Bealisation Board, Wellington.
The Secretary to the Treasury to the Chairman, Assets Bealisation Board. Sir,— 9th June, 1896. I am directed by the Minister acting for the Colonial Treasurer to state that he is at present unable to have the certificate (provided by section 20 of " The Bank of New Zealand and Banking Act, 1895 ") approved, as he has asked the Colonial Auditor to supply him with further information concerning the adjustment, which at present he deems to be unsatisfactory. The magnitude of the interests involved, and the close intimacy of the taxpayers of the colony to the liabilities which the Board and the Bank of New Zealand have assumed through the State assistance, have rendered it incumbent upon the Government to seek for further expert advice, and they are therefore in correspondence with Mr. Henry Kember, accountant, of this city, with the object of ascertaining if arrangements can be come to whereby his services can also be available on behalf of the Government (and at the Government expense) as an auditor, in conjunction with a Government officer, of the amount required to be ascertained of the adjusted purchase-money, mentioned in sections 16 and 19 of the Act. The Minister ventures to express the hope that the Board will readily agree to the course which the Government now propose, and will render the auditors every assistance in making their independent report. I have, &c, Jas. B. Heywood, The Chairman, Assets Bealisation Board, Wellington. Secretary to the Treasury.
The Colonial Auditor to the Colonial Treasurer. Sir, — Bank of New Zealand, Head Office, Wellington, 10th June, 1896. I have the honour to acknowdedge receipt of Treasury letter No. 96/894, dated the 9th instant, and to express my regret that my explanation of the circumstances under which the outgoings exceed the incomings in the adjustment between the Bank of New Zealand Estates Company (Limited) and the Assets Bealisation Board is not deemed satisfactory. I respectfully submit that the wording of clause 16 of "The Bank of New Zealand and Banking Act, 1895," requires that the incomings and outgoings shall be ascertained incomings and outgoings, and that, as the proceeds of the produce shipped to the United Kingdom by the Bank of New Zealand Estates Company (Limited) on account of the Assets Bealisation Board had not been ascertained at the 31st March, I have followed the requirements of the Act in leaving out of the adjustment any estimate of the probable outcome of the shipments. I may say that in the view I have taken of the reading of the Act 1 am to an extent fortified by the opinion of the solicitor consulted by the Assets Bealisation Board, who, at an interview at which the chairman and general manager of the board were present, advised that the items to be included in the adjustment must be ascertained items only, and that it was not permissible to include estimated items. I understand that the reason why the Bank of New Zealand Estates Company (Limited) did not draw against the wool and other produce when shipped was that in their opinion the proper course was to leave the disposal of the proceeds of the produce to be dealt with by the Assets Bealisation Board. Should you desire further information, may I request the favour of an interview, in order that I may the better understand the points on which you require me to report. I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Colonial Auditor.
The General Manager, Assets Bealisation Board, to the Secretary to the Treasury. Sir, — The Assets Bealisation Board, Wellington, 10th June, 1896. We have to acknowledge receipt of your favour of the 9th instant. The Chairman is absent from Wellington at the moment, and I am not aware of his present whereabouts, but am satisfied, however, that the Board would be desirous of facilitating the fullest possible investigation and auditing of the adjustments referred to. With a view to expedite business, I shall be glad if you will instruct the gentlemen referred to to take the matter in hand at once. Kindly let me know when they will be coming, and I will have everything in readiness for them. I have, &c, Walter G. Foster, The Secretary to the Treasury, Wellington. General Manager.
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The Secretary to the Treasury to Mr. Heney Kember. Sic,— 10th June, 1896. I am requested by the Minister acting for the Colonial Treasurer to ask you to undertake, in conjunction with Mr. Charles O'Hara Smith, a Government officer, the investigation and audit of the adjustment required to be made under the provisions of section 16, 19, and 20 of " The Bank of New Zealand and Banking Act, 1895 " (copy of which I enclose). The General Manager of the Assets Bealisation Board will be happy to afford the fullest possible facilities for investigation, and will have everything in readiness for your audit. A settlement of the adjustment is required to be made at the earliest possible moment. lam therefore to request you will be good enough to enter on your duties to-morrow if possible, and Mr. Smith will be asked to see you on the subject. The Minister will be glad to be informed of the amount of fee per diem you will charge the Government for the work. The Colonial Auditor, Mr. Butt, has been asked to co-operate with you. I have, &c, Jas. B. Heywood, Mr. Henry Kember, Accountant, Wellington. Secretary to the Treasury.
The Secretary to the Treasury to Mr. Charles O'Hara Smith. Sir,— 10th June, 1896. I am directed by the Minister acting for the Colonial Treasurer to ask you to undertake, in conjunction with Mr. Henry Kember, accountant, of this city, the audit of the adjustment required by sections 16, 19, and 20 of " The Bank of New Zealand and Banking Act, 1895." The General Manager of the Assets Bealisation Board will be happy to afford every assistance in making the fullest possible investigation ; and, as the matter is one of considerable urgency, Mr. Kember is being asked to enter upon the work, if possible, to-morrow ; and the Minister will be glad if you will at once place yourself in communication with him on the subject. The Colonial Auditor, Mr. Bytt, has been asked to co-operate with you. I have, &c, Jas. B. Heywood, Mr. Charles O'Hara Smith, Brougham Street, Wellington. Secretary to the Treasury.
The Secretary to the Treasury to the Colonial Auditor. Sir,— 10th June, 1896. I am directed by the Minister acting for the Colonial Treasurer to inform you that the Government have appointed Mr. Henry Kember, accountant, of this city, and Mr. Charles O'Hara Smith, Auditor of Land Bevenue, to furnish the Government with an independent audit of the adjustment provided for by sections 16, 19, and. 20 of "The Bank of New Zealand and Banking Act, 1895." The Minister directs me to assure you that no reflection is intended to be cast upon you by these extra appointments. The magnitude of the amount involved, and the close intimacy of the colony with relation to the Bank of New Zealand and the Assets Board, you will recognise cast a very great responsibility upon the Colotiial Treasurer in satisfying himself as to the sufficiency or otherwise of the adjusted amount arrived at. I am to mention that the Assets Board have assured the Government of their willing assistance, and he trusts you will see your way to render what help you can to the gentlemen appointed for the purpose of this special audit. I have, &c, Jas. B. Heywood, Secretary to the Treasury. J. M. Butt, Esq., Colonial Auditor, Bank of New Zealand, Wellington.
The Colonial Auditor to the Colonial Treasurer. Sir, — Bank of New Zealand, Head Office, Wellington, llth June, 1896. I have the honour to acknowledge the receipt of Treasury letter No. 96/920, dated the 10th instant, informing me that the Government have appointed Mr. Henry Kember and Mr. Charles O'Hara Smith to furnish an independent audit of the adjustment provided for by sections 16, 19, and 20 of " The Bank of New Zealand and Banking Act, 1895." I shall be most happy to afford Messrs. Kember and Smith all the assistance and information in my power, and am now holding myself and my office at the National Mutual Assurance Association Buildings at the disposal of those gentlemen. I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Colonial Auditor.
Messrs. Kember and Smith to the Colonial Treasurer. Sir, — Wellington, 26th June, 1896. In conformity with your instructions re investigation and audit of the adjustments required to be made under the provisions of sections 16, 19, and 20 of " The Bank of New Zealand and Banking Act, 1895," we have the honour to report as follows : — We find the sum-total of £2,731,706 comprised the following items: — £ s. d. Properties ... ... ... ... ... ... 755,207 15 9 Stations (1,690,626 4 3 btations ... ... ... ... ... ... | 54)5 07 o 0 Sheep ... ... ... ... ... ... 231,365 0 0 32—1. 6
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With the exception of the properties taken over from the Auckland Agricultural Company, the origin of the entries in the books of the Estates Company of these properties and stations are on the basis of Mr. Hean's valuations, and bear date December, 1890. The amount of £54,507 is at that date entered to the debit of capital account, and so remained up to the month of June, 1895, when it was split up and added pro ratct to the book-value of each station. We can find no reasonable explanation for this course, as there is positively nothing to show that this amount has any relation whatever to any of the stations, or to any properties agreed to be taken over by the Assets Board. The fact of its having remained in the books unadjusted for years is sufficient proof to us that it never could have been looked upon as part value of the stations, or as part value of any properties taken over by the Assets Board. If further proof were necessary to show that this sum of £54,507 cannot be connected with any of the properties of the Assets Board, we will quote the case of the Auckland Agricultural Company. The sum of £16,184 is added to the value of these stations as their proportion of the sum of £54,507 paid in excess of Mr. Hean's valuation ; yet, as a matter of fact, Mr. Hean never made any valuation of those properties at all. We therefore reject the amount as no valid liability of the Assets Board. In the above figures there is included a sum of £81,649 paid by the Estates Company on the 28th June, 1895, for half share in the Matamata Station. It appears to us as somewhat peculiar that the Estates Company should acquire an asset of this nature at this cost, when the property-tax valuation for this interest, plus improvements, sheep, &c, and 10 percent., only amounts to £53,342. We would therefore recommend that, before you approve of the issue of bonds for the item £81,649, further inquiries should be made regarding this transaction. Sheep, 231,365. —Sheep Account has always been entered in the books as of current marketvalue on the date of entry. To determine the book-value on the 31st March in each year the current value of the sheep on hand has been passed through the journal, and such value dealt with in the annual profit and loss stations accounts. On the 31st March, 1895, Mr. Foster, the Manager of the Estates Company, followed the usual custom, and, on the current values being ascertained, passed the necessary journal entries, which were.duly entered into the ledgers, disclosing the fact that there was shrinkage of £66,953 in sheepvalues, which sum was written off capital or cost, and a balance-sheet prepared accordingly. This balance-sheet, on being discussed by the attorneys for the directors, they pointed out that under clause 16 of "The Bank of New Zealand Share Guarantee Act, 1894," there was no power to write down the par- or book-value of any item, and so directed a journal entry to be made of £83,380, which at once wrote up the loss of £66,953 to a profit of £16,427 (which is neither par- nor bookvalue). As an example of the practical effect of the writing-up of the books-values of the sheep by the insertion of this fraudulent entry we will cite the case of the Carnarvon Station. On the 31st March, 1895, the books of the Estates Company show that they had 17,019 sheep, valued at £5,668 14s. 6d. The value of these 17,019 sheep was written up to £9,025 2s. 9d. During the financial year 1895-96 they bought 9,138 sheep and bred 4,804. Add the sheep on station at 31st March, 1895, 17,019: total, 30,961. Now, although by the altered valuation in the price of the sheep they value 17,019 at £9,025 os. 9d., during the year 1895-96 they sold 27,932 sheep for £8,606 Is. 6d. -Section 16 of "The Bank of New Zealand Share Guarantee Act, 1894 " (repealed 1895), under which the journal entry is directed, reads as follows : " In valuing the shares held by the bank in the Bank of New Zealand Estates Company (Limited), or any items which shall take the place of such shares or any of them, the directors and auditors shall treat the same as an account in liquidation, and pending the completion of such liquidation such shares or items shall be taken at the par- or book-value thereof." We contend that this section simply relates to the bank, and has nothing whatever to do with the affairs of the Estates Company,,and therefore reject this journal entry of £83,380. Whatever power the above clause gives the attorneys for the directors, there is none to warrant the construction of a false Profit and Loss Account. An audited document called the Station Adjustments to the 31st March, 1895, was laid before us, calling for a further sum of £45,701 2s. Id. as due by the Assets Board to the Estates Company. On account of the inclusion of the false value of £83,380, the groundwork of this production is on an incorrect basis. A portion of the result arrived at—viz., £42,492 ss, Id.—is composed of such items as growing turnips, sown grass-seed, used implements, and doubtful improvements. We consider these assets unreliable, impossible to be correctly stated, and to a great extent unrealisable. The stations cannot be supposed to be worth this extra £42,492, neither should the books-value be increased thereby, as the original estimate of Mr. Hean is far in excess of any possible real value. For these reasons, therefore, we reject the sum of £42,492 ss. Id. as not representing any real value. It should be treated as an ascertained loss on the stations as at the 31st March, 1895, and should be borne by the Estates Company. The remaining portion of the adjustment, £3,208 175., represents assets of quite a different character, being both good and liquid, and should be allowed. A further audited document was laid before us showing the incomings and outgoings from the Ist April, 1895, to the 31st March, 1896, showing a result of £33,089 ss. Id. of outgoings over incomings. So far this is correct, but we consider the statement should go beyond this, and include all the incomings received or receivable from shipments of produce and sales of land and properties. We therefore prepared a statement including these items, and think it is only fair and equitable that the same should also include the liability of interest upon the debentures to be issued as on the 31st March, 1895. Such statement clearly defines the actual position of the Assets Board as on the 31st March, 1896. Our investigation of the documents placed before us leads us to this conclusion : that the amount of debentures stated in section 19 should be reduced by the two sums of £54,507 and £83,380, leaving the amount to be £2,593,819. We interpret clause 16 as giving power to adjust the figures stated in the Act.
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c s. a. On the Adjustment Account to the 31st March, 1895, the amount allowed is ... ... ... ... ... 3,208 17 0 Balance of outgoings over incomings to the 31st March, 1896, amount allowed ... ... ... ... ... 33,089 5 1 36,298 2 1 From which point we are of opinion the account should be extended as follows:— Expenditure re Thames Valley Company and expenses ... 6,758 4 0 Liability for interest on £2,593,819 debentures at 3-J- per cent. to 31st March, 1896 ... ... ... ... 91,578 0 6 134,634 6 7 Estimated value of produce shipped to London £90,000 0 0 Cash received on account of land-sales, properties, and interest ... ... ... 34,476 19 4 124,476 19 4 10,157 7 3 £10,157 7s. 3d. due by the Assets Board to the Estates Company on the adjustment to the 31st March, 1896. Total amount of debentures to free all liability of the Assets Board ... ... ... ... ... ... 2,603,976 7 3 A settlement on this basis should place the Assets Board in a fairly good position to finance their affairs, as on the Ist April, 1896, they had £35,946 owing by purchasers of properties. Attached please find schedule of debenture adjustment and statement of cash adjustment, 1895-96. ' We have, &c, Henry Kember, F.1.A.N.Z., C. O'Hara Smith, The Hon. the Colonial Treasurer, the Treasury, Wellington. Special Auditors.
The Assets Bealisation Board in Account with the Bank of New Zealand Estates Company. Debenture Settlement. £ s. d. £ s. d. To purchase of properties in terms of Amount claimed in excess of Mr. Hean's "The Bank of New Zealand and valuation, and disallowed for reasons Banking Act, 1895" • .. .. 2,731,706 0 0 stated in special auditors'report .. 54,507 0 0 Amount of value of sheep written up, and disallowed for reasons stated in special auditors' report .. .. 83,380 0 0 Balance .. .. .. .. 2,593,819 0 0 £2,731,706 0 0 £2,731,706 0 0 To balance .. .. .. 2,593,819 0 0 Balance .. .. .. .. 2,603,976 7 3 Balance payable on adjustment, as per statement attached .. .. 10,157 7 3 £2,603,976 7 3 Total .. .. .. £2,603,976 7 3 To balance.. .. .. .. 2,603,976 7 3 ' Statement of Adjustment between the Assets Bealisation Board and the Bank of New Zealand Estates Company for the Year ended 31st March, 1896. £ s. d. | £ s . a. Cash received on account of lands sold, '■ Disbursements from Ist April, 1895, to &c. .. ■■ ■■ ■■ 27,273 9 2 31st March, 1896 .. .. .. 158,660 12 4 Interest on amounts due by purchasers 427 10 9 : Balance payable on adjustment of freeBalances at credit of various estates with holds .. .. .. .. 2,054 1 8 the Bank of New Zealand at 31st ■ Balance payable on adjustment of other March, 1896 .. .. .. 6,775 19 5 properties.. .. .. .. 1,154 15 4 Reclamations on produce shipped to I Realisation expenses .. .. .. 319 3 0 London .. .. .. .. 2,893 4 1 i Calls paid on Thames Valley Land CornReceipts from Ist April, 1895, to 31st pany .. .. .. .. 6,439 1 0 March, 1896 .. .. .. 122,678 3 2 Interest due on £2,593,819 worth of deWool, frozen meat, &c, shipped to bentures, at 3J per cent., for the six London .. .. .. .. 90,000 0 0 j months ended 30th September, 1895 .. 45,39116 8 Balance due by Assets Board to Bank of j Interest on £45,391 16s. Bd., at 3J per New Zealand Estates Company .. 10,157 7 3| cent., for the half-year ended 31st | March, 1896 .. .. .. 794 7 2 | Interest on £2,593,819 worth of debentures, at 3J per cent., for the six months ended 31st March, 1896 .. 45,39116 8 £2_60,205 13 10 £260,205 13 10
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Memorandum by the Government Auditor. Bank of New Zealand, Head Office, Wellington, 27th June, 1896. Memorandum by the Government Auditor in reply to T. 96/1045, upon the Subject of the Report of the Special Auditors of the Assets Realisation Board on the Adjustment to be made between the Board and the Bank of New Zealand Estates Company at 31st March, 1896. The first item questioned by the special auditors is the sum of £54,507 included in the sum-total of £2,731,706 named in " The Bank of New Zealand and Banking Act, 1895," as the price to be paid by the Assets Bealisation Board to the Bank of New Zealand Estates Company, subject to adjustment. They are correct in stating that this amount was not charged up to any particular assets up to June, 1895. As far as I have been able to learn, the explanation of the appearance of this sum in the books of the Estates Company is as follows : — Prior to the formation of the company in 1890, the London board of the bank employed Mr. Hean to make a valuation of the bank's assets. Mr. Hean employed Mr. Thomas Brydone to value the stations in the South Island, and the Hon. J. B. Whyte to value those in the North Island, and accepted the valuations of those gentlemen in arriving at the gross figures. Thus, what were really the valuations of Messrs. Brydone and Whyte came to be known as " Mr. Hean's valuations." A number of the assets (including the above stations) reviewed by Mr. Hean were subsequently sold by the bank to the Estates Company, which had meantime been formed in London to purchase them. The new company appointed representatives in New Zealand, and instructed them to take into their books at " Mr. Hean's valuations " the assets purchased from the bank. Later on, when information was sent by the company in London to their representatives in New Zealand to enable the latter to make up a balance-sheet, it was found that the total of the consideration paid by the company to the bank was £54,507 in excess of "Mr. Hean's valuations" of the assets transferred ; but no explanation was then given of the fact, nor has any been given since. The bank had, however, had a valuation made of the station properties in the South Island by Mr. A. M. Clark, which was largely in excess of the valuations of Mr. Brydone adopted by Mr. Hean ; and when the bargain came to be made between the bank and the Estates Company the negotiators allowed an addition of £54,507 to the purchase-money, in consequence, it is believed, of this excess of Mr. Clark's valuations over Mr. Brydone's. In consequence of this, when the position of the Bank of New Zealand Estates Company was laid before the Joint Parliamentary Committee in August, 1895, this sum of £54,507 was tacked on to the book-value of the station properties. It appears on page 2of Statement No. 6 laid before the Committee, where the book-value of the stations is shown as £1,921,991 4s. 3d., and there is added, " Amount paid by the Bank of New Zealand Estates Company for consolidated properties in excess of Mr. Hean's valuation, £54,507 " : total, £1,976,498 4s. 3d. When the Estates Company, acting as agents for the Assets Bealisation Board, which had not then been constituted, came to open up the books for the Board, they, finding this sum of £54,507 included in the purchase-price which Parliament had approved, spread it over the whole of the station properties, adding a percentage to each. The next item referred to by the special auditors is the sum of £81,649 paid by the Estates Company on the 28th of June, 1895, for half-share in the Matamata Station. At the date of the establishment of the Bank of New Zealand Estates Company the Bank owned one half-share of the Matamata property, and the New Zealand Loan and Mercantile Agency Company owned the other half. The bank transferred its half to the Bank of New Zealand. Estates Company. Subsequently, when the Loan Company's troubles supervened, the bank, being a creditor, agreed to accept in part payment a transfer of the Loan Company's half of Matamata, which it proceeded to sell to the Bank of New Zealand Estates Company, so that when the bank's position was laid before the parliamentary Committee the Estates Company held the whole of Matamata. The bank received from the Estates Company the sum of £81,649, representing the cost to it of the second half of Matamata up to date of the sale, and the Estates Company included Matamata as a whole on page 1 of Statement No. 6, where it appears as, " Matamata, freehold, total book-value £195,178 lis. 4d.," and forms part of the purchase-money fixed by Parliament in last year's Act. The latest valuation appears in the same statement as £84,969, the difference between these two valuations being part of the admitted discrepancy between the "book" and the "estimated true values " of the assets sold to the Assets Bealisation Board. The next item referred to is " Sheep, 231,365," and the " writing-up of the nominal value by £83,380." As the special auditors have referred to this transaction in very strong language, I think it would be better to give the explanation of the Estates Company at length, and I shall forward it at the earliest possible moment. I cannot get it now, as the colonial manager and the directors of the company are out of town. Whatever view may be taken of this action of the Estates Company, it remains the fact that the valuation of the sheep formed part of the price which the parliamentary Committee recommended, and which was subsequently adopted by the Act of last year; and, whether rightly or wrongly, I did not consider I was justified in reducing the price at which any particular asset had been included by the parliamentary Committee in their recommendation to Parliament. A statement showing the numbers of live-stock on the stations (which, I believe, showed the relative valuations) was laid before the parliamentary Committee.
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The special auditors then pass on to the "station adjustment-sheets at 31st March, 1895," calling for a further sum of " £45,701 2s. Id. as due by the Assets Board to the Estates Company," and point out that a portion of the result arrived at (namely, £42,592 ss. Id.) is composed of such items as " growing turnips, sowing of grass-seed, used, implements, and doubtful improvements." . In this I cannot agree with them. The further sum of £45,701 called for consists principally of the overdrafts of the stations with the Bank of New Zealand at 31st March, 1895. The accountant of the Estates Company (Mr. Cuff) has handed me a memorandum (attached hereto) setting forth that this sum is fairly represented by assets that were not included in the valuations laid before the parliamentary Committee. It will be seen from this memorandum that the item, " Expenditure re Thames Valley Company, and expenses, £6,758 45.," mentioned by the special auditors at the end of page 7 of their report, was not disclosed to me up to the time of making my certificate. lam informed that the Assets Bealisation Board have arranged to pay this sum in cash. The amount, however, is as stated in Mr. Cuff's memorandum, not as shown by the special auditors. The difference consists of " Bealisation expenses, £319 35." Whether the liabilities of the stations to others than the Bank of New Zealand Estates Company at the 31st of March may legitimately be added on to the price of £2,731,706 has not, so far, been considered by me as open to question. At the time that the position of the bank and the Estates Company was under consideration by the parliamentary Committee I informed the President of the bank of these outside obligations, and he told me that a clause would be inserted in the Act to be brought down, giving effect to the recommendations of the Committee, to meet the case of these liabilities. I have always thought, and have been advised by the bank's solicitor (Mr. Hosking), that clause 16 was inserted in the Act for that especial purpose, and I have made my adjustments accordingly. The special auditors then pass on to the '' Statement of Incomings and Outgoings from the Ist April, 1895, to the 31st March, 1896," and take the ground that the statement should include " all the incomings received or receivable from shipments of produce and sales of land and properties " ; and in the statement they have made out they include " Estimated value of produce shipped to' London, £90,000," and " Cash received on account of land-sales, properties, and interests, £34,476 19s. 4d." I did not include in my statement anything on account of the estimated value of produce shipped, because at a consultation with a leading Wellington solicitor, who is regarded as, perhaps, the best commercial lawyer here, at which the Chairman and General Manager of the Assets Bealisation Board and Mr. Fraser were present, we were advised that the adjustments to be made in pursuance of the Act must be confined to actual incomings and outgoings, and that to make an estimate of probable receipts and expenditure, which would be subject to alteration later on, would not be in accordance with the provisions of the Act. I cannot say the same of the item, " Cash received on account of land-sales, properties, and interests, £34,476 19s. 4d." I left that out because the Assets Bealisation Board wished it —they thought it would be to the interests of the Board that the sum should be paid over by the Estates Company in cash, rather than that the Board should find themselves under the necessity of asking the bank for an overdraft. As the question whether the amount was to be made good to the Assets Bealisation Board by being deducted from the debenture issue, or by being paid over in cash", did not affect the financial position of the Board, I thought I might, without impropriety, concur in the proposed adjustment. Neither does the inclusion or exclusion of the estimated value of produce shipped (£90,000) affect the financial position of the Assets Bealisation Board. If my adjustment is accepted, the debenture-issue is £124,476 greater, and the amount of cash in the hands of the Assets Bealisation Board is also greater by the same amount, than if the proposed adjustment of the special auditors is adopted. Or, again, if it is considered desirable to apply the whole of the cash in the hands of the Assets Bealisation Board in reducing the amount of the debenture issue, that can be done by at once redeeming debentures to that amount. Thus it will be seen that the inclusion or exclusion of these sums is only a matter of book-keeping, and makes no difference to the financial position of the Board. The special auditors include in the adjustment the sum of £91,578 os. 6d. on account of liability for interest on the principal of the debenture-issue as assessed by them. I, on the other hand, discarded this liability from my adjustment, and left it to be settled in cash between the Board and the company. My reason is that Ido not think a " liability " can be called an " outgoing" within the meaning of the Act, nor do I think it would have been right for the Bank of New Zealand Estates Company, acting as agents to the Assets Bealisation Board, to have paid over to themselves any sum in respect of the estimated amount due as interest on the purchaseprice from March, 1895, to March, 1896. But this also seems to me to be mainly a question of book-keeping, not affecting the ultimate result. I have referred to the proposed cash transactions between the Assets Board and the Estates Company ; and, in order to make myself clear, I attach a " Statement of Proposed Cash Settlement." The memorandum referred to me being marked " Urgent," I have endeavoured to reply to the points raised as rapidly as possible, and may not have dealt with everything as fully and clearly as desired. I shall be glad to supplement my remarks in any way that may be desired. J. M. Butt, Government Auditor.
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Mr. Cuff's Explanation to Me. Butt. Bank of New Zealand Estates Company (Limited), Wellington, 27th June, 1896*. Dear Sir, — Adjustment with Assets Realisation Board. As requested, I beg to give the following explanation as to how the sum of £45,701 2s. Id., shown as due in adjustment of accounts between the Estates Company and the Assets Bealisation Board at the 31st March, 1895, is arrived at. In the first place, I may state that in preparing the station balance-sheets each year each estate was treated as a separate entity, having assets and liabilities of its own outside the value of land, stock, and implements, which latter were shown as liabilities to capital. At the 31st March, 1895, the total liabilities (outside capital) amounted to £82,584 ss. Id., made up as follows : — £ s. d. Bank overdrafts ... ... ... ... ... . ... 40,267 7 2 Accident insurance ... ... ... ... ... 222 13 2 London office ... ... ... ... ... ... 1,061 411 Sums due by capital for adjustments of stock and Cr. balances of Profit and Loss ... ... ... ... ... 33,855 6 8 Sundry accounts outstanding ... ... ... ... 5,849 11 11 Amounts due by Assets Bealisation Board to Estates Company... 1,328 1 3 82,584 5 1 Against these liabilities, assets for a similar amount, not included in value of stations in Estates Company's balance-sheet, were held, made up as follows : — Improvement Suspense Account ... ... ... ... 12,584 8 0 Turnips, and stock-feed, &c, on hand ... ... ... 14,696 5 5 Seed and material ... ... ... ... ... 11,985 10 8 ■Accounts outstanding ... ... ... ... ... 4,241 17 2 Credit bank balances ... ... ... ... ... 4,974 13 8 Cash adjustments and Profit and Loss ... ... ... 34,101 10 2 82,584 5 1 In making the adjustment of accounts, we assumed that the Assets Bealisation Board would purchase these assets, which, in my opinion, are tangible assets to the estates, and the Estates Company would, with the proceeds thereof, liquidate the liabilities for a similar amount. As a portion of the liabilities mentioned consists of sums due by the various estates to capital, and, on the other hand, sums were due by capital to the estates, and such latter sums were included in the assets, an account in the form of an Adjustment Account was prepared, in which the Assets Bealisation Board were debited with the assets, amounting to ... ... £82,584 5 1 Against which credit was given for sums payable by capital as follows : — Capital adjustments ... ... ... £27,935 14 6 Profit and Loss Dr. balances ... ... 10,467 16 3 Sundry amounts due by Assets Bealisation Board to Estates Company ... ••■ ■■• 1,688 9 3 Total ... ... ... ... 40,092 0 0 Leaving a balance of ... ... ... 42,492 5 1 payable to the Estates Company on adjustment of station accounts at 31st March, 1895. In addition to this there were, — Accrued rents at 31st March, 1895, on freeholds ... ... £2,054 1 8 And adjustment of Waikato Coal Company's accounts... ... 1,154 15 4 3,208 17 0 which, added to £42,492 ss. Id., makes a total of £45,701 2s. Id., due to the Estates Company on adjustment, as at 31st March, 1895. Produce shipped, but not accounted for. —At 31st March, 1896, there were wool, frozen meat, and cheese, shipped and in store, of the estimated value of £92,1.19 10s., but at that date we had not received the proceeds or advices of the sale of the produce; subsequently, early in April, we had cable advice that a certain quantity of wool had been sold. [Memorandum by Government Auditor. —" I was not informed of this until after my certificate had been sent in."] Cash received for Proceeds of Sale of Land, £27,273 9s. 2d. —It was arranged, I understand, between the boards of the Estates Company and Assets Bealisation Board that the cash received for proceeds of land sold should be paid over in cash, it being considered an advantage to the Board to have the money liquid for finance purposes. Call on Thames Valley Land Company's Shares, £6,439 Is. —This item was inadvertently omitted from the adjustment until after the Auditor's certificate had been signed : it was therefore arranged with the directors of the Assets Bealisation Board that the amount should be settled in cash. Yours faithfully, W..C. Cuff, Late Acting-Accountant, Estates Company. J. M. Butt, Esq., Government Auditor.
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The Assets Bealisation Board in Account with the Bank of New Zealand Estates Company. Cash Settlement. £ a. d. £ s. d. To Interest on £2,731,706 debentures, at By Cash, account sales made .. .. 27,273 9 2 3£ per cent., for six months, to 30tb Interest on amounts due by purchasers 427 10 9 September, 1895 .. .. 47,804 17 1 — Interest on £47,804 17s. Id.,at per 27,700 19 11 cent, from 30th September, 1895, 836 11 8 Balances at credit of the various to 31st March, 1896 .. .. estates with the Bank of New Interest on £2,731,706 debentures, Zealand at 31st March, 1895 .. 6,775 19 5 at 3J per cent., for six months, to Balance .. .. .. 68,727 10 6 31st March. 1896 .. .. 47,804 17 1 96,446 5 10 Realisation expenses .. .. 319 3 0 Calls paid on Thames Valley Land Company's shares, with exchange.. 6,439 1 0 £103,204 9 10 £103,204 9 10 Balance.. .. .. £68,727 10 6
The Government Auditor to the Colonial Teeasueee. Sir, — Bank of New Zealand, Head Office, Wellington, 30th June, 1896. Beferring to my memorandum, dated the 27th instant, in reply to T 96/1045, upon the subject of the report of the special auditors of the Assets Bealisation Board on the adjustments between the Board and the Bank of New Zealand Estates Company at the 31st March, 1896, and more especially to that part of my memorandum, on page 3, dealing with the question of stock values: I now enclose copy of a letter addressed to me by the colonial manager of the Estates Company on the subject of the alleged writing-up of the stock. I'have also mentioned the matter to the attorneys of the Estates Company, but so far they have not given me any explanation other than that contained in the colonial manager's letter. I have, &c, J. M. Butt, The Hon. the Colonial Treasurer, Wellington. Government Auditor.
The Colonial Manager, Bank of New Zealand Estates Company (Limited), to the Colonial Auditor, Bank of New Zealand. Bank of New Zealand Estates Company (Limited), Wellington, 30th June, 1896. Dear Sir, — Stock Adjustment Account, £94,063. For balance-sheet of the 31st March, 1895, entries were passed by my instructions which comprised estimated shrinkage of values in stock. On my bringing the matter under the notice of the attorneys they declined to authorise any alterations, and reversing entries were passed in consequence. Yours, &c, Walter G. Foster, Colonial Manager. The Colonial Auditor, Bank of New Zealand, Wellington.
Messrs. Kember and Smith to the Colonial Teeasueee. Sir,— Wellington, 2nd July, 1896. In reply to the memorandum of the Government Auditor, we beg to remark as follows :— £54,507 : The explanation of the Government Auditor leaves this matter as we stated it, and we still see no reason for allowing the amount to be added to the book-values of the stations accounts, with which it apparently has no connection. £83,380: Journal entry for false values of sheep. Mr. Foster does not say, as he distinctly stated to us, that he was, and still is, opposed to the action of the attorneys for the Estates Company ; and the Government Auditor states it as his opinion that he is not responsible for values, they having been accepted by the parliamentary Committee. £42,592 ss. Id.: Virtually overdrafts of the stations supposed to be covered by extra assets, which we say no purchaser would pay for, and we cannot recommend the Assets Board to take over as good such doubtful assets. £6,758 45.: We are not responsible for the fact of this amount not having been disclosed to the Government Auditor, but beg to state that he is in error when he remarks, " Not as shown by the special auditors." Please refer to the statement of adjustments attached to our report. £34,476 19s. 4d.: The Government Auditor states that he left out this amount at the wish of the Assets Board. Comment unnecessary. £90,000 : Produce shipped. This could and should have been made an incoming by following the usual business custom of drawing against shipments. The amount, being available, can now be drawn for, and we think it the wisest course not to issue debentures for this sum, rather than to issue debentures, and leave them to be redeemed at a future period. £91,578 os. 6d. : The Government Auditor is correct in stating this is not an outgoing. We never so stated it, but, for the purposes of an adjustment, it cannot, we think, be ignored. We have, &c, Heney Kember, F.1.A.N.Z., C. O'Haea Smith, Special Auditors. The Hon. the Colonial Treasurer, the Treasury, Wellington.
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Supplementary Memorandum by Special Auditors, for the Hon. the Colonial Treasurer. Re the £81,649 paid on account of half-interest in the Matamata Estate, the explanation of the Government Auditor only shows more clearly than ever the necessity of further inquiry. It would appear from the statement of the Government Auditor that the Estates Company bought the property at a price far in excess of its value, in order that the New Zealand Loan and Mercantile Agency Company might be able to liquidate a debt owing by it to the Bank of New Zealand, and they then claim bonds for the amount. Query. —lf the Estates Company had not on 28th June, 1895 —viz., the date upon which the cheque was paid to the Bank of New Zealand—a reasonable hope that they were to get guaranteed debentures for the amount, would they have paid £81,649 for a property worth only £53,342 ? Henry Kembee, C. O'Hara Smith, Wellington, 4th July, 1896, Special Auditors.
Fact. —The House of Bepresentatives Committee understood that the sum of £2,731,706 was the book-value of the properties proposed to be handed over to the Assets Board as at 31st March, 1895. Query. —l. Is it possible to make an adjustment of the station accounts as at 31st March, 1895, without going behind the £2,731,706? 2. If, in making the adjustment as at 31st March, 1895, the auditors discover that the bookvalue of a station has been understated, should they recommend the Hon. the Colonial Treasurer to increase the £2,731,706 by the amount? 3. If, in making the adjustment as at 31st March, 1895, the auditors discover that the bookvalue of a station had been overstated, should they recommend the Hon. the Colonial Treasurer to reduce the £2,731,706 by the amount ? 4. Is the item £2,731,706 a sum that may be increased by the operation of the adjustment, but which cannot in any case be decreased ? .5. .If, in making the adjustment as at the 31st March, 1895, the auditors discover that the book-values as at the 31st March, 1895, did not amount to £2,731,706, but to a lesser amount, and that the greater amount was arrived at by inserting fraudulent entries, would they be justified in passing the matter over, because in their opinion the item £2,731,706 is a sum fixed by Act, and cannot be reduced ? 6. If, in making the adjustment as at the 31st March, 1895, the auditors discover that the £2,731,706 was arrived at in an improper manner, and the books falsified to support the amount, are they justified in recommending the Hon. the Colonial Treasurer to reduce the item £2,731,706 by the amount overstated?
Memorandum for the Solicitor-General. Section 16 of " The Bank of New Zealand and Banking Act, 1895," provides that the Estates Company shall sell, and the Assets Board shall purchase, as on the 31st March, 1895, the assets, of the Estates Company mentioned in the schedule to the Act, at the price mentioned in section 19— namely, £2,731,706 —subject, however, to a due adjustment of the station accounts as on the 31st March, 1895, and of the incomings and outgoings for the period between the above date and the date on which the Assets Board shall assume the control of the said assets. The question the Colonial Treasurer desires to submit for your consideration and opinion is, whether the figures £2,731,706 can be altered or amended, as it seems impossible to make an adjustment of the.station accounts as at the 31st March, 1895, without going behind these figures. In other words, does it not follow that an adjustment of the accounts forming part of the £2,731,706 must necessarily embrace an adjustment or alteration (if necessary) of the figures themselves ? The Government Auditor is of opinion these figures cannot be altered, or, rather, must be accepted without alteration; while, on the other hand, the special auditors contend that if the valuations or methods of arriving at the purchase-price of £2,731,706 are in themselves found to be erroneous, it follows that a proper and correct adjustment cannot be made without an alteration of the figures quoted in section 19 of the Act. The various reports and correspondence relating to this matter are forwarded for your information.
I think the question stated opposite (above) must be answered in the affirmative. And I also think that the contention of the special auditors is a fair and reasonable construction of the terms of sections 16, 19, and 20 of the above-mentioned Act.—W. S. Beid. 3rd July, 1896. Jas. B. Heywood, The Treasury, Wellington, 2nd July, 1896. Secretary to the Treasury.
EXHIBIT No. 53. [Handed in by Mr. Watson, 2nd September, 1896.] General Managers, Bank of New Zealand, between July, 1890, and July, 1894.
Name. Prom To J. M. Butt ... Acting General Manager W. T. Holmes .. General Manager ... I April, 1890 ... December, 1890. ... December, 1890... ; November, 1894.
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Inspector and Assistant Inspectors.
EXHIBIT No. 54. [Handed in by Mr. Watson, 2nd September, 1896]. Combined Statement, Assets and Liabilities of Bank of New Zealand, 25th June, 1894. New Zealand, Australia, and Fiji Offices only. Liabilities. £ s. d. Assets. £ s. d, Notes in circulation .. .. 463,170 0 0 Coin .. .. .. .. 817,569 3 8 Due to other banks .. .. .. 7,774 12 10 Bullion on hand and in transit .. 108,621 2 1 Bills payable .. .. .. 23,789 15 3 Due by other banks .. .. 8,086 14 2 Deposits and other liabilities .. 5,247,708 17 10 Bills discounted and bills receivable .. 769,474 18 2 Bank of New Zealand Estates Company 453 740 0 9 Advances and other debts due to the Branches .. .. .. .. 73,903 2 5 bank .. .. .. .. 3,478,548 16 8 London Office Account .. .. 2,005,379 10 2 Bank of New Zealand Estates Company . . . (Limited) .. .. .. 796,373 12 4 Bank of New Zealand Estates Company (Limited) Share Account .. .. 1,850,000 0 0 Landed property, bank premises, furniture, &c. .. .. .. 415,602 15 8 Profit and loss .. .. .. 31,188 16 6 £8,275,465 19 3 £8,275,465 19 3 2nd September, 1896. Bichd. W. Gibbs, Accountant.
EXHIBIT No. 55. [Handed in by Hon. Mr. Seddon, during Mr. Watson's examination.] . Hon. Colonial Treasurer to the General Manager, Bank of New Zealand. (Confidential.) Dear Sir, — The Treasury, Wellington, 9th October, 1893. I have the honour to call your attention to the position of your bank's reserve. I trust that you will recognise the desirableness of bringing the reserve within legal limit at as early a date as possible. I am, &c, The General Manager, Bank of New Zealand, Auckland. J. G. Ward.
The General Manager, Bank of New Zealand, to the Colonial Treasurer. (Confidential.) General Manager's Office, Bank of New Zealand, Auckland, Sir,— 27th October, 1893. I have the honour to acknowledge receipt of your " confidential" letter of the 9th instant, and in reply beg permission to lay before you a few considerations touching the asserted inadequacy of the bank's coin reserves in New Zealand which I think you will agree with me are pertinent to the question, and should not be overlooked. I desire to point out, in the first place, that the bank's Act of Incorporation does not make it at all clear what reserves are to be maintained in this colony, and I do not therefore admit that the bank has failed to keep them within " legal" limit. The proportion has been lower on a previous occasion than it was in the June quarter without objection being taken. Apart, how*ever, from that, and with reference to the general question whether it is not desirable that a bank should maintain a holding of coin, bullion, and public securities, to the extent of not less than one-third of its demand liabilities, our reply is that our colonial reserves are not inadequate, The bank always keeps in Australia cash resources largely in excess of what are needed for its business there ; in fact our coin in Australia is invariably largely in excess of our demand liabilities in those colonies. The large sums of money which the bank has to move to London to provide for Government remittances necessitated in the past, and still necessitates, its having ample cash resources available at a point where exchange on London is regularly procurable when wanted, at every season of the year, which is not the case in New Zealand. It is only by working exchange through Australia 33—1. 6.
Name. Place or District. From To Inspector. J. M. Butt Auckland -October, 1891 ... November, 1894, C. G. Andrews ... B. M. Litchfield W. B. Buller . . T. G. Pleydell ... Assistant Inspectors. July, 1890 January, 1890 ... September, 1891 September, 1890 July, 1891. to date, to date. June, 1891. Auckland and Northern District Wellington and Central District Christchurch and Southern District Australia * Was previously signing " for the Inspector."
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that we are able to afford the Government the favourable terms for London exchange which are conceded. Our contention is that, in view of the rapidity of steam communication, and the facility with which gold can be transferred from Australia to any point in this colony—a facility greater in many cases than that with which it can be moved from point to point in the colony itself —in view also of the comparatively trivial liabitities of the bank in Australia, and its preponderating assets there (more than treble its total liabilities), the bank is entitled to treat its cash resources in Australia as part of its New Zealand reserve. Our position in this respect is peculiar, and entirely different from that of other banks whose trading is not entirely confined to New Zealand. Their Australian position is normal, and their demand liabilities exceed their coin-holding there. Viewing the position of the bank's reserves from this standpoint, you will find, taking the last published returns (June quarter) for example's sake, that the bank held during that quarter average coin and bullion in New Zealand and Australia equal to 29-J- per cent, of all its demand liabilities in those colonies, including its liability to the New Zealand Government on deposits (£469,000) which can hardly be regarded as " ordinary cash deposits of customers." If we exclude these deposits the proportion was 34-J per cent. These are the proportions of actual coin and bullion available in the bank's colonial coffers, and do not include bills and notes of other banks and balances due to us by other banks which averaged during that quarter £52,421, and were practically as good as coin. There is one other point to which I would ask leave to direct your attention. The bank's demand liabilities, as disclosed by the published statements, are swollen by Bank of New Zealand Estates Company deposits, amounting in the June quarter to over £425,000. These deposits cannot he regarded as in any sense " ordinary cash deposits "of a customer. The amount is not withdrawable, because there are advances to a greater extent standing in the bank's books as liabilities of the company to the bank, and which the bank treats as a set-off. On technical grounds these deposits and advances have to be kept separate; but for all practical purposes the position, as far as the bank's liabilities to the public are concerned, is the same as though they were combined in one account. The credit balances are practically fixed, although they appear in the bank's returns as payable- on demand. If we deduct these deposits from our demand liabilities we find the bank held 34 per cent, of coin and bullion to those liabilities (including Government deposits) —a proportion in excess of the reserves which it is asserted the Act requires should be maintained. If we exclude Government deposits, the proportion is nearly 41 per cent. It will reassure you to know that the bank's available cash resources in Australia and New Zealand at the moment exceed considerably £1,000,000 sterling. I have, &c, W. T. Holmes, The Hon. the Colonial Treasurer, Wellington. General Manager.
Memorandum by the Secretary of the Treasury. The Principal Act (1861) did not provide for extension of business beyond the Colony of New Zealand, and the subsequent Acts giving extended powers are silent as regards limit of liabilities. I think it may therefore be fairly argued that the limit defined by section 13 of the Principal Act ("not to exclude three times the amount of the coin, bullion, and public securities—within the colony ") is the legal limit which we may properly ask should be maintained. That no objection should have been made on a previous occasion, when the proportion was even-lower than the present, cannot be accepted as an argument against exception being taken now. Mr. Holmes excuses the position of the bank in New Zealand by asserting that the resources of the institution in Australia are largely in excess of what are needed for its business there, and that these excess resources can be readily brought to New Zealand, should occasion arise, and therefore the reserves in Australia should be treated as part of the New Zealand resources. Ido not see how the Treasury can recognise this line of explanation, for if the bank chooses to do business in Australia, it must not do so at the cost of imperilling their New Zealand assets; and if an actual shrinkage takes place, it is our duty to draw attention to it. lat once allow that the requirements connected with the conduct of the Government business necessitate an exceptional treatment, but the Bank of New Zealand, having undertaken to do the business of the Government, must conduct their whole business upon lines which should not challenge adverse criticism. The introduction of the Estates Company deposits into the question of the adequacy or otherwise of the bank's resources is, I think, unfortunate, because it is impossible to separate the Estates Company from the bank proper. Mr. Holmes's explanation shows how completely the two concerns are interwoven. The percentages quoted by Mr. Holmes are more a matter of opinion (taken from the peculiar standpoint of the onlooker) than of actual fact, and do not, in my opinion, remove the necessity for calling upon the bank to strengthen their cash resources. J.8.H." 4th January, 1894. Mr. Heywood,— Owing to the New Zealand Loan and Mercantile Company's suspension, the general financial position is so surrounded with difficulties that, while I think the bank reserves must be strengthened as soon as possible, it is not desirable to press the institution at the present moment. Do not lose sight of the matter. 12th January, 1894. J. G, Ward,
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EXHIBIT No. 56. [Handed in by Hon. Mr. Seddon during Mr. Watson's evidence, 3rd September, 1896.] PAPERS RELATING TO THE BANKING LEGISLATION OP 1894, Mr. J. Murray to the Hon. the Premier. Sir, — Bank of New Zealand, Wellington, 25th June, 1894. I have the honour to inform you that I have been commissioned by the directors of this bank to communicate with the Government regarding its affairs, and to say that, owing to low prices, bad seasons, and other circumstances, the directors find that it will be quite impossible to declare a dividend to shareholders at the approaching annual meeting, the certain result of which must be the closing of the bank ; because even now, notwithstanding efforts to collect resources, the executive find the utmost difficulty in maintaining the gold reserve prescribed by law. The very low price of the bank shares in the market is itself evidence of distrust which may at any moment develop into panic. That the closing of the Bank of New Zealand would be a calamity to the colony of the first magnitude can be questioned by no one. Its business relations in New Zealand are larger and more important in proportion to the population and resources of the country than are those of any bank in any other colony. This will appear more strikingly when the following figures are considered : The bank has within New Zealand ninety-five branches or agencies. At these there are kept 25,000 current accounts, with an aggregate on deposit of £1,600,000; 12,000 fixed deposits, £2,800,000; which means, after allowing for cases of persons holding more than one fixed deposit, say, 35,000 separate depositors, with a total of £4,400,000 on deposit. On the other hand, there is afforded accommodation by way of overdraft to 4,600 persons to the total-amount of £2,550,000; and there are, besides, 950 discount accounts, representing a large number of traders' acceptances, the aggregate amount being £600,000. That many of these persons would find accommodation elsewhere is no doubt true, but these would be the better off, large numbers of well-doing but not rich men would be ruined, promising enterprises crushed, and the industries of the colony would suffer damage from which it would take years to recover. That the lock-up of the money of 35,000 depositors would cause immense dislocation of business, inconvenience, and loss goes without saying. Among these depositors there is the Auckland Savings-Bank, with, say, £60,000 at its credit in the Bank of New Zealand. You are aware that a run on it took place last year. There is also the Government of New Zealand, with about £800,000, between actual deposits and drafts of the bank held. This large sum is in addition .to the liabilities to the public detailed above. There are, say, £1,500,000 of London deposits which, as quickly as the money could be collected in the colony, would be withdrawn from use there. I will only add that the bank has 1,300 shareholders in New Zealand, who, besides the capital they have at stake, are liable for £720,000. It is not my place to allude to other banks, but I think I only echo a general opinion when I say that the trouble would not stop short with the Bank of New Zealand. On this point recent Australian experience is suggestive. Finally, it is clear that the evil would be intensified by the depression admittedly now existing in the colony, or would greatly intensify it. Employment, already scarce, would become scarcer, and the finding of work for the unemployed would strain the resources of the Government, and unavoidably involve much waste of these ; while, as a matter of course, the public revenue would suffer seriously. He would be a bold man who would permit such a calamity to overtake New Zealand if he could prevent it, and I am firmly persuaded it may be prevented if the Government will meet the crisis wisely, boldly, and in good time. The business of the bank is as yet practically intact — distrust has not to any material extent reached depositors; and it only needs that the bank be put upon a stable footing to avert the mischief which as yet, happily, is only imminent. But I must respectfully warn the Government that it is imminent, and, if they determine to adopt any measures to deal with the situation, these would need to be taken at once to be effective. To do this two things are required : (1) That the bank be placed in possession of increased capital resources, partly to fortify its cash reserves, partly to enable it to extend to its customers the accommodation they require in the second half of the year in anticipation of their wool-clips and crops of the ensuing season; (2) and that this be done to an amount which will suffice to maintain confidence in the bank's stability, even if no dividend be paid for a time on its existing capital. The directors hoped to have been able themselves to have issued the required amount of preference capital, but this has been found impracticable. I have therefore to propose to the Government that the colonial guarantee be given to an issue of two millions in preference shares, bearing not exceeding 4 per cent, interest, the period to be ten years ; such issue to be then replaced by a fresh issue of ordinary shares or otherwise, and the State relieved of its guarantee. No dividend to be in the meantime paid on the present capital till the Estates Company assets be disposed of, and the business of the bank declared by an auditor of the Government's appointing to be clean and sound. In seeking the interposition of the State, I have no idea of the bank shareholders being relieved of one penny of the loss which may fall upon them at the expense of the taxpayer. As cover to safeguard the State from loss, there is the bank's paid-up capital, £900,000; reserve liability, £1,500,000: total, £2,400,000. And as the bank's assets have twice in recent years been subjected to severe scrutiny and writing down, such as no other bank in these colonies has undergone, it is not to be questioned that £2,400,000 affords an ample margin. Of the proposed two millions, one to be at the disposal of the bank in its ordinary business, the other million to be held in reserve, and invested only in such manner as the Colonial Treasurer may approve.
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I have verbally suggested to you precautions which the Government might take to secure itself and to guard against a recurrence of the state of things which calls for such exceptional treatment ; but it is for the Government to impose conditions. I need not, therefore, dwell on that aspect of the matter herein. I will only ask permission to add that, apart from preventing so terrible a misfortune to the colony, such arrangements as I have suggested (including State supervision and public audit) would have the effect of placing and maintaining the banking business of the colony fundamentally on a sound footing. The want of a great bank, the true position of which was known to the Government by independent audit of its own appointee, and through which the financial assistance of the State could in time of monetary crisis be extended to the community without hesitation, was severely and even disastrously felt recently in Australia. The great nations of the Old World have each their national banks in more or less intimate relations to the State. It is felt that these banks have, in case of need, the State behind them; and on their stability the immense fabric of banking, currency, and credit rests. In entering upon such relations, the Government of New Zealand would only be following the highest examples. I have, &c, The Hon. the Premier. John Murray.
Mr. J. Murray to the Premier. Sir, — Bank of New Zealand, Wellington, 29th June, 1894. I have the honour to hand you a copy of the balance-sheet of the Bank of New Zealand. Since that balance-sheet was issued the position has become impaired, and, indeed, seriously compromised, by causes set out in my letter to you of the 25th instant; but this does not imply that any heavy losses in the bank's business have been made. To the best of my knowledge and belief no such losses have been made. The difficulty arises rather out of the circumstances stated in my letter. As a banker of forty-five years' standing—thirty years of which have been spent in New Zealand—and having occupied a prominent position during much of that time, and being in no way personally interested (some shares in the bank standing in my name do not directly or indirectly belong to me), I wish to be permitted to give my honourable assurance, —(1) That the occasion is one of the gravest public urgency ; (2) that by the measure I have proposed I am absolutely convinced that the State will not lose one penny, but will, on the contrary, avert great loss to itself as well as to the community; (3) that by this measure the banking affairs of the colony will be placed on a greatly-improved footing for the future; (4) and that if the Government finally determine to go on with the measure it should be put through to-day. I have, &c, The Hon. the Premier. John Murray.
Mr. J. Mueeay to Hon. the Peemiee. Deae Mr. Seddon, — Bank of New Zealand, Wellington, 4th July, 1894. I am cabling London about arrangements for this issue, which, owing to the approach of the autumn holidays in England, should be made at once if possible. I would like, if you can get out, to see you for a minute or two as to what you will permit the Agent-General to do in the way of certifying to London financiers that the guarantee of the colony has been given. The London people will not, of course, accept the pure statement of the bank. Yours, &c, Hon. Bichard Seddon. John Murray.
I promised Mr. Murray that I would authorise the Agent-General to certify in a business manner that the Colony of New Zealand would guarantee the two-million loan, but that the Agent's name shall not go on the prospectus.—B. J. S., 4th July, 1894.
The Secretary to the Teeasuey to Mr. J. Mueeay. Sic— sth July, 1894. I have the honour, by direction of the Colonial Treasurer, to request that you will cause a carefully-prepared statement of the position of the Bank of New Zealand as on the 30th ultimo to be furnished to me with the least possible delay. The information should contain the several amounts of the ledger balances representing the bank's business within the colony and Australia on the date above named, and the London balances, separately stated, as on the date of the latest advices received. These balances should show the whole of the liabilities and assets of the bank under the heads set out in the usual quarterly statements furnished to the Government. Under " Assets" I am directed to ask you to distinguish the amount due by the Estates Company. The Colonial Treasurer would also be glad to be favoured with any other information you might consider of value to him. It is, of course, understood that the particulars you may be good enough to furnish will be treated as strictly confidential and only for the information and guidance of the Government. I have, &c, John Murray, Esq., Jas. B. Heywood, Bank of New Zealand, Wellington. Secretary to the Treasury.
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Mr. J. Murray to the Secretary to the Treasury. Sic,— Bank of New Zealand, Wellington, sth July, 1894. I have the honour to acknowledge receipt of your letter of date hereof, requesting statement of the position of the Bank of New Zealand as on the 30th ultimo. I shall forward copy of your letter to the bank at Auckland, with request that they will forthwith furnish the information required. As the head office is in London, and London accounts are not, so far as I am aware, sent to the colony, it may be that that part of the return will have to be sent for. I have, &c, The Secretary to the Treasury. John Mueeay.
The Colonial Treasurer to the Agent-General. Sir,— 7th July, 1894. The necessity of the recent legislation affecting the position of the Bank of New Zealand came upon the Government, as you may well believe, like a thunderclap, without the least warning. Mr. John Murray, who had been accredited by the London Board, waited upon me some three weeks ago, and represented the straits the bank was in owing to the collapse of the grain trade, to the extremely low price of our staple product—wool, to the disaster which had befallen that huge concern the Loan and Mercantile Agency, to the incubus of the Globo Assets Estates Company, and to the general shrinkage and depression in the trade and commerce in Australia as well as in our own colony. Owing to the disasters which had overtaken banking institutions in our neighbouring colonies, it had been impossible for the directors of his bank, so Mr. Murray assured me, to secure the increase to their capital which they had counted upon through the legislative authority given by the Act of last session. This being the case, and it having become painfully evident that without an increase of capital the bank could not continue to conduct business, Mr. Murray had been deputed to lay before the Government the exact position at which the bank had arrived, with the single alternative that the Government, through the Legislature, would have to come to the assistance of the bank or the doors of the institution would then and there require to be closed. I need hardly assure you of the very grave anxiety the consideration of such an important subject has entailed upon the Government. The bank's position is of colonial importance, and the financial results, whether good or evil, must necessarily affect not only the Government but the whole community, and, such being the case, it did not take long to decide that the bank could not be allowed to fall, and so involve the colony in widespread disaster. After anxious consultation with the bank's representative and among ourselves the Government assented to afford assistance in the shape of the colony's guarantee to a 4-per-cent issue of new capital. You will, of course, understand that, having made up our minds as to the shape the assistance was to take, it became necessary to secure the needed legislative authority without a moment's delay, and that, having started on our course, any delay would have been fatal to the bank, as it was of the utmost consequence that the public should have no inkling of what was going on until the necessary legislation should have been secured. The three Bills passed on Friday week last will remain as records of a Government and Legislature capable of grappling with a crisis of momentous aspect, and successfully rescuing the community from inevitable disaster; and I am proud to think that, after I had placed the very grave issue before the House and country, our legislators on both sides of the House and of all shades of opinion had no hesitation in recognising the responsibilities arising out of the situation, and there was little time lost in sanctioning the proposal of the Government by passing into law the Bill pledging the colony to a guarantee of two millions for the benefit of the Bank of New Zealand. And now, after more mature consideration than time then allowed, the Government is quite of opinion that the course pursued was the proper one in the best interests of the people, and my earnest hope is that the wisdom of our action will be demonstrated by the restoration of the bank to a thoroughly sound financial position, able to show the country that our assistance was legitimate and prudent. I may here add that not only has the press of the colony been unanimous in praising the prompt action of the Government, hut hundreds of letters and telegrams have reached the Premier and myself from persons of all shades of political opinion congratulating and thanking the Government for averting what in most persons' estimation would otherwise have been a colonial calamity. I need not go over the ground which has already been covered in the cable despatches between us, copies of which I append hereto. It is sufficient to note the unwillingness of the Government that the bank should again have to submit to loss on the issue of new capital on account of the apparent urgency of the matter. Considering the magnificent position now occupied by the New Zealand Government Stocks in the London money market, I am emboldened to believe that our colonial guarantee should be sufficient to secure a handsome premium to the bank, notwithstanding the short currency of ten years which I recognise places the offer at some disadvantage. It must not be forgotten that if we allow the money market to make their own terms to secure a low rate to the bank the colony's interests through the price of its stocks are likely to suffer also, and naturally I am jealous of such an event occurring. Underwriting under such circumstances appeared to me to be fraught with danger to the price of our securities, and therefore to be deprecated and avoided if possible. However, after very anxious consideration and consultation with Mr. Murray, I decided that you and your financial advisers are in the best position to know what will induce the public to subscribe on the most advantageous terms, and I therefore determined to allow you a free hand to make the best possible arrangements for both the bank and the Government, only asking you to
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keep me fully supplied with all possible information; and I shall look forward to an early intimation by cable that the required capital has been fully subscribed at a profitable price. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
The Agent-General, London. Wellington, 30th June, 1894. Bank of New Zealand's business this morning quite normal, therefore very satisfactory. Government think it desirable to see Glyn, and urge that we do not see the necessity to pay high commission to obtain new capital. Think it desirable to keep Government informed as fully as possible of Bank of New Zealand's action in respect of new capital. Treasurer.
The Agent-General, London. Wellington, 3rd July, 1894. Text of Bank of New Zealand Share Guarantee Act: Clause one, short title ; two, interpretation; three and four, bank empowered to issue £2,000,000 guarantee preference capital and dividends without further liability ; five, directors shall, if Colonial Treasurer requires, call up one-third of reserve liability within twelve months after notice, bank may pay interest on same ; six, bank shall at expiry of ten years, cancel, repay preference shares at par; seven, dividend on preference shares shall not exceed four per cent.; eight, colonial guarantee given to preference shares and dividend ; nine, Crown prior lien in respect of guaranteed shares waived in favor of general creditors ; ten, £1,000,000 applicable for general bank business, £1,000,000 held in reserve for investment in securities, Colonial Treasurer approves ; eleven, until guarantee shares cancelled, directors shall not pay dividends on ordinary shares without the consent of the Colonial Treasurer ; twelve, headoffice to be removed to Wellington, Government appoints President with power of veto; thirteen, Government appoints banking expert Auditor, attached to bank ; fourteen, Colonial Treasurer may make regulations defining Auditor's powers ; fifteen, Colonial Treasurer, upon Auditor's report, confirmed by President, may require directors to stop objectionable business ; sixteen, in balancesheet, the directors and Auditor shall, pending liquidation of Estates Company, value shares or items therein at par or book-value ; seventeen, deed settlement deemed amended to conform with this Act.. • Treasurer.
The Colonial Treasurer, Wellington. (Beceived 4th July, 1894.) Your message of the 3rd instant received. Amount at credit of Public Account: will make the necessary arrangements. Bank of New Zealand Act: does head office mean Auckland or London ? Daily conferring with Glyn. No excitement.
The Agent-General, London. Wellington, 4th July, 1894. Youe message of the 3rd instant received. Bank of New Zealand Act means removal of head office, London, to Wellington. What is your opinion of price likely to be obtained for Bank of New Zealand guarantee shares ?
The Agent-General, London. Wellington, sth July, 1894. Youe message of yesterday received yesterday. Agree immediate London issue desirable ; but before issue, cable me the principal points of proposed prospectus. Bank Act does dispense shareholders consent. After consideration prospectus, will cable express authority. Certify whatever necessary to give effect to guarantee £2,000,000 preference shares. Sections six, seven, and eight, verbatim, as follows: — Section Six. —The Bank shall, at the expiration of ten years from the date of issue of such A shares, call in and cancel the same on payment of the nominal or face value of the same, with accrued dividends. Section Seven. —The rate of dividend on such A shares shall not exceed four per centum per annum, and the directors shall pay the same out of the moneys of the bank. Section Eight.—Every sum of money for which such A shares shall be issued under the authority of this Act, and the dividend thereon, shall be a charge upon, and in the event of default in respect thereof by the bank shall be payable out of the Consolidated Fund of New Zealand without further appropriation than the authority of this Act.
The Colonial Treasurer, Wellington. (Beceived sth July, 1894.) Bank of New Zealand: As operation impracticable August, September, and doubtful during the month of October, lam strongly of opinion that immediate London issue is desirable. Assume Act dispenses shareholders consent. Scheme favourably received, and prospects encouraging. Immediately underwriting £2,000,000, so as to provide Bank of New Zealand may receive 100 per cent., in accordance with English law. Cannot arrange issue of shares subject to a discount. If Government approve, cable express authority Government authorise Agent-General to approve of prospectus and execute New Zealand Government guarantee. Cable, verbatim, clauses six, seven, and eight.
The Colonial Treasurer, Wellington. (Beceived 6th July, 1894.) Peoposed offer shares not less than one hundred and one. Prospectus would invite subscriptions £2,000,000 bearer shares simply on basis interest and principal being guaranteed by the New Zealand Government. Negotiations still pending. Whole to be underwritten at 1 per cent., in addition to brokerage, one-eighth. Latter payment in accordance with law. It is very important to successful issue that shares be bearer. Cable express authority, separate and uncoded, immediately if Government approve, so as to provide underwriting. Negotiations proceeding immediately, and matter completed during the next few days, which deemed very important, London, sth.
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The Agent-General, London. Wellington, 6th July, 1894. Message yesterday. Government deprecate any idea underwriting £2,000,000. Colonial guarantee should be amply sufficient to secure successful issue in open market. Instruct whether agree premium. What is your opinion lowest price guaranteed 4-per-cent. shares fetch in open market ?
The Colonial Treasurer, Wellington. (Eeceived 7th July, 1894.) The Bank of England. Scrimgeour, and my opinion is that you can rely on no more than par for shares. Compare Greymouth debentures, having currency of thirty-one years, with shares ten years. Market prefer stock to shares. Question underwriting very difficult. It is not usual for public to subscribe more than 25 per cent, any issue. Would the New Zealand Government Departments tender at par for £750,000, selling Consolidated 1884 Stock Debentures to provide money ? My advice is the Bank of New Zealand be authorised to issue inscribed stock, guaranteed by the New Zealand Government, alternative to shares, leaving the question of underwriting at price not below par, to be settled by Agent-General and Bank of New Zealand. I think it desirable the Agent-General have full discretion, as prompt action often essential. London, 6th.
The Agent-General, London. Wellington, 7th July, 1894. Government strongly of opinion shares should be floated so as to realise to the Bank of New Zealand net par value. Government does not approve issue of inscribed stock by the Bank of New Zealand ; indeed we do not think there is any legal authority. You are authorised to act with full discretion, and give the necessary guarantee, keeping us posted in all particulars.
The Colonial Treasurer to the Agent-General. Sir,— llth July, 1894. In continuation of my letter—No. 95—dated the 7th instant, on the subject of the colony's guarantee of two millions for the benefit of the Bank of New Zealand, I concluded my despatch, with an expression of hope that you would be able to cable me that the guaranteed capital had been successfully raised. I was therefore much concerned and disappointed to receive on Sunday your telegram, dated the 7th instant, pointing out that the deed of settlement of the bank limited the individual holding of shares to two thousand (the deed, I think, reads three thousand), and that, as there was a growing dislike to £10 shares, financial experts could not too strongly urge upon the Government the necessity to make the proposed issue in the form of stock instead of shares; and, further, offering the opinion that such an alteration would increase the value of the issue in the money market by 2 per cent. You also ask if it would be possible to pass an amending Act so as to do away with the share-limit, and to procure the necessary authority for the guaranteed capital to be issued, in the form of stock or otherwise, as suggested. It is greatly to be regretted that this fatal blot of a limit of shareholding was not discovered before the Guarantee Act was passed ; and on consulting our Law Officers there seems to be no other remedy than for an amending Bill to be introduced. You will, of course, understand that having to go before Parliament a second time is much to be deplored in the interest of the bank, and I cannot be certain that some antagonism will not be shown by parties interested in rival institutions, and by those who consider it their duty to oppose any measure introduced by the Government. Added to the difficulties of the position is the unfortunate fact of my enforced absence from the House, owing to a severe attack of the prevailing epidemic—influenza—which developed into bronchial catarrh, and has compelled me to keep my bed ever since the night of the introduction and passing of the Bank Act. I am, however, rapidly recovering, and think I may be in my place in the House to commence the work of next week. In the meantime, it is admittedly difficult for my colleagues to secure the same attention and consideration for financial matters as would be given to the Colonial Treasurer on his personal explanation. On consulting Mr. Murray it was decided that he should cable to the London directors with the view of ascertaining, if possible, full particulars of the nature of the stock or debentures which would prove most acceptable to the London money market, and that upon receipt of such information an amending Bill would be at once prepared to embrace the altered position of affairs, and to clear up or strengthen one or two other points which since the passing of the Act have been pointed out necessary under its operation. I enclose copies of telegrams herewith. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
(Telegram from the Agent-General.) The Colonial Treasurer, Wellington. Beceived Bth July, 1894. Growing dislike ten-pound shares. Financial experts cannot too strongly urge upon you issue stock instead. Bank of New Zealand deed settlement limits individual holding to 2,000 shares. Is it possible pass amending Act cancelling limitation and giving power Bank of New Zealand raise fresh capital in form of stock or otherwise ? This probably increase money-market value 2 per cent.—in fact, essential to successful issue. (London, 7th.)
(Telegram to the Agent-General, London.) Wellington, 9th July, 1894. Your message of the 7th instant received. Begret such unforeseen difficulties have arisen through shares-limit. Question amending Act so as to provide issue stock instead shares now under consideration. Advise any suggestion you think advisable.
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(Telegram from the Agent-General.) Treasurer, Wellington. Beceived 10th July, 1894. Amending Act should cancel limitation holding, and give general and comprehensive power raise capital form of stock or otherwise. Success assured. (London, 9th.)
The Colonial Treasuree to the Agent-Geneeal. Sir,— 12th July, 1894. Bank of New Zealand Guarantee. —The bank having undertaken to bear all charges which the Government might incur incidental to the guarantee, I have the honour to request you to be good enough to collect from the bank the cost of all cablegrams you have sent or may yet despatch in connection with the matter. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
Memorandum for the Secretary to the Treasury. Mr. Heywood,— Colonial Treasurer's Office, Wellington, 19th July, 1894. I think you had better send a cable to the following effect to the Agent-General: " I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Every effort must be made to carry into effect this assurance." J. G. Ward.
Telegram to the Agent-General. The Agent-General, London. 19th July, 1894. I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Every effort must be made to carry into effect this assurance. Treasurer.
The Colonial Treasurer to the Agent-General. Sir,— 26th July, 1894. • After the despatch of my letter, dated the llth instant, intimating the disappointment I felt at receiving your cable about the discovery of the limit of shares, no time was lost in getting an amending Bill prepared, which was introduced in the House on Tuesday, the 17th instant. As might have been expected, the amending Bill met with some opposition ; but after careful explanation of the position, which I was personally able to make, the support of our own party was assured, and the few members of the Opposition who were clamouring for more information, and for the relegation of the Bill to a Select Committee, were at last convinced that the measure before them was essentially necessary in order that the guarantee of the colony contained in the main Act should have successful results for the bank in whose interests it had been passed. Little difficulty was experienced in the passage of the Bill through the Upper House, and His Excellency's assent was obtained on the 20th instant. Under separate cover I am sending you six copies of the Amendment Act as passed. Copies of cables to and fro since the llth instant are enclosed, but I think I need only refer to yours dated the 24th instant, in which you informed me that the two millions of 4-per-cent. stock had been subscribed four times over, and that present quotations were -J-per-cent. premium. The quoted premium I read to mean that the stock was for sale at -J- per cent, over the issuing price of 101J— in other words, was being quoted at lOlf. I therefore felt compelled to express the opinion of the Government on our committal to what we cannot but think was unnecessary underwriting; and I can assure you that the expression of opinion on this subject in business circles here is entirely antagonistic to such underwriting, and I feel, myself, that the bank should have been saved from such an expense. At the same time, I am prepared to fully recognise the responsibilities thrown upon you in connection with this matter, and to acknowledge that, in a large transaction such as this, the opinions of eminent financial experts should receive full consideration, and, if no other course presented itself to you, their advice had to be acted upon. One great fact remains that, by offers of four times the amount required, there is clear evidence that the credit of our colony stands higher than ever in your financial circles; and this is a matter for great congratulation. I beg you will accept my cordial thanks for the very great trouble you have taken in the negotions between the bank and the Government. I have, &c, The Agent-General for New Zealand, London. J. G. Ward.
Telegram from Agent-General, London, dated 24th July, 1894. Application has been made (for) Bank of New Zealand 4-per-eent. stock four times over. Present quotations are -J-per-cent. premium.
Telegram to the Agent-General dated 25th July, 1894. Message of 24th received. Besult shows underwriting unnecessary. A good deal of feeling upon the point here. Have you received resolution from directors in writing in accordance with my cable eighteenth.
Mr. Murray to the Colonial Treasurer. Sir,— Bank of New Zealand, Wellington, 12th July, 1894. I have the honour to inform you that, in response to an inquiry from me, the President of the bank in London has sent me the following cable message : " You may assure the Government that the board of directors will co-operate to fulfil conditions." I have, &c, The Hon. the Colonial Treasurer, Wellington. John Murray.
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Mr. Murray to the Colonial Treasurer. Sic,— Bank of New Zealand, Wellington, 30th July, 1894. For the sake of record, I have the honour to quote as follows a cable message, dated London, Ist ultimo, which I received from the President of the Bank of New Zealand, the original of which I submitted to the perusal of the Hon. the Premier and yourself: "John Murray, Bank of New Zealand, Auckland. Board of directors, Bank of New Zealand, empower you to act.—Glyn, President." I wish also to record that, in notifying th# directors in London of the passing of the Share Transfer Amendment Act, I informed them that the Government, as a condition of the guarantee, expected them to act thereon, to which I received reply dated the 21st instant: " Board are taking all reasonable care to satisfy themselves with regard to the means of transferees." And, further, that in reply to a telegram from me, dated llth inst., stating that the Government required an express assurance that the directors would co-operate to fulfil the conditions of the Guarantee Act, I received the following message from the President : " Beferring to your telegram of llth July, you may assure Government board of directors will co-operate to fulfil conditions.— Glyn." I have, &c, The Hon. the Colonial Treasurer, Wellington. John Murray.
The Seceetaey to the Teeasuey to Mr. J. Murray. Sir,— 2nd August, 1894. I have the honour, by direction of the Colonial Treasurer, to acknowledge with thanks the receipt of your letter of the 30th ultimo, enclosing, for record in this office, copies of cablegrams received by you from the President of the Bank of New Zealand, —(1) Empowering you to act; (2) Assurance Board will co-operate in fulfilling conditions Guarantee Act; (3) Board are satisfying themselves as to means of transferees. I have, &c, Jas. B. Heywood, Secretary to the Treasury. John Murray, Esq., Bank of New Zealand, Wellington.
Mr. J. Murray to the Secretary to the Treasury. Sic, — Bank of New Zealand, Wellington, 21st August, 1894. I have the honour to enclose, as desired by you, a statement of the assets and liabilities of the Bank of New Zealand in the colonies as at the 25th June, 1894. The figures for London are not available in the colony, and have been written for. I have added, in a memorandum attached, figures explanatory of the amounts shown in the balance-sheet as due to and by the Bank of Zealand Estates Company. I have, &c, The Secretary to the Treasury. John Mueeay.
Statement of Assets and Liabilities of the Bank of New Zealand at 25th June, 1894, in New Zealand and Australia. In New Zealand. In Australia. Liabilities. £ s. d. £ s. d. Notes in circulation .. .. .. .. .. .. - .. 439,413 0 0 20,941 0 0 Bills in circulation .. .. .. .. .. .. .. 19,010 17 8 4,617 1 3 Balances due to other banks .. .. .. .. .. .. 3,51112 7 4,263 0 3 Deposits—Government .. .. .. .. .. .. 402,661 9 10 119,353 10 4 Not bearing interest .. .. .. .. .. 1,409,013 12 i" 180,030 17 11 Bearing interest .. .. .. .. .. .. 2,836,319 11 2 196,55111 2 £5,109,930 3 7 £525,757 0 11 Bank of New Zealand Estates Company (Limited) — Cr. balances .. .. .. .- .. .. .. 89,860 15 9 Deposit in name of Estates Company jointly with Messrs. Jafiray and Glyn, being cash proceeds of realisation not otherwise specified 347,117 13 11 £5,546,908 13 3 £525,757 0 11 Assets. £ s. d. £ s. d. Coined gold and silver and other coined metals.. .. .. .. 557,543 16 11 239,942 16 1 Gold and silver in bullion and bars .. .. .. .. .. 29,891 711 28,200 0 0 Notes and bills of other banks .. .. .. .. .. 25,257 15 4 12,511 18 8 Balances due from other banks .. .. .. .. .. 973 14 0 7,113 0 2 Landed property and bank premises .. .. .. .. .. 288,809 14 4 88,717 011 Notes and bills discounted .. .. .. .. .. .. 653,970 8 7 94,570 8 4 Other advances 2,712,473 8 6 870,622 17 3 Shares in Bank of New Zealand Estates Company (Limited) .. .. 1,850,000 0 0 6,118,920 5 7 1,341,678 1 5 Bank of New Zealand Estates Company (Limited), as per annexed statement "654,790 3 11 £6,773,710 9 6 £1,341,678 1 5
* The item £89,860 15s. 9d. should not, properly speaking, be shown on the other side, and should be deducted on this, beoause it is pro forma: representing assets transferred from one concern to another, appearing formally in the books as credits to oertain accounts. The Auditor in London insisted on treating the items as realisations. —J.M. E. and O. E. M. Andrews, Inspector of Accounts.
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The figures relating to the Estates Company may be explained approximately as follows : — A. Advances Account, landed estates being worked : — (1.) Permanent improvements ... ... ... ... £161,000 (2.) Additional, live-stock* ... ... ... ... ... 127,000 (3.) Purchase of land previously held under Maori lease, or for other special reasons ... ... ... ... 28,000 £316,000 B. Advances Account, trading and industrial concerns :• — (1.) Working capital, including ordinary overdrafts taken over from bank ... ... ... ... ... ... £134,000 (2.) Additions to stock-in-trade, &c. ... ... ... ... 51,000 £185,000 *C. (1.) Sundry shares, interests, and properties acquired (this is largely pro forma, as shown below) ... ... ... £124 ,000 (2.) Additions under various heads, including improvements to house property, premises, and plant ... ... ... 30,000 £154,000 Total as per bank sheet ... ... ... ... £655,000 Of which ... ... ... ... ... 90,000 • • • Leaving ... ... ... ... ... £565,000 is merely transfers of live-stock, or assets from one concern to another, chiefly in the items above marked,* and appears as a credit balance in the bank return —£89,860 15s. 9d. It has had to be kept in this form because, having been credited in the company's books to certain concerns, the London auditor insisted that it must be treated as realisations—a contention which the company and the bank resist. Realisations by Estates Company. The nominal total is, say ... ... ~. ... ... £790,000 Deduct, as explained, being merely pro forma ... ... ... 90,000 Actual ... ... ... ... ... 700,000 First mortgages paid off, and calls on shares paid... ... £194,000 Special expenses chargeable to this account ... ... 3,000 197,000 £503,000 Held— Cash in bank ... ... ... ... ... £347,000 Mortgages and bills held for unpaid advances . ... 156,000 £503,000
Mr. J. Murray to the Secretary to the Treasury. Dear Heywood,— Bank of New Zealand, Wellington, 21st August, 1894. Beferring to the figures relating to the Estates Company annexed to the bank's balancesheet, people are apt to connect me with that company as if I had been all along controlling it. I wish you to understand, and any Minister who may see the statement, that for the first two years or so—during which period, in fact, these figures grew up—l had nothing to do with the Estates Company. For the last sixteen months or so I have controlled it, and have been doing so in the direction of stopping expenditure and bringing things down as much as possible without needless sacrifice and upsetting. I have, &c, John Mueeay. P.S. —I do not wish it to be supposed that I reflect on what was done : I do not doubt that it was, all things considered, wisely enough done.—J.M.
The Secretary to the Treasury to Mr. J. Murray. Sir,— 22nd August. I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the 21st instant enclosing a statement of the assets and liabilities of your bank in the colonies as at 25th June, 1894, and to thank you for it. I have, &c, John Murray, Esq., Jas. B. Heywood, Bank of New Zealand, Wellington. Secretary to the Treasury.
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The Secretary to the Treasury to Mr. J. Murray. Sir,— 25th August, 1894. Beferring to the statement of assets and liabilities of the bank in New Zealand and in Australia at 25th June last, I am directed by the Colonial Treasurer to express his regret that the London business was not also included in such statement. I am to note, however, your remarks that particulars have been written for, but he would have preferred that they should be supplied by cable. In examining the figures, there are several items which call for remark; but on this occasion it is not intended to make an elaborate criticism of the statement, but to ask you for particulars connected with £564,929 of asset under the head of the Bank of New Zealand Estates Company. The Colonial Treasurer desires to point out how enormously inflated these figures are, in his opinion, taking into consideration the fact that the business of the Assets Company is asserted to be disassociated from the bank. In view, however, of the fact that the Assets Company is now indebted to the bank on advance account alone considerably over half a million of the bank's money, it will be understood how desirous the Colonial Treasurer is that he should be able to form some idea of the value of the asset now under remark. From the memorandum accompanying the statement he finds that the £564,000 is made up of three sets of items —namely, £316,000 for advances connected with landed estates ; £185,000 for advances on account of trading concerns, &c. ; and £154,000 for sundry shares, interests, &c, making a total of £655,000, from which you have deducted £90,000 as a transfer-entry affecting both sides of your books. The Colonial Treasurer desires further information respecting the advances on account of landed estates. He would like to know the names of the occupiers, and where the estates are situated, upon which the sum of £161,000 has been paid by way of permanent improvements, and the same particulars with regard to the sum of £28,000 for purchase of land. Assuming that the figures above given represent the original cash values, the Colonial Treasurer would be glad to receive an estimate of their present market value. Although the advance of £185,000 for trading, &c, is exceedingly large, it is of course recognised that a necessty for advances of this sort exists. The Colonial Treasurer is of opinion that more detailed information should be compiled concerning the £124,000 advanced for sundry shares, &c, and that particulars similar to those asked for in connection with the item of £161,000 should be supplied concerning the £30,000 for improvements to house property. Passing on to the item of £347,117 on the other side of the statement, I am desired to ask you to explain the item of £156,000. You state that £503,000 net has been realised, of which £347,000 is held in deposit; but you do not explain what has become of £156,000. Under what head is the amount represented in the bank books ? Finally, with regard to the asset of £565,000, I am to request that you will have the value of these assets very carefully examined, and that you will furnish the Colonial Treasurer with an estimate of what, in your opinion, is their present market value. Before concluding, I am desired to draw your attention to the result of the Australian business, which apparently shows that the Colony of New Zealand has been drained to the extent of over £800,000 for the purpose of maintaining the bank's business there, and I am therefore to ask you whether this drain is expected to continue, and whether the business done in Australia is of such a remunerative character as to warrant such a strain upon the bank's resources within New Zealand. I have, &c, Jas. B. Heywood, Secretary to the Treasury.
Mr. J. Mueray to the Secretary to the Treasury. Bank of New Zealand, Wellington, Sir,— 27th August, 1894. I have the honour to acknowledge the receipt of your letter of 25th instant. In compliance with the Colonial Treasurer's wish, I am cabling to the London office of the bank for their figures; and I have written to the manager of the Estates Company in Auckland for the particulars and the information the Treasurer requires. Without assuming responsibility for the policy which has led to what your letter descrrbes as the "enormous inflation "of the figures denoting the Estates Company's financial relations to the bank, I ask permission to point out that, taking the total indebtedness at... ... £565,000 there should be set against this money on deposit with the bank ... ... ... 347,000 Leaving ... ... ... ... ... ... £218,000 actually, so to speak, out of pocket by the bank. Then there is £156,000 represented by mortgages and other securities for unpaid balances of properties sold —good interest-yielding assets, which any lender might advance upon; and, though these are not held by the bank, they may be regarded almost as cash assets. Then, again, £194,000 has been applied in paying off first charges on Estates Company properties, and in paying calls on shares. As it was not found practicable to sell all the estates quickly, the then local board of the Estates Company determined to increase the productiveness of certain of them by development of their resources. Without debating the wisdom of this policy, it may be urged that the carryingcapacity of their properties has been much increased, the exports of the colony materially contributed to, and much employment provided for labour.
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In reply to your inquiry regardiug the item £156,000 on the credit side of realisation account in my memorandum, that, as I have just said, is represented by mortgages and other securities for balances due on account of properties sold. It has nothing to do with the bank figures. I set it out merely to explain the position of the liquidation account. As regards the Australian business of the bank, your remark " that the Colony of New Zealand has been drained to the extent of over £800,000 for the purpose of maintaining the bank's business there " indicates, as it seems to me, a grave misconception. Beference to the sworn bank quarterly returns of 25th June last—as, indeed, to the statement of assets and liabilities now under review—will show that the Bank of New Zealand employs within the colony not only all the resources derived therefrom, but all its capital as well. The resources employed in Australia are derived from London. I have, &c, The Secretary to the Treasury. John Mueeay.
[Prom London, in answer to request to cable their advances.] Aug. 28. —Beferring to your telegram of 28 August, telegram would be very lengthy, and liable to be misunderstood. Are they absolutely essential ? Would it not suffice telegraph particulars items required ?
The Agent-General to the Colonial Treasurer. Westminster Chambers, 13, Victoria Street, London, S.W., Sir— 20th July, 1894. Beferring to my memorandum No. 842 of the 14th instant, I beg to transmit copies of further cablegrams which have passed relating to the Bank of New Zealand. I also enclose copy of correspondence with the bank, and copy of the prospectus which has been issued inviting applications for the £2,000,000 Bank of New Zealand 4-per-cent. stock. With reference to your cablegram with respect to the bank receiving not less than par for the stock, the issue price of £101 ss. in cash for every £100 in stock is sufficient to meet the J per cent, brokerage payable to the bank's broker for negotiating the underwriting, and also the 1 per cent, commission payable to the underwriters themselves, leaving £100 per cent, net payable to the bank. On my pressing upon the board of directors the expediency of carrying into effect, so far as possible, the urgent wish of the Government that the bank should receive par, they represented that virtually that would be the case; at the same time they did not disguise the fact that over and above the commission to the underwriters and the brokerage there would be certain miscellaneous expenditure which the bank would have to provide, such as the cost of advertising, printing, telegrams, &c, and some additional brokerage which outside brokers, through whom the public might apply, would probably claim. The amount of this expenditure cannot, of course, be ascertained until after allotment; but the directors represented that in any case it would not exceed, at the outside, J per cent. The arrangements for the issue had, however, proceeded so far, and there had been already so much unexpected delay, that it would have been extremely hazardous, particularly at this time of the year, to have postponed the issue any further. The financial portion of the city were already leaving London, and any further postponement would have necessitated another reference to the underwriters, which would, in addition to causing a delay which would have probably seriously affected the success of the issue, might have resulted in the underwriters withdrawing altogether. These and other considerations weighed with me so heavily that I considered that I should be justified in allowing the stock to be issued at the price which I have named. With regard to the underwriting, I may say that at the beginning I was extremely reluctant to concur in the view taken by the bank directors, that endeavouring to place the stock, simply trusting to the public to take it up, would seriously risk the success of the issue ; but finding that other financial authorities, such as the Governors of the Bank of England and Messrs. Scrimgeour, took a similar view to that taken by the directors, I felt myself justified in withdrawing my opposition. There are other points, such as issuing the stock at a fixed price instead of by tender, on which I might make some remarks; but I think it will suffice if in the present communication I assure you that this and every other point of any importance received the most earnest and careful consideration on the part of the directors and myself. In conclusion, I may be allowed to express my conviction, which is confirmed by the opinions expressed to me by the Governors of the Bank of England and by Messrs Scrimgeour, that the terms on which the operation has been carried out are, taking all the circumstances into consideration, as satisfactory as could possibly be expected. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. B. Peecival.
Telegram to Agent-General, London. Beceived 18th July, 1894. For purpose of preventing transfer of shares to persons of inadequate means, Government have passed Bill providing that no transfer be effected without consent of directors in writing. Treasurer.
Telegram to Agent-General, London. Beceived 19th July, 1894. I assured House Government would insist on Bank of New Zealand receiving not less than par for stock, and this point was strongly debated in House. Depend upon your decision to carry into effect this assurance. Treasurer.
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Telegram to Colonial Treasurer, Wellington. Despatched 19th July, 1894. Bank prospectus issued, price of issue 101 J, so as to provide for underwriting, brokerage, Bank of New Zealand receiving par and providing some miscellaneous expenditure which cannot yet ascertain until after allotment; this most satisfactory arrangement possible under the circumstances. Bank of England and Scrimgeour thought underwriting essential and terms very satisfactory.
The Agent-General to the Manager, Bank of New Zealand. Westminster Chambers, 13, Victoria Street, London, S.W., Sic,— 19th July, 1894. I have to inform you that I have received telegraphic advice from my Government that "The Bank of New Zealand Share Guarantee Act 1894 Amendment Act, 1894," has been passed, and herewith I enclose, for the information of your directors, copy of its provisions as received by me by cablegram from my Government. I have further to state that, previous to my certifying as Agent-General, on behalf of my Government, to the guarantee provided for under these Acts, I shall require a written assurance from the directors of your bank that Mr. Murray was duly authorised to represent them in the arrangements he has made on your bank's behalf with my Government, and that they accept without reserve the provisions of the main and amending Acts which have now been passed, and under which the £2,000,000 Bank of New Zealand stock guaranteed by my Government can now be issued. I have further to request that you will move your directors to pass a formal resolution to the above effect, and that the same be communicated to me forthwith by letter. I have to add that, in the discussion in Parliament which took place in the passing of the Amendment Act, my Government gave an assurance that they would require that the bank shall receive not less than par value for the stock. I shall, accordingly, be satisfied to leave the issue price to be fixed by your directors, provided they will give me an assurance that the above requirements will be duly carried into effect. I have, &c, W. B. Percival. The Manager, Bank of New Zealand, 1, Queen Victoria Street.
The Manager, Bank of New Zealand, to the Agent-General. Sic, — Bank of New Zealand, London, 19th July, 1894. I have to acknowledge the receipt of your letter of this date, and to inform you that my Board are prepared to give you the assurance for which you ask, that they have authorised Mr.. Murray to represent them in the negotiations with the Government, and that they accept without reserve the provisions of the main and amending Acts. In confirmation thereof, I beg to hand you the annexed copy resolution. I am also instructed to inform you that the issue price which has been settled for the stock will provide for the bank's receiving par therefor after payment of the underwriting commission. There will, however, be certain additional expenses, such as the usual brokerage and advertising expenses, the amount of which is not at present ascertainable, but which is estimated not to exceed £5,000. We are advised by counsel that these expenses are legitimately payable by the bank, as they do not involve any question of the issue of the stock at a discount. I have, &c, Sir Westby B. Percival, K.C.M.G. G. J. Tegetmeier, Manager. Agent-General for New Zealand, 13, Victoria Street, S.W.
Memorandum. —At a meeting of the board of directors of the Bank of New Zealand, held on Thursday, the 19th July, 1894, the Board resolved : " That Mr. Murray was duly authorised to represent them in the arrangements he has made on behalf of the bank with the New Zealand Government, and hereby affirm and approve his action ; and further, that the Board accept without reserve the provisions of the main and amending Acts which have now been passed, and under which the £2,000,000 Bank of New Zealand Stock guaranteed by New Zealand Government is now about to be issued." C. J. Tegetmeier, Manager.
Bank of New Zealand 4-per-cent. Guaranteed Stock (guaranteed by the New Zealand Government.) Issue of £2,000,000, repayable at par on 9th July, 1904. Dividend payable half-yearly on Ist May and Ist November. Authorised by the New Zealand Parliament under an Act intituled "The Bank of New Zealand Share Guarantee Act, 1894," and an amending Act. Thd Bank of New Zealand invite applications for £2,000,000 of the above stock. Principal and dividend are absolutely guaranteed by the New Zealand Government. The interest will be payable half-yearly, on the Ist May and Ist November, and the principal will be repayable on the 19th July, 1904. Both principal and dividend will be payable at the Bank of New Zealand in London, and in terms of the Acts above referred to in the event of default by the bank, will be payable out of the Consolidated Fund of the Colony of New Zealand. The stock will be issued in certificates to bearer of £1,000, £500, and £100 respectively, with option to holders to convert at any time into registered stock. The books of such registered stock,
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which will be transferable in any amount, will be kept at the Bank of New Zealand, London, where all transfers will be registered. The Act provides that holders of this stock shall not be under any further liability, reserved or otherwise, beyond the amount of the instalments specified herein, nor shall they be entitled to vote as shareholders. The issue price will be at the rate of £101 ss. in money for every £100 expressed in the stock certificates, payable as follows : £5 per cent, on application ; £26 ss. per cent, on allotment (which includes the premium of 1J per cent.) ; £70 per cent, on 26th October, 1894. Payments may be made in full on allotment or at any date prior to 26th October, 1894, under discount at Bank of England rate. Dividend on instalments commences from date of payment thereof and scrip certificates to bearer with coupons attached for the accrued dividend up to Ist November will be issed in exchange for the allotment letter. Stock certificates to bearer with coupons attached will be delivered in exchange for fully paid scrip. The first coupon, being for six months' dividend, will be payable on Ist May, 1895. The only contract made by the bank other than those made in the course of business is one with the brokers to the bank in regard to the subscription of the above issue. Warrants for the dividends on registered stock will be transmitted by post. Applications for other than even hundreds of stock will not be accepted. The stock certificates will be countersigned by the AgentGeneral for New Zealand on behalf of his Government. The subscription list will be opened at the Bank of New Zealand, No. 1, Queen Victoria Street, London, E.G., on Tuesday, 24th July, 1894, and closed on or before Wednesday, 25th July, 1894, at 4 p.m. Applications must be upon printed forms which may be obtained at the Bank of New Zealand, and at the office of Messrs. W. Greenwell and Co., the Brokers, 2, Finch Lane, E.C. Bank of New Zealand, London, 19th July, 1894.
I approve of the above prospectus.—Westby B. Percival, Agent-General for New Zealand.
Form op Application. Bank of Nexo Zealand 4-per-cent. Guaranteed Stock guaranteed by the New Zealand Government for £2,000,000. To the directors of the Bank of New Zealand, No. 1, Queen Victoria Street, London. hereby request that you will allot to £ , say pounds nominal of the above stock on which enclose deposit of 5 per cent, or £ , and agree to accept that amount or any less sum that may be allotted to and to pay the instalments thereon upon the terms of the prospectus dated 19th July, 1894, and agree to waive any fuller compliance with section 38 of " The Companies Act, 1867," than is contained in the said prospectus. Name in full . Usual signature . Address . Occupation or description Date July,. 1894.
The Agent-General to the Colonial Treasurer. Westminster Chambers, 13, Victoria Street, London, S.W., Sir,— 27th July, 1894. Beferring to my letter, No. 849 of the 20th instant, I beg to report that the subscription list for the Bank of New Zealand 4-per-cent. stock was opened on the 24th instant, and was closed on the same evening, applications having been sent in for about five times the amount of the issue. I have not yet received from the bank any detailed particulars of the result of the issue; but 1 understand that one-fourth (£500,000) was applied for direct by the public, and that the remainder of the applications came through brokers. I attach copies of cablegrams which have passed, in continuation of those which went with my letter of the 20th instant. I also enclose copy of letters to and from the bank relating to the transfers of shares. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. B. Percival.
Telegram to Colonial Treasurer, Wellington. (Despatched 24th July, 1894.) Application has been made Bank of New Zealand 4-per-cent. stock four times over. Present quotations are one-half per centum premium.
Telegram to Agent-General, London. (Beceived 25th July.) Your message of 24th instant received. Besult shows underwriting unnecessary. A good deal of feeling upon the point here. Have you received resolution from directors in writing in accordance with my cable 18th. Treasures.
Telegram to Colonial Treasurer, Wellington. (Despatched 25th July, 1894.) Your message of 25th instant received. Besolution directors obtained according to instructions. A reliable indication cannot be had from result that underwriting unnecessary. Opinion still held city success doubtful without. Week ago money-market most uncertain. Informed Bank of New Zealand Government strongly objected underwriting, but,, taking into consideration Bank of England's, Scrimgeour's, and Bank of New Zealand's advisers' strong opinion in favour, reluctantly felt compelled concur. Underwriting ensured success, causing excessive speculative applications to endeavour to obtain proportionate amounts.
Dear Sir,— 13, Victoria Street, London, S.W., 19th July, 1894. I am directed by the Agent-General to inform you that he has received telegraphic advice from his Government that, for the purpose of preventing transfers of shares to persons of inadequate
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means, an Act has been passed by the New Zealand Legislature providing that no transfer be effected without the consent in writing of the directors. I have, &c, Walter Kennaway, The Manager, Bank of New Zealand. Secretary to the Department.
Sir, — Bank of New Zealand, London, E.C., 21st July, 1894. I have to own receipt of letters from your department dated 19th instant, the contents of which are noted. In reply thereto, I beg to inform you that the directors, before passing transfers are taking every reasonable care to satisfy themselves that the transferees are fully responsible for the reserve liability on the shares. I have, &c, C. G. Tegetmeier, The Agent-General, for New Zealand. Manager.
EXHIBIT No. 57. [Handed in by Mr. Watson, 9th September, 1896.] BANK OP NEW ZEALAND. Amounts of Dividends and Dates of Payment since Ist January, 1888. 31st March, 1888 ... ' ... ... ... ... ... £35,000 29th September, 1888 ... ... ... ... ... ... 24,500 30th March, 1889 ... ... ... ... .. ... 33,063 30th September, 1889 ... ... ... ... ... ... 39,375 31st March, 1891 ... ... ... ... ... .. 21,250 30th September, 1891 .. ... ... ... ... ... 22,500 31st March, 1892 ... -. ... ... ... ... 22,500 '30th September, 1892 ... ... ... ... ... ... 22,500 31st March, 1893 ... ... ... ... ... ... 22,500 30th September, 1893 ... ... ... ... ... .. 22,500 £265,688 Bth September, 1896. Bichd. W. Gibbs, Accountant.
EXHIBIT No. 58. BANK OP NEW ZEALAND. [Handed in by Mr. Watson, 9th September, 1896.] Statement of Assets and Liabilities of London Office, 25th June, 1894. Liabilities. £ s. d. Assets. £ s. d. Capital .. .. .. .. 900,000 0 0 Coin and cash balances at bankers .. 45,020 17 2 Reserve Fund ' .. .. .. 45,000 0 0 Investments .. .. .. 62,040 17 11 Bills payable .. .. .. 700,359 5 10 Bills receivable and bills discounted .. 539,099 11 3 Deposits .. .. .. .. 1,657,264 15 2 Advances —Short-dated loans and other Other liabilities .. .. .. 47,679 8 1 debts due .. .. .. 722,305 011 Profit and Loss .. .. .. 52,963 1 6 Head Office Account .. .. 2,034,800 3 4 £3,403,266 10 7 £3,403,266 10 7 Bank of New Zealand, Head Office, Bichd. W. Gibbs, Accountant. Wellington, Bth September, 1896. Details received in the colony on 15th October, 1894.— W. W.
EXHIBIT No. 59. BANK OE NEW ZEALAND. [Handed in by Mr. Watson, 9th September, 1896.] Combined Statement of Assets and Liabilities of Bank op New Zealand, 25th June, 1894. Liabilities. £ s. d. Assets. £ s. d. Capital .. .. .. .. 900, 000 0 0 Coin and cash balances at bankers .. 862,590 010 Reserve Fund .. .. .. 45,000 0 0 Bullion on hand and in transit .. 108,621 2 1 Notes in circulation .. .. 463,170 0 0 Investment Account .. .. 62,040 17 11 Due to other banks .. .. .. 7,785 4 3 Due by other banks .. .. 11,956 10 5 Bills payable .. .. .. 724,149 1 1 Bills discounted and bills receivable .. 1,308,574 9 5 Deposits and other liabilities .. 6,944,596 15 1 Advances and other debts due .. 4,145,876 3 9 Bank of New Zealand Estates Company 461,785 15 4 Bank of New Zealand Estates Company 847,481 911 Branches (net balance of items in transit) 73,903 2 5 Bank of New Zealand Estates Company Profit and Loss .. •• .. 21,774 5 0 Share Account .. .. .. 1,850,000 0 0 Landed property, bank premises, &c. .. 415,602 15 8 London Office (net balance of items in transit) .. .. .. .. 29,420 13 2 £9,642,164 3 2 £9,642,164 3 2 Bank of New Zealand, Head Office, Bichd. W. Gibbs, Wellington, Bth September, 1896. Accountant.
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EXHIBIT No. 60. [Handed in by Mr. Watson, 9th September, 1896.] Writings-off, 1888-96, may be approximately distributed as follows:—
Bank of New Zealand, Head Office, Bichd. W. Gibbs, Accountant. Wellington, 9th September, 1896.
EXHIBIT No. 61. [Handed in by Hon. Mr. Seddon, during Mr. T. G. Macarthy's evidence, 9th September, 1896.] Wellington, 21st October, 1895. Memorandum showing how the Figures of the Contract for the Sale and Purchase of the Business and Assets of the Colonial Bank of New Zealand have been arrived at. The transaction is based upon the balance-sheet of the Colonial Bank of New Zealand as at 31st August last, including the figures of its London Office as at 31st May last ; and it is provided that since 31st August last in New Zealand, and 31st May last in London, and up to the date upon which the purchased business and assets actually change possession, the Colonial Bank of New Zealand is to be held to have carried on business on behalf of and is to account to the Bank of New Zealand. The figures of the balance-sheet mentioned above are as follows :— Assets. £ Coin, bullion, and cash balances at bankers' ... ... ... ... £363,087 Money with London brokers at call and short notice ... ... ... 45,000 Notes and balances due by other banks ... ... ... ... 9,589 Government securities, Consols, &c. ... ... ... ... ... 168,131 Bemittances in transitu and awaiting maturity ... ... ... ... 548,762 1,134,569 The Colonial Bank of New Zealand guarantees that the items making up this total of £1,134,569 are, in the aggregate, value for that sum. Landed property and bank premises ... ... ... ... ... ... 125,399 This is the book-value, and the Bank of New Zealand take them over at that. The Property-tax values of 1891, as stated by the Colonial Bank, indicate a worth of about £107,000. Bills discounted, and all other assets due to the bank ... £1,731,549 This total has been classified as under— Good assets, list " A" ... ... ... ... ...£926,198 Assets per lists "B" and " C," of the aggregate of which the purchasing bank considers good ... ... ... ... 375,772 1,301,970 Bemainder in lists " B " and " C " to be held by purchasing bank until dealt with as provided in the agreement ... ... £327,305 Bank furniture and stationery ... ... ... ... ... £9,717 Less allowance made by the Colonial Bank of New Zealand ... ... 3,467 6,250 Shillings and pence ... ... ... ... ... ... ... 2 Total assets taken as good ... ... ... ... ... £2,568,190 Add— Bemainder in lists " B " and " C," as above . ... ...£327,305 Allowance off furniture and stationery ... ... ... ... 3,467 330,772 Assets in list " D " not taken over by the Bank of New Zealand ... ... 102,274 Total assets per balance-sheet ... ... ... ... ... £3,001,236
Date. On account Bank. >n account Consolidate! Properties Account. Total. £ 216,885 3,129 80,760 18,949 20,198 13,532 15,164 596,509 £ £ 216,885 109,565 1,169,555 18,949 20,198 13,532 15,164 596,509 .888 .889 .890 .891 .892 .893 .894 .895-96 ... 106,436 1,088,795 .895-96 ... 965,126 1,195,231 2,160,357 Amount written off the Estates Company Share Account Amount remaining to credit of Contingency Fund Account 764,306 171,136 M ... £3,095,799
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Liabilities to the Public. o Notes in circulation ~. ... ... .... .. ... ... 107,367 Bill payable, and other liabilities ... ... ... ... ... .... 457,887 Deposits ... ... ... ... ... ... £1,947,921 Deduct balances the property of the bank ... ... ... ... 6,972 1,940,949 Balances due to other banks ... ... ... ... ... ... 3 f 080 Shillings and pence ... ... . . ... • • ... ... 1 £2,509,284 Liabilities to Shareholders. Capital ... ... ... ... ... ... ... £400,000 Beserve fund ... ... ... ... ... ... ... 65,000 Profit and Loss ... ... ... ... ... ... ... 19,980 Current Account items ... ... ... ... ... ... 6,972 491,952 Total liabilities per balance-sheet ... ... ... ... £3,001,236 Recapitulation. £ Total good assets .. ... ... ... ... ... ... ... 2,568,190 Total liabilities to public to be assumed by purchasing bank ... ... ... 2,509,284 Balance to credit of shareholders of the Colonial Bank of New Zealand... £58,906 Good-will. It is a condition of the bargain that the Bank of New Zealand pays the Colonial Bank of New Zealand the sum of seventy-five thousand pounds for the good-will of the latter's business... ... ... ... ... ... ... ... 75,000 Amount to be paid in cash ... ... ... .. ... 133,906 " Bemainder " in lists " B " and " C" : in other words, " reserves" the equity of which belongs to the Colonial Bank of New Zealand ... ... ... ... 327,305 Face-value of consideration for sale and purchase ... ... ... £461,211 J. M. Butt, Auditor of the Bank of New Zealand.
EXHIBIT No. 62. [Handed in by Hon. Mr. Seddon during Mr. Watson's evidence, Ist September, 1896.] The President, Bank of New Zealand, to the Hon. Colonial Treasurer. (Confidential.) General Manager's Office, Bank of New Zealand, Sir,— Wellington, 17th October, 1894. Beferring to my interview to-day with the Hon. the Premier and yourself, I have now the honour to submit to you the following rough estimate of the bank's position as computed by the Acting General Manager, Mr. Butt, and myself— Deposits bearing interest— £ £ In the colonies ... ... ... . 3,051,000 In London ... ... ... ... 1,300,000 Deposits not bearing interest — • 4,351,000 In the colonies (Government) ... ... * i: 547,000 In the colonies (private) ... ... . . 2,107,000 In London ... ... ... ... 100,000 2,754,000 Note-circulation ... ... ... ... 515,000 Bills payable (average) ... ... ... 1,500,000 Capital— Guaranteed ... ... ... ... 1,000,000 Ordinary, of which £500,000 is estimated to be intact ... ... ... ... ... 900,000 1,900,000 11,020,000
* Of whioh £500,000 is interest-bearing.
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Dead money— £ £ Shares in Estates Company ... ... 1,850,000 Advances to Estates Company ... ... 770,000 Other advances ... ... ... ... 944,000 3,564,000 Coin and bullion £1,562,000 Premises (tax values about £100,000 413,000 higher) 1,975,000 5,539,000 Profit-producing assets .. ... ... 5,481,000 Interest-bearing liabilities— Deposits ... .. ... ... ... ... 4,351,000 Guaranteed capital ... ... ... ... ... 1,000,000 Notes (3 per cent.) ... ... ... ... ... 515,000 Government accounts ... ... ... ... ... 500,000 £6,366,000 I have also the honour to advise that the following resolution was passed by the bank's board at its meeting to-day : "Resolved, That it is necessary to the credit, welfare, and success of the bank that the Bank of New Zealand Estates Company should be entirely separated from the bank, so that the creditors of the bank may have nothing to fear from risk of loss through deficiencies of the Estates Company. The board strongly urge upon the Government to provide such legislation as shall bring about such severance of the Estates Company from the bank, and will secure to the bank not less than 4 per cent, interest on the sums now due to it by the Estates Company. In return for this the board will hold at disposal of Government the reserve liability of the bank's shareholders, amounting to £1,500,000, the amount of the capital and reserves of the bank, and all future profits of the bank, until liquidation of deficiencies in the Estates Company. The directors also respectfully urge that a board should be appointed to liquidate the affairs of the Estates Company, and that upon such board the bank should be secured due representation." I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President,
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EXHIBIT No. 63. [Handed in by Mr. Butt, 15th September, 1896.] Summary of Lists Nos. 1, 2, 3, and 4, and other Assets.
to show^hesT 8 msMng Up the total ° f listB NoS ' :1 to 4 are oollated from the Branch Abstract, without allowance for discounted bills in transit between London office and branches. Corrections 1, 2, and 3 are made I certify that I have personally drawn up this statement, and that it truly sets forth the assets of the bank as recorded in the returns furnished by head office and branches. J. M. Butt, Assistant Inspector.
List No. 2. List No. 3. List No. 4. Io. 4. Deficiencies. Total of 1, 2, 3, and i. Coin and Bullion on Hand . and in Transitu. Landed Property, Premises, Furniture, and Stationery. List No. 1. Due by other Banks. 1. Total. Deficiencies. Deficiencies. Surplus. £ a. a. £ s. a. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. 6,662,759 17 31,270,046 6 9115,225 5 91,191,73113 4469,568 1 21,756,426 2 7283,128 5 3 10,880,963 19 11 £ s. d. ,062,759 17 3 £ s. a. £ s. d. 1,270,046 6 9115,225 5 9 £ s. d. 1,191,731 13 4 £ s. d. 1,623,674 12 6 £ s. d. 889,021 0 3 £ s. d. 386,176 12 9 £ s. d. 135,419 2 9 £ s. d. 12,186 12 8 £ s. d. 13,792,022 18 1 1. Deduct Bills remitted, per Statement No. 5 .. .. .. .. .. 1 481 804 3 3 1,481,804 3 3 9,399,159 16 sj 2. Add Bills receivable, minus Foreign Agency Remittances, pee Statement No. 5 .. .. 629,596 0 o! 1,623,674 12 6! 1889,021 0 3 386,176 12 9 12,186 12 8| 12,310,218 14 Id 629,596 0 0 •• •• •• •• 10,028,755 16 8 Note. —These adjustments are necessary to make! Add .. .. .. .. 22,869 9 7 the classification given by branches correspond with [ Deduct .. .. 2' 804 17 2 the condensed report prepared for publication. They [ ! balance themselves, the total remains unaffected. j 10 048 820 9 1 Add items in transitu .. .. 151,239 0 9 1,623,674 12 6 824,248 16 8 36 4 0 J889,021 0 3 1,740 16 6 1824,248 16 8 386,176 12 9 1,100 4 8 13,481 16 2 12,186 12 8 12,939,814 14 10 849,959 7 a 849,959 7 5 9,387 13 5 i 2,447, 887 5 2 5,879 6 5 66,513 0 1 373,795 1 3 2,798 19 3 I 12,939,814 14 10 157,118 7 2 _..... Deduct items in transitu .. 974 0 0 13,096,933 2 0 974 0 0 i i 65,539 0 1 373,795 1 3 10,200,059 9 10: 2,453,766 11 7; 135,419' 2 9 2,798 19 3 13,095,959 2 fl 3. Bills receivable, and Securities in London 1,424,488 6 2 Net deficiencies — No. 2. £115,225 5 9 No. 3. 469,568 1 2 No. 4. 283,128 5 3 £14,520,447 8 3 I £867,921 12 2
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EXHIBIT No. 64. [Handed in by Mr. Hutchison during Mr. Butt's evidence.—l6th September, 1896.] This deed, made the 30th day of August, 1887, between Thomas Bussell, of 59, Eaton Square, London, Esq., C.M.G., of the one part and the Bank of New Zealand (hereinafter called "the said bank ") of the other part : Whereas the said T. Bussell is indebted to the said bank in several sums of money for which the said bank holds sundry securities in part securing the payment of such indebtedness : And whereas a settlement of accounts has been made between the said Thomas Bussell and the said bank, and an arrangement has been come to whereby the said T. Bussell has transferred certain properties of the said bank in reduction of his said indebtedness, leaving a balance of £20,000 unsecured, due by the said T. Bussell to the said bank, exclusive of his indebtedness upon his overdrawn account with the London branch of the said bank : And whereas the interests of the said bank are concerned in the continued existence and solvency of a certain company known as the "Waikato Land Association (Limited)," (hereinafter called " the said association "): And whereas the said T. Bussell is the largest shareholder in the said association, and has a liability therein of upwards of (£108,000) upon uncalled capital: And whereas in consequence of the depreciation in value of the properties of the said association it will be necessary for the said association to make heavy calls upon its shareholders, and it is important that the said T. Bussell shall be in a position to pay all such calls as may be made upon him in respect of his shares in the said association, and that the said association shall be prevented from going into liquidation or having to ask time from its debentureholders for payment of the amounts due to them by the said association upon debentures held by them : And whereas the said T. Bussell, with the assent of the said bank, has borrowed £40,000 upon certain securities from the New Zealand Loan and Mercantile Agency Company, in order to enable him to meet such calls as may be made : Now these presents witness that the said parties hereto do hereby mutually agree, the one with the other, in manner following, that is to say,— 1. The said bank shall not require payment of the said balance of £20,000 until the said T. Bussell shall have paid up the whole of the uncalled capital for which he is liable in the said association, together with the said sum of £40,000 so borrowed from the said New Zealand Loan and Mercantile Agency Company, or until the said association shall have assets of sufficient value to meet its engagements, and upon either of such alternatives happening, the said balance of £20,000 shall be due and payable to the said bank by the said T. Bussell, but no interest shall be charged against or payable by the said T. Bussell upon such balance. 2. In the event of the said T. Bussell being unable to meet his engagements and having to assign his estate for benefit of his creditors, or in case the said T. Bussell or his estate shall become subject to the operation of bankruptcy laws, either in England or New Zealand, the said bank shall not claim on his estate for the said £20,000. 3. The said bank shall allow the said T. Bussell to increase his overdraft with the London branch of the said bank from £20,000 to £30,000 upon the said T. Bussell lodging with the London branch of the said bank transfers of the shares in the schedule hereto, and giving a second mortgage over Mrs. Bussell's house, Eaton Square, London, for the sum of £3,000, to be payable when the London overdraft shall be called up, which transfer of shares and guarantee or security are to secure the additional £10,000 for which the increased overdraft is to be allowed, it being agreed that the bank may sell and dispose of the said shares at any time after default shall have been made in payment of the moneys they are intended to secure under the terms of this agreement. 4. The said bank shall not enforce payment of the indebtedness of the said T. Bussell at the London branch of the said bank until it shall have given twelve months' notice to the said T. Bussell to pay the same ; but in case the said bank shall consider that there is an urgent necessity for the earlier payment of the last-mentioned indebtedness, then in such case one month's notice to the said T. Bussell shall be sufficient in lieu of twelve months' notice. Any such notice as aforesaid shall be signed by some officer of the said bank specially appointed by resolution of the board of directors, Auckland, for that purpose. And if the said T. Bussell shall be unable to pay such indebtedness at termination of said twelve months or one month respectively, he shall, on being requested to do so by the said bank, hand over to the said bank any balances of money and securities he may have in the hands of any London broker, subject to any obligations attached thereto, together with any other assets in which the said £30,000, or any part thereof, may at any time be invested, to be realised as soon as possible, and the proceeds applied in or towards payment of said last-mentioned indebtedness, and if there shall be more than sufficient for that purpose, the surplus shall be paid over to the said T. Bussell. But in case said bank shall decline to take over any one or more such balances of money or securities or other assets aforesaid, the said T. Bussell shall himself realise the balances, securities, and other assets so declined to be taken over, and shall hand the proceeds (not exceeding what is due in respect of such indebtedness) to the said bank, and such balances and securities, with other assets and proceeds, if any, to be realised by the said T. Bussell as aforesaid, shall, in the event of the bank requiring payment on said one month's notice only, but not otherwise, be accepted by the said bank in discharge of said T. Bussell's indebtedness in respect of such portion of said London overdraft as is not otherwise covered. 5. The said London overdraft is not to be reported to the weekly meetings of the London board of the said bank. Witness —Thos. Buddle. Thomas Bussell.
Schedule referred to. One hundred shares : Bank of New Zealand. One hundred shares : Commercial Union Assurance Company. Two hundred shares : New Zealand Loan and Mercantile Agency Company. Two hundred shares : New Zealand Land Mortgage Company, Limited. Witness —Thos. Buddle, Thomas Bussell,
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EXHIBIT No. 65. [Handed in by Mr. Hutchison during Mr. Butt's evidence, 16th September, 1896.J Sir, — Bank of New Zealand, Inspector's Office, Auckland, 9th March, 1889. Though it is but a comparatively short time that we have been working together in the general management, the conclusion has now forced itself upon us that the provision made last year to meet losses is inadequate, and that developments since the period referred to, among other things the continued heavy loss of foreign deposits, is so crippling earning-powers as to render it impossible to make good out of current profits the insufficient provision for old losses. We deem it our duty to at once place our convictions before you, and to respectfully intimate that we are prepared to carry on the business of the bank until the directors can communicate with the shareholders and the London board. Yours obediently, G. E. Tolhurst. W. B. Buller. C. G. Andrews, The President of Board of Directors, Bank of New Zealand, Auckland,
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EXHIBIT No. 66. The Assets Realisation Board. [Handed in by Mr. Foster, 17th September, 1896.] Stations.—Statement showing Area, Value, and Profit and Loss Accounts, 1895 and 1896.
1895. 1896. Estate. j Area. Book Cost. Land and Stock. Profit and Loss Account. Profit. Loss. Area. Book Cost. Land and Stock. Profit and ioss Account. Profit. Loss Awamate Beerescourt Carnarvon Kakare Lockerbie Mangatoro Matamata Motoa Paparamu Rangiatea Rangiuru and Ohauiti Richmond Downs Waimana .. .. Albury Arowhenua, Rangitata, and Riverslea Awatere Bushy Park Clarence Eskbank Glentui .. .. Mitcham Retreat Waihaorunga Peneourt and other properties £ 2,976 300 7,422 I 3,500 21,700 30,754 55,016 9,020 7,073 4,988 13,293 12,498 20,547 : 24,890 14,833 i 108,649 2.328 95.753 4,810 41,241 677 4.506 18,187 105.372 £ s. d. 28,302 12 4 3,151 12 6 61,743 6 3 8,273 3 7 101,503 3 8 189,535 7 10 195,178 11 4 77,474 19 1 33,686 13 11 29,099 16 0 69,791 2 3 41,110 7 10 27,329 6 6 91.845 0 0 71,699 7 11 85,087 7 10 23,969 17 3 36,032 17 6 38,221 17 5 28,980 2 2 3,150 8 0 2,020 16 3 103,835 18 10 570,967 8 0 £ s. d. 2,528k 11 ; 1,098 12 1 4,142 15 5 4,944 11 6 2,110 14 1 965 0 10 713 0 3 83 19 4 1,640 "9 6 1,623 17 0 536 4 2 2,436 2 0 £ s. d. 168 4 8 82 13 9 258 10 0 406 8 7 627 19 4 1,534 7 4 5,603 13 4 40 0 6 1,226 9 2 95 5 11 424 3 8 4,974'l9 6 Acres. 2,976 300 1,891 3,400 21,665 30,754 55,006 9,020 7,073 4,988 13,293 12,498 20,547 24,775 14,823 108,649 2,328 95,753 4,810 41,241 677 4,506 18,187 105,371 £ s. d. 27,026 1 5 2,987 4 6 20,340 8 2 8,022 10 1 97,015 19 6 195,905 9 7 177,984 4 7 76,931 11 5 32,499 9 11 27,794 15 6 68,760 12 0 37,934 17 4 25,262 10 3 93,971 16 8 71,423 15 9 88,190 15 3 24,314 19 5 36,821 2 9 38,581 17 5 28,061 6 10 £ s. d. 3,299 9 6 237 3 8 1,103 13 0 5,471 7 10 7,013 8 3 2,746 9 0 754 8 4 1,061 4 11 £ b. d. 484 11 S 118 4 K ■ ■ 34 5 1C 341 4 3 1,617 13 11 8,925 16 6 5,240 2 1 6,701 16 10 817 4 0 2,576 7 10 4,442 9 5 94 7 3 1,883 14 3 105,119 15 4 572,771 19 11 6,794 12 8 3,692 3 4 159 18 0 •• ' •• I 610,333 J 1,921,991 4 3 22,824 1 1 15,442 15 9 7,381 5 4 604,531 1,859,606 17 10 60,877 17 2 2,850 5 10 58,027 11 4 22,824 1 1 22,824 1 1 60,877 17 2 60,877 17
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EXHIBIT No. 67. [Handed in by Mr. Fosteb, 18th September, 1896.) New Zealand Thames Valley Land Company, incorporated 6th Judy, 1882. £ Shares— Authorised ... ... ... 50,000, at-£lO ... ... ... 500,000 Issued ... ... ... ... 48,000 Less ... ... ... ... 5,047 forfeited. 42,953, £8 called ... ... 343,624 Less calls unpaid ... ... ... ... ... ... 519 Liability, £2 per share. £343,105 Estates Company hold ... ... 25,128 Outsiders ... ... ... ... 17,825 42,953 One vote for each share, but maximum 200 votes.—(Clause 71, Articles.) Directors.—J. McCosh Clark, C. G. Tegetmeier, John Clerk, Henry Kimber, Chas. D. Kimber. Local Director, New Zealand.—Jas. Hume. Area of Estate.—l64,7oo acres. Stock at 31st March, 1896.—Sheep, 16,728; cattle, 2,466.
EXHIBIT No. 68. [Handed in by Mr. Fosteb, 18th September, 1896.] • Bank of New Zealand Estates Company (Limited), Wellington, 14th July, 1896. Dear Sir, — I have pleasure in submitting the balance-sheet, Profit and Loss Account, and supporting statements of the assets administered on account of and to be transferred to the Assets Bealisation Board. The balance-sheet is, of course, based on the assumption that the adjustments, as certified to by the Colonial Auditor, are in accordance with the provisions of " The Banking Act, 1895," and will not be altered. The Profit and Loss Account shows a debit balance of £43,859, against which, in terms of Act, 1895, £50,000 has accrued, due from the Bank of New Zealand. Upon the passing of " The Banking Act, 1895," I at once opened a new set of books for the Assets Bealisation Board, transferring from the Estates Company's books to them all entries relative to assets sold in terms of Act. Various changes have, with marked success, been made to facilitate account-keeping and to relieve station-managers as far as possible of clerical work, leaving their time freer to attend to profit-earning. Realisations. £ s. d. Station properties ... ... ... .. ... 40,485 1 1 General properties ... ... ... ... ... 22,852 11 4 £63,337 12 5 The sales made during the year ending 31st March, 1896, amount in all to £63,337, as per statement attached to balance-sheet, and may be considered as realising full times value, nevertheless showing an aggregate loss on book-cost of £6,284, including estimated loss on Carnarvon of £3,000. Amongst the properties realised are 5,213 acres of the Carnarvon Estate, for the whole of which the Land Purchase Board offered £5 10s. per acre, which offer was declined and the estate sold in lots, the portion sold to 31st March realising an average of £6 17s. per acre, and leaving a balance of only £3,330 —equal to £1 15s. per acre —to be obtained to equal the Government offer. Since the 31st March we have sold a further 521 acres at £6 10s. per acre, leaving 1,369 acres unsold, which will certainly bring £5 10s. to £6 per acre, or a total of £8,200, which may be considered highly satisfactory, and fully bearing out my valuations. Other sales were chiefly of town and suburban sections, full particulars of which are shown in statement of sales referred to above. Working Stations. Accompanying the general balance-sheet are the Profit and Loss Accounts and balance-sheets of the stations, the outcome of the working of which for the year is matter of considerable gratification to me, and one which more than justifies the estimate given by me before the Parliamentary Committee of 1895. The bringing into operation of a more economical system of management and working has conduced, to a very great extent, to the profits therefrom, as per comparative statement hereunder :—
Grassing, &c, 20 , v . I Permanent per Cent, of Deprecia- shirmino Kent 'ear. Improve- which is chargedj tion, w™,?™ Turniping. and ments. each Year to I Implements, ""uianoe, Interest. Profit and Loss. Kaiiage. General Expenses, Wages, &c. (including Peed). Babbiting. Sundries. Total, .895 896 £ 12,103 3,908 £ 17,674 12,438 £ 3,342 j 1,336 £ 4,471 3,237 £ £ 19,762 6,861 r j 18,217 5,260 £ 57,364 £ 2,072 £ 5,706 £ 129,355 40,209 2,517 3,026 90,148
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The reduction in working-expenses under all heads is ... ... ... £39,207 in which is included :— For grassing operations ... ... .... ... £5,236 Permanent improvements ... ... ... ... 8,195 Turniping ... ... ... ... ... 1,545 Bent and interest ... ... ... ... ... 1,601 Shipping, insurance, and other charges ... ... 1,234 Depreciation, implements .. .. ... ... 2,006 Sundries... ... ... ... ... ... 2,680 22,497 16,710 Plus rabbiting, extra ... .. ... ... ... ... 445 Showing actual saving in cost of management ... ... ... ... £17,155 It will be remembered that I was only placed in charge from the 31st March, 1895, and necessarily some time elapsed before I could bring fully into line the necessary alterations, so that practically the period during which these economies have been brought to bear is not exceeding eight to nine months; so that over a whole year the saving would be considerably enhanced.
The following are the returns for the past two years:—
With regard to the — Loss Producing Accounts. Awamaie, £484 lis. 9d.- —1 was unable to visit this property until the close of the year, and consequently could not make such alterations in management as would, in my opinion, conduce to better results. The debit balance of Profit and Loss Account is chiefly due to shrinkage in value of stock, the difference per head on the sheep aggregating over £900. This item- excluded, Profit and Loss x\ccount would show a credit of £416, or 1*37 per cent, on cost. Beerescourt, £118 4s. lOd. —Was worked as a dairy farm, but, the result being a deficit, the place was restocked, and, in consequence, profits were nil for this year. Paparamu, £34 ss. lOd; Richmond Downs, £341 4s. 3d. —In Paparamu and Bichmond Downs the reduced value of sheep—viz., £574 and £612 respectively—has produced the debit balances; otherwise figures would show—Paparamu, profit of £540, and Bichmond Downs, profit of £271. Waimana, £1,617 13s. lid. —Of this amount, £1,294 is also due to the lower valuation of stock; but the management is, I am inclined to think, very indifferent, and this will now have my first attention. The country is apparently not suitable for sheep. I have not yet seen the estate, my intended visit a few months ago being frustrated by floods. Glentui, £94 7s. 3d.; Retreat, £159 18s. —Are the result of heavy snow losses. The changes of management to a more economical system, whilst, of course, not carried into effect without inflicting some loss or inconvenience on employes, have as far as possible been in the direction of a reduction in numbers of staff without reducing wages below rates current in the district in which the estate lies. In addition to this we have, to a large extent, contracted out work, which had previously been carried on by weekly hands. In these cases, especially ploughing, &c, we have as far as possible given the work to the men we had previously employed as weekly hands, selling them on deferred payment our teams and implements, and I am pleased to say that in every instance with satisfactory results to both contractors and us, the ploughing, &c, operations being considerably less costly and the men earning better wages, proving very conclusively the advantage of the contract system. Although the cost of working has been so greatly reduced there is no loss in efficiency, as is proved by our out-turn of produce, mutton, wool, &c, and operations for year.
Wool.
Profit and Loss Account, 1895. Profit and Los; Account, 1896. Profit. Loss. £ s. d. £ 22,825 10 3 15,347 ' s. d. 9 10 Profit. Loss. £ s. d. 61,343 12 1 £ s. d. 2,850 5 10 Net profit 7,478 i 0 5 Net profit 58,493 6 3
Sheep shorn. Number o: I Bales. Weight. Realised. Equal to, per Pound. Year. Greasy. Scoured. 6,786 713 £ 74,811 a. 6-80 1895 411,089 2,630,088 1896 377,400 6,421 745 2,456,059 Estimated. 84,225 8-23 Slipe and 478 Oddments. 146,988 5,177 8-45
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Stock sold.
Stock bought.
Operations for Year.
The chief items contributing to Profit and Loss Account are :— £ Wool ... ... ... ... ... ... ... ... 89,400 Stock... ... ... ... ... ... .. ... 33,500 Wool this year shows an increase in value on last year's clip of £9,414, although it will be seen that the weight is somewhat less, owing to reduced numbers shorn and to the lighter clip in consequence of the severity of the winter. Our profit is £58,493, and this notwithstanding that losses from snow last winter were heavy, totalling 3,450, valued at £862 ; and in addition we had the Motoa floods, in which we lost 700 sheep, valued at £262, and had to make heavy repairs to fencing, besides paying a large sum for grazing. Besides this the stock at Motoa, partly owing to a mistaken management, were of a most inferior description, and, being unremunerative, have been heavily culled and replaced with better, and now bear favourable comparison with any on the coast. The southern estates, in most cases, I found were too fully stocked, to the detriment of returns. We have reduced numbers to a safer carrying point, and are already reaping benefit from the change. The numbers now carried compared with previous year are as follow : — 1895 ... ... ... ... ... ... 471,270 1896 ... ... ... ... ... ... 410,849 or a decrease of ... • ... ... ... ... ... 60,421 This decrease is partly attributable to poor lambing at Glentui. 4. Stock Adjustment Account. In order to more clearly ascertain the outturn of working, I opened this account with an entry of £61,552, being difference between managers' valuations and book valuations of sheep and implements at the 31st March, 1895, the average value of sheep over all stations being— s. d. 1895 ... ... ... ... ... ... 7 3 1896 ... ... ... ... ... ... 7 1 This year South Island sheep were valued up to an average of 6s. 10d., and North Island down to an average of 7s. 3d., the combined average, however, being 2d. per head lower than 1895, which amount would, had values been maintained as last year, have enhanced profit by £3,400, or a total of £61,893. 36—1. 6.
Sheep. Cattle. Year. 1895 1896 Sold. 82,426 92,912 ! Transferred. 34,395 Frozen. 26,969 37,402 i Total. Transferred. 109,395 165,209 2,130 Sold. 4,457 3,106 Total. 4,457 5,236
Sheep. Cattle. Year. Bought. Transferred. Total. Transferred. Bought. Total. 1895 1896 27,932 1,251 31,885 27,932 33,136 2,130 3,286 432 I I 3,286 2,562
Year. Turnips. With SurfacePlough, sown. Grassing. Oats. Oaten Hay. Draining. Bush- ™ , -n felling. Clearm g- Penoing. 1895 1896 17,71*8 14,815 2,325 14,606 14,867 1,160 Acres. Bshl. 3,477 27 2,667 29 Acres. Tons.' Chains. 1,179 li 3,815 1,385 li 680 Acres. Acres. Chains. 938 7,794 2,903 1,390 1,947
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The following is a comparison of the valuation of sheep in the North and South Islands for 1895 and 1896:—
This account is for the purpose of showing from year to year the total fluctuations in values of this class of asset, and is essential to a proper knowledge of the realisable profit or loss on sale of the estate on which the stock are depastured. 5. Capital Expenditure. I have during the past year restricted capital expenditure within closest practicable limits, only creating permanent improvements where committed to a course in pursuance of previous management, or where showing absolute certainty of immediate profitable return. The principal items are as per particulars below :— £ Fencing ... ... ... ... ... ... 664 Clearing ... ... ... ... ... ... 711 Grassing, first time ... ... ... ... ... 2,161 Draining ... ... ... ... ... ... 175 6. Stock. 1895. 1896. Sheep, increase— Per Cent. Per Cent. Lambs cut and tailed ... 121,665 = 80 ... 117,073 = 77 Mortality ... ... 29,758 = 7 ... 39,892 = 8 CattleCalves dropped ... ... 3,233 = 70-31 ... 3,039 = 69 Mortality ... ... 640 = 3-82 ... 1,205 = 5-39 As regards the lambing, considering the very severe winter of 1895, this must be considered very good. The ewes, notwithstanding the best treatment possible, could not be expected to be in a condition most favourable to dropping and rearing lambs. The same reasons apply to the mortality rate, which is only 1 per cent, higher than preceding year. As regards the cattle, Motoa, Carnarvon, and Mangatoro contributed chiefly to the mortality, the cause being the mistaken attempt to keep down the tall fescue at Motoa by crowding on cattle and forcing them to eat grass that was not only too rank to be nutritious, but also was so ergotted as to completely ruin the mob, putting them in such a deplorable condition as to necessitate the removal of such as could travel to other estates. A large portion have not yet, and some never will, recover the punishment. I have, however, sold off all which were not likely to turn to profit, and the losses will not recur from the same cause. 7. Operations. With a view to keeping the estates in the best possible heart and condition for sale, we have confined our cereal operations to the growing of oats, which, prices ruling so low, we have found it profitable to feed to the stock in greater quantity than heretofore. 8. Sundry Assets. Cost ... ... £738,750 | Bevenue ... ... £4,090 In realisation of these, considering the times, fair progress has been made, and whenever demand has existed it has been taken advantage of to effect sale. A considerable spurt has now set in in Auckland, and it may be reasonably expected that sales at satisfactory prices will be made. There is little to report in this connection. The assets, where comprising buildings, are being well cared for and maintained. Sales, as per statement, amount to £22,852. ... 9. In conclusion, I wish to record my appreciation of the manner in which my staff at all points has applied itself to the interests concerned. My plans and directions have been well seconded and given effect to, and to the energy and ability with which officers have applied themselves is very largely due the comparative success of the year's operations. Assuring you of the continued best services of my staff and self, I am, &c, Walter G. Foster, Colonial Manager.
1895. 1896. Number on Hand, 31st March, 1895. Average. Number on Hand, 31st Maroh, 1896. Manager's Valuation. Average. CD TO cS CD JM O a M CD c3 CD U O A Manager's Valuation. Jorth Island louth Island 258,934 212,336 £ 115,415 56,150 s. d. 8 11 5 3 222,339 188,510 £ s. 80,276 18 65,025 11 d. 6 9 s. d. 7 3 6 10 s. d. 1 "*7 s. d. 1 8 471,270 171,565 7 3 410,849 145,302 10 3 7 1 0 2
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EXHIBIT No. 69. [Handed in by Mr. Fosteb, 18th September, 1896.] BANK OP NEW ZEALAND ESTATES COMPANY (LIMITED). Extract from Minutes of Meeting held in the Board-room at the Bank of New Zealand, Auckland, Saturday, sth May, 1894. Valuations of Live-stock on Stations. At present sheep, cattle, horses, and pigs are valued and taken into our balance-sheet at current market rates, as fixed by our various managers at the close of each year —31st March. It is suggested that, in order to bring out the actual results of the year's operations, we should adopt a system of fixed values — i.e., put a value on live-stock under all headings, such value not to change with the markets. It will remain fixed whether prices go up or down. Except, perhaps, in cattle (which are higher), prices ruling at 31st March, 1893, would pretty well represent the average for the past five years :— North Island. Sheep. Stud Sheep. Cattle. s. d. £ s. d. £ s. d. Prices at March, 1894 ... ... ... 8 9 2 2 5 . Average for four years ending March, 1893... 90 247 2 19 7 Resolution: The attorneys resolved that an average of four years seems reasonable, and be taken.
Extract from E.C.E. Circular No. 5/10, Page 2, re Valuation Stock of 28th February, 1895. Valuation, Sheep. Begarding the values to be set against the flocks, we refer you to our E.C.E. Letter No. 4/ , Para.
Extract from Letters to Managers as indicated above, dated July, 1894. Sheep-valuations. It was decided here to adopt the average valuation as at March, 1893, for flock sheep. It is desirable, however, to have the sheep valued under their respective classes. The standard valuations for next year will therefore be These valuations are to remain fixed unless you are advised to the contrary.
Extract from Letter to A. B. Lyons, Mangatoro, of 18th July, 1894, re Annual Accounts. Enclosed herein I hand you press copies of letters written to the various estates in your circle regarding the valuation of sheep, &c. You will readily understand that the heavy drop in value of sheep this year would, if adopted, mean our making provision for a loss that had not actually taken place. It was therefore decided that the valuations of sheep were to remain at a fixed figure from year to year unless subsequently advised to the contrary. Any profit or loss in sheep cannot be shown until the sheep are sold, and it is considered unfair to make a loss by reducing the values of sheep still on hand. (Side-note.) The value of the different classes remains fixed whether prices go up or down. This is what you advocated some time ago.
Extract from Letter to A. M. Clark, Temuka, of 19th July, 1894, re Sheep-valuation. You will readily understand that the heavy drop in value of sheep this year would, if adopted, mean our making provision for a loss that had not actually taken place. It was therefore arranged that the valuations of sheep were to remain at a fixed figure from year to year unless subsequently advised to the contrary. Any profit or loss in sheep cannot be shown until the sheep are sold, and it is considered undesirable to make a loss by reducing the values of sheep still on hand. It was accordinglydecided here that the average valuations for the four years ending 31st March, 1893, at each estate should be adopted as a standard value.
Extract from E.C.E. Circular No. 5/13, Page 1, re Valuation of Sheep of 22nd April, 1895. Annual Balance. — Valuation, Sheep. Beferring to our E.C.E. Circular No. 5/10, of 28th February last, and to returns sent in thereunder : The disparity between the values shown therein and actual current rates requires a revaluation, which we shall be glad to have from you at the earliest possible moment. This revaluation we wish you to base on full market prices prevailing, of course taking into consideration the extra value that breeding and young stock have to the property on which they are grazing.
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EXHIBIT No. 70. [Handed in by Hon. Mr. Seddon during Hon. Mr. Ward's evidence, 19th September.] ADDITIONAL CONFIDENTIAL PAPERS RELATING TO THE LEGISLATION IN 1895 ON BEHALF OF THE BANK OF NEW ZEALAND. A.—Aggregate Balance-sheet of the Bank of New Zealand at 31st March, 1895. Liabilities. Assets. Capital,— £ s. d. £ s. d. 4-per-cent. guaranteed stock .. 2,000,000 0 0 Coin and cash balances at bankers .. 1,302,009 510 100,000 shares of £5 ss. each .. 525,000 0 0 Bullion on hand and in transitu .. 92,185 3 11 50,000 shares of £7 10s. each .. 375,000 0 0 Investments .. .. .. 880,213 0 4 Call of 1895 account .. .. 159,745 9 2 Bills receivable and bills discounted .. 2,112,347 13 0 Reserve fund .. .. .. 45,000 0 0 Other advances and securities, and Notes in circulation .. .. 468,195 0 0 debts due to the bank .. '.. 5,625,730 13 10 Bills payable in circulation .. .. 1,486,891 3 5 Bank of New Zealand Estates CornDeposits and other liabilities.. .. 7,222,20116 1 pany (Limited) shares (par value) .. 1,850,000 0 0 Balance, Profit and Loss Account .. 383 11 1 Landed property, bank premises, &c... 419,931 210 £12,282,416 19 9 £12,282,416 19 9 Peofit and Loss Account. £ s. d. £ s. d. To Loss for year ending 31st March, 1895 37,356 6 0 By Balance from year ending 81st March, Balance .. .. .. .. 383 11 1 1894 .. .. .. .. 37,739 17 1 £37,739 17 1 £37,739 17 1 Reserve Fund. To Balance (invested in Consols) .. £45,000 0 0 By Balance from year ending 31st March, 1894 .. .. .. .. £45,000 0 0
B.—Balance-sheet of the Bank of New Zealand Estates Company (Limited) at 31st March, 1895. Liabilities. Assets. Share capital— £ s. d. Unrealised properties— £ s. d. 60,000 6-per-cent. preference shares Stations — (£10), cumulative .. .. 600,000 0 0 Land and improvements .. 1,079,450 1 0 125,000 ordinary shares (£10) .. 1,250,000 0 0 Stock and implements .. .. 244,43115 3 Debentures — Trading concerns.. .. .. 554,589 11 7 Redeemable in 1910 at £103 .. 750,000 0 0 Sundry assets .. .. .. 975,874 7 9 Dr. to Bank of New Zealand— „ .. .. .. 221,743 3 11 General Account .. .. .. 875,327 10 4 Amounts due from purchasers .. 128,360 2 8 Station Adjustment Account .. 186,785 6 1 Advances of working capital to Auckland Agricultural Purchase Ac- trading concerns .. .. 21,000 0 0 -count .. .. .. .. 50,000 0 0 Bank of New Zealand— On account of joint interests .. 405 0 9 Joint Account with Messrs. Glyn and London Office Account .. .. 17 15 8 Jeffray .. .. .. 16,804 2 7 Accrued interest on debentures .. 21,225 0 0 Joint account with Messrs. Glyn and Beserve to provide for loss on Onehunga Jeffray, Suspense Account .. 4,649 10 5 Ironworks stocks in hands of T. and Manager's Suspense Account .. 14 17 9 S. Morrin and Co. (Limited) .. 3,316 1 11 Sundry agencies .. .. .. 6,193 0 7 Cash and bills in hand -. .. 232 10 9 Adjusting account of revenue .. 6,150 0 0 Balances owing to company in sundry accounts .. .. 10,506 10 1 Bealisation Adjustment Account deficiency .. .. .. .. 39,068 7 3 Realisation expenses, commissions, &c. 4,343 6 1 Cost of issuing debentures .. .. 187,500 0 0 Preliminary expenses .. .. 13,998 19 7 Station improvement, Suspense Account .. .. .. .. 44,858 0 0 Balance of profit and loss .. .. 177,308 7 6 £3,737,076 14 9 £3,737,076 14 9
AUCKLAND AGEICULTURAL COMPANY (LIMITED). Statement of Assets and Liabilities as at 31st March, 1895. Liabilities. £ a. d. Assets. £ a. d. Capital— £ s. d. Stations — Ordinary shares .. 333,940 0 0 Land and improvements .. .. 569,050 4 2 Preferenoe shares .. 200,000 0 0 Stock and implements .. .. 73,195 3 8 Horse-feed, grass-seed, manure, and 533,940 0 0 sundries on hand .. .. .. 4,302 0 7 Less written off 310,249 18 0 General— 223,690 2 0 Mortgages and agreements ..£34,669 Stations— Less Pah mortgage (property Sundry creditors, Bank of New Zealand being also shown as an Estates Company, &c. .. .. 4,645 15 10 asset below) .. .. 28,490 Accident Insurance Company .. 42 4 2 6,179 0 0 Bank of New Zealand Cambridge Surrey Hills, unpaid balances .. 3,743 16 0 Working Account .. .. 13,012 19 5 Pah Estate and other properties taken Bank of New Zealand Ordinary Account 90,185 14 0 over from Williamson's .. .. 28,708 2 4 Bank of New Zealand No. 1 Account.. 90,968 3 5 Shares in various companies taken over Debentures outstanding— from Williamson's .. .. 5,150 0 0 Old issue.. .. .. £4,950 Funds in hands of Trustees .. .. 21,414 12 8 New issue .. .. 278,010 282,960 0 0 Accrued interest on debentures .. 5,000 0 0 Sundry accounts held in suspense .. 1,238 0 2 £711,742 19 0 £711,742 19 0 Note.—The difference between value of properties as shown in this statement, £569,050 4s. 2d., and the amount under head of properties in balance-sheet, £865,785 Is. 5d., is made up of various items charged to the aooount for interest, general charges, and amounts written off investments, &c, as pet balance-shest, i
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Assets of the Bank of New Zealand within New Zealand. [Shillings and penoe omitted.] £ Coin ... ... ... ... ... .... ... ... ... 922,711 Bullion 17,797 Notes of other banks ... ... ... ... ... ... ... 27,210 Stamps ... ... ... ... ... ... ... ... 4,885 Bills 529,025 Debentures ... ... ... ... ... ... ... . . 34,866 Property, premises, &c. ... ... ... ... ... ... ... 316,234 Government securities ... ... ... ... ... ... ... 249,855 Other securities... ... ... ... ... ... ... ... 96,058 Current accounts ... ... ... ... ... ...£2,454,240 Deduct bad and doubtful debts ... ... ... ... 376,898 2,077,342 £4,275,983 Shares in Bank of New Zealand Estates Company (Limited), at par ... ... 1,850,000 6,125,983 Liabilities of the Bank of New Zealand within New Zealand at 29th July, 1895 ... 5,405,721 Excess of assets ... ... ... ... ... ... £720,262 J. M. Butt, Auditor.
The President, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir,—. . Bank of New Zealand, Wellington, 20th August, 1895. I have the honour to inform you that three large customers of the bank in Dunedin have withdrawn deposits of about £1,000 each, and that two customers here have to-day reduced their deposit accounts to trifling balances. Notes amounting to £100 were to-day cashed at the Wellington counter by a person who remarked that there were ugly rumours outside. Private inquiries have been carefully made by the bank's officers, and our information is that there is much tension and anxiety in the minds of our customers and the public as to the bank's future. This, I fear, cannot be allayed until the report of the Committee is made known. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
The President, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, 22nd August, 1895. I beg to inform you that the withdrawals of accounts from the bank still continue, and that customers openly express to our managers their fears regarding the safety of their balances, and their intention to withdraw their money unless the present condition of affairs is quickly terminated. I earnestly beg that you will urge upon the Joint Committee the necessity there is for prompt action. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
The President, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, 23rd August, 1895. I have the honour to inform you that the bank has lost during the fortnight ended the 19th instant deposits amounting to £138,000. Telegrams received to-day from the managers at Christchurch and Dunedin refer to considerable withdrawals of deposits at those branches, and state that in Dunedin the uneasy feeling of the public seems to be increasing. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
The Bresident, Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir, — Bank of New Zealand, Wellington, 26th August, 1895. I have the honour to inform you that advices from Christchurch and Dunedin, under date of 24th instant, report all quiet at those branches. This was, no doubt, owing to the Bremier's utterances in the House on Friday last. In Wellington five persons have withdrawn their money to-day, and about £300 in notes was exchanged for gold across the counter. One or two fixed depositors exhibited some wish to withdraw their deposits, but were pacified. The following telegram has just reached us from our manager at Gisborne : " Most alarming press telegram has been received, on account of Wellington, referring to Bank of New Zealand. Beport not yet published." We have also received the following telegram from Auckland : " Coin and deposits will show temporary reduction to-day of £30,000, being transfer that amount to safe custody at request and on account of Auckland Savings-bank." I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
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The President, Bank of New Zealand, to the Hon. the Colonial Treasures. Sir, — Bank of New Zealand, Wellington, 27th August, 1895. I have the honour to quote for your information the following telegram, dated yesterday, received this morning from the bank's manager at Napier: " Telegram mischievous character having regard to Committee's report appears late to-day's paper. Much anxiety is felt. Telegraph as soon as possible." I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
Hon. J. G. Ward to the President, Bank of New Zealand. Sir,— Wellington, 27th August, 1895. I have the honour to enclose herewith, for the confidential perusal of your board, the conclusions which have been arrived at by the Joint Bank Committee. I submit them to you for the purpose of ascertaining whether such proposals, if given effect to, will meet with the concurrence of your directors, and are such as will place the bank in a sound position. I should be glad to have your acknowledgment with as little delay as possible, as the Committee meet at ten o'clock for the purpose of preparing a report for submission to the House. At the same time I beg to ask you to be good enough to have the figures in the proposals carefully scrutinised, and if there should be any discrepancy in them to direct my attention to the same. I have, &c, The President, Bank of New Zealand, Wellington. J. G. Ward.
[Note. —The copy of the enclosure is not on the file. In order, however, to complete this paper the following " conclusions " are extracted from the Committee's report. See 1.-6 of 1895.] Your Committee is of opinion that it would be in the best interests of the colony, of the shareholders of the Bank of New Zealand, and of all concerned, that a separation of the affairs of the Bank of New .Zealand and the Estates Company should take place. In dealing with so momentous and intricate a question it is necessary that every precaution should be taken to safeguard the colony against losses, and to render future application for the intervention of Parliament unnecessary. To effect this, your Committee recommend that the whole of the freeholds, leaseholds, stations, stock, and implements in New Zealand be disposed of, and that the Bank of New Zealand and Estates Company sell them to a Bealisation Board, to be established for that purpose. That an Assets Bealisation Board, consisting of three members, be created as hereinafter provided. That the Assets Bealisation Board be authorised to issue bonds for £2,734,000, bearing 3-| per cent, interest, and that the deficiency, if any, on these bonds, after the realisation of the New Zealand Estates Company's properties, be guaranteed by the colony to the bank. In return for these, the Bank of New Zealand, the New Zealand Estates Company, and the Auckland Agricultural Company, to transfer the whole of the property referred to to the Bealisation Board for liquidation purposes". That £500,000 of uncalled reserve liability of the Bank of New Zealand shareholders be called up in four equal instalments, the first being payable on the 30th June, 1896, the second on the 31st December, 1896, the third on the 30th June, 1897, and the fourth on the 31st December, 1897. That, to encourage the shareholders of the bank to meet the call of £500,000 proposed to be made, your Committee recommend that the first charge on all annual profits of the bank beyond £50,000 per annum should be a payment of interest not exceeding 5 per cent, on amount paid by shareholders on the call as aforesaid. That the Bank of New Zealand, out of its profits, pay to the Assets Bealisation Board the sum of £50,000 per annum as hereinbefore mentioned, and any further sum which may remain after paying 5 per cent, to ordinary shareholders until any deficit on realisation is provided for. Your Committee are of the opinion that the last valuations of stations and landed property may, under favourable circumstances, he maintained, but the more prudent course would be to allow for further depreciation. That, to insure the colony against any loss on account of guaranteeing any deficiency that may arise on bonds, in addition to the payments from profits above provided for, security be given over the freeholds, certain leaseholds, stations, stock, and implements in New Zealand, the bank's latest ascertained value of which is £1,879,000, and over the second call of £500,000, and also over the balance, £500,000, of the uncalled reserve liability of the bank shareholders. That the first call, the last payment of which is due on the 26th November next, estimated to amount to £450,000, together with the present paid-up capital, amounting to £900,000, be written off to provide for losses, of which £1,150,000 is for ascertained losses, and includes £9,532 which is proposed to be held as a dependency, and £200,000 as a contingency for unascertained loss. In conjunction with this proposal, and to enable adequate capital to be provided for the bank to carry on its busrness and restore its credit, your Committee recommend the colony to subscribe £500,000 for preferential shares, bearing 3-| per cent, interest, and that they be paid for by the issue of 3f per cent, stock to the bank; the bank to have the right to purchase for purpose of sale any or all of these shares, bank shareholders to have priority of purchase. This, with the £500,000 of capital from the second call of the reserve liability, will give the Bank of New Zealand a clear capital of £1,000,000 sterling. In addition to this the position of the bank will be strengthened by having the whole of the £2,000,000 of "A " stock for use in its ordinary business. -Under the altered position that the bank will occupy, these proposals, if given effect to, will put it on a sound basis.
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On investigation, your Committee ascertained that the second million " A " stock, now invested according to law in liquid securities, entails a heavy annual loss on the bank. To prevent this recurring loss, and in order to increase the earning-power of the bank, your Committee recommend that the million be freed and made available for use in the bank's general business. And, to further enable the bank to increase its earning-power, your Committee are of opinion that the bank should be at liberty, if deemed advisable, to secure further trade by purchasing other banking business, but that no purchase be allowed unless with the sanction of the Governor in Council; and that, to enable this to be done, section 3 of " The Banking Act, 1894," be repealed. And, further, with a view of increasing the earning-power of the bank, the Committee recommend that the colony's business in England be transacted by the Bank of New Zealand. The directors of the bank are of opinion that, if these recommendations be given effect to, the net earning-power of the bank will be so increased as to leave a profit of £135,000 per annum. That, in consideration of the £500,000 preferred shares to be taken up by the Government, the colony should have further representation, and that the Governor in Council be empowered to appoint one director. That the Assets Eealisation Board shall consist of three members, and, inasmuch as the colony has guaranteed the deficiency, if any, on the bonds to be issued by the said Board, the Governor in Council shall appoint two members and the directors of the Bank of New Zealand one member. The Committee are of the opinion that the shareholders of the bank should be prohibited by law from winding up the bank until the whole of the obligations to the colony are repaid. This is an obvious precaution, considering the large responsibilities of the bank to the colony. And the Committee also recommended that the power under "The Bank Guarantee Act, 1894," be amended so that the power to appoint a Eeceiver shall arise on any default of the bank.
The President, Bank of New Zealand, to the Hon. the CoLONrAL Treasurer. Sir, — Bank of New Zealand, Wellington, 27th August, 1895. I have the honour to acknowledge receipt of your letter of this date, enclosing for the confidential perusal of the board of this bank the conclusions that have been arrived at by the Joint Bank Committee. The directors concur with the proposals, and consider them to be such as will place the bank in a sound position. They would, however, respectfully request the Committee that power should be given to pay the shareholders interest not exceeding 5 per cent., instead of not exceeding 4 per cent., as the directors think that this modification would conduce to the more ready payment of the call. They would also request the Committee to reconsider the clause rendering a bank director ineligible for the Assets Bealisation Board. The Hon. W. W. Johnston's services as Chairman of the Bank of New Zealand Estates Company's Local Board have been most valuable to the bank ; and, as a large amount of valuable banking business flows to the bank from the estates, it is desirable that the bank's board should be in touch with the Assets Board. As in any case the Government will control the board by their majority of two to one, I think the above wish of the directors might well be conceded. With regard to your request respecting the figures in the proposals, I would point out that these were the figures of 31st March last, and that they are subject to modifications by the transactions that have taken place since. The directors beg to suggest that either the figures should be adjusted in accordance with the transactions, or that the Assets Bealisation Board should enter into possession as at 31st March, and adjust with the bank for subsequent transactions. I have, &c, The Hon. the Colonial Treasurer, Wellington. W. Watson, President.
The General Manager, Colonial Bank of New Zealand, to the Hon. the Colonial Treasurer. Sir, — The Colonial Bank of New Zealand, Wellington, 28th August, 1895. I have the honour to inform you that, in view of the present disturbed condition of banking matters in this colony, I recently, at the wish of my directors, requested the Government Auditor of the Bank of New Zealand to make an examination of the business of the Colonial Bank of New Zealand, with the details of which he is now thoroughly conversant. Should occasion arise, therefore, and the Government be desirous to know the position of the Colonial Bank of New Zealand, the Government Auditor will be able to give them in confidence full information regarding it. I have, &c, H. Mackenzie, The Hon. J. G. Ward, Colonial Treasurer. General Manager.
The Colonial Manager, Bank of New Zealand Estates Company, to the Chairman of the Joint Banking Committee. Bank of New Zealand Estates Company (Limited), Dear Sir— Wellington, 29th August, 1895. My total valuation of the estates the company is now working is £1,099,098; add to-day's value for stock, £343,466 = £1,442,564. The average net profits, as per company's books, for the four years ending the 31st March, 1895, amount to £49,898, which provides interest at 3-46 per cent, on my estimate. There are,
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however, ascertained economies in management and expenditure to the extent of £12,500 per annum, which will enhance profits to the extent of 0-86 per cent., or a total of 4-32 per cent, per annum, without taking into consideration any prospective advance in wool or mutton. Sundry properties return only 1-54 per cent, on latest valuation, which is Land-tax assessment of 1892, plus improvement—if any—and plus 10 per cent.; but there are ascertained economies in connection with the removal of the head office from London, &c, to the extent of, say, £1,500, which would increase this to 1-91 per cent, per annum. In the North Island there are: 187,463 acres improved, which carry all the stock; 106,259 acres unimproved, not contributing to revenue : total, 293,722 acres. My valuation is as follows: Estates now being worked by the company and stock thereon, £1,442,564 ; sundry properties, £396,460 : total, £1,839,024. The net profit yielding 3-80 per cent, per annum. Yours, &c, Walter G. Poster, Colonial Manager. The Chairman, Joint Committee, Bank of New Zealand and Bank of New Zealand Estates Company (Limited) Business, Wellington.
EXHIBIT No. 71. [Handed in by the Hon. Mr. Seudon during Hon. Mr. Ward's evidence, 19th September, 1896.] The Agent-General to the Premier. (Confidential.) Westminster Chambers, 13, Victoria Street, London S.W., Sir,— 6th October, 1894. On receipt of your cablegram of the Ist instant re the proposal to offer Mr. Coates the position of President of the Bank of New Zealand, I immediately interviewed the directors and urged them as strongly as I could to favourably entertain your wishes. They were taken by surprise, and evidently did not view the suggestion with favour, and promised to communicate with Mr. Coates. From the letters received, copies of which are attached, I gather that Mr. Coates has definitely declined the position. I have, &c, The Hon. the Premier, Wellington. W. B. Percival.
The Colonial Treasurer to the Agent-General. (Confidential.) Sir,— 29th November, 1894. With reference to the correspondence which has taken place in connection with the Government's proposal to offer Mr. Coates the position of President of the Bank of New Zealand, you will, ere this, have learned that Mr. William Watson, late of the Colonial Bank, has been appointed. It remains for me to thank you for the trouble you have taken in the matter of the negotiations with the National Bank. I have, &c, A. J. C ADM AN, The Agent-General, for New Zealand, London. Eor the Colonial Treasurer.
EXHIBIT No. 72. [Handed in by Mr. Montgomeb? during Mr. Hanna's examination, 28th October, 1896.] Beport by Mr. J. C. Hanna. Auckland, 9th June, 1894. Two courses—(l) To obtain assistance from Government, or (2) reconstruct. If negotiations with Government are successful, suspension would be averted, and that, to my mind, is the chief thing in favour of Government aid. Of course, there is the further question of control and management, which could also under this arrangement be satisfactorily settled. Under reconstruction, stoppage is, of course, inevitable, and loss of prestige would follow. The banks would also suffer to an alarming extent, because, no matter how speedily reconstruction was carried through, everything would be dislocated, credit destroyed, and serious shrinkage in the colony's securities all round would, of course, follow. On the whole, I am strongly in favour of Government aid, providing (1) that the Ministry will, on the position being put to them, say outright that they will or will not support the bank. If they will not support the bank, should not steps be taken forthwith to suspend, and thus avoid the harmful effects of the position becoming known, and a consequent " run "? I doubt very much if the Cabinet as a whole would observe absolute secrecy. If the proposal meets with the approval of the Government, what form will their assistance take ? The issue of a million fresh capital under Government guarantee. In return for the guarantee we could give them a second charge on the assets for £1,850,000. Or are we in a position to pledge the reserve liability of shareholders for £1,500,000 ? Or would they guarantee without cover? Of course, the present paid-up capital would stand between the Government and loss to the extent of £900,000. The following questions will have to be dealt with: (1) Duration of guarantee; (2) rate of interest on new capital. As things go now, a million under Government guarantee should be readily got at 4 per cent. Profit over and above that to go to the shareholders, or applied as the directors may think fit. In the event of a guarantee being agreed against cover, legal cover cannot be given right away in New Zealand, but, on Mr. Murray's motion, it or anything else will be handed to the Agent-General in London.
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The assets at 31st March, 1894, were classified thus: Estates, £1,277,621; trading, £620,033 ; general, £1,304,607 : total, £3,202,261. Further classified : profit-producing, £2,267,125—3-60 per cent.; loss-producing, £935,136—0-63 per cent.: total, £3,202,261—3-15 per cent. These properties were valued specially in 1888, and again in 1890, by competent men. They produced in 189], say, £120,000. In 1890-91 we only took revenue for seven months and a half-that is, from August, 1890, to March, 1891. Between those dates the average was £10,000 a month. The revenue in 1891, £120,000; the revenue in 1892, £129,387; the revenue in 1893, £84,887; the revenue in 1894, £78,352. The average for the five years ending August, 1890, as far as I can ascertain it, was in keeping with the profits of 1891-92, as shown above. (See attached extract from annual report.) The financial facts to be noted in connection with the foregoing are: (1.) The drop in the value of our staple products is so great that the margin between the cost of production and market value is trifling; that is, there is next to nothing to represent interest or capital. (2.) In every branch of trade prices are cutting to an alarming extent. In some instances business is beingcarried on at a loss. (3.) That unless there is a rise in the present unprecedently low prices ruling for wool, live-stock, and wheat there must inevitably be a serious fall in land-values. Indeed, it appears to me that the seriousness of the present depression is not yet properly felt or understood. Everything at present points to the recent banking disasters in Australia being succeeded by a great commercial crisis. And in this view lam only drawing my own conclusions from the remarkable statement made by the Chairman of the English and Scottish Bank at the annual meeting of the bank on the 3rd October, 1893—"That a set of station accounts which between 1860 and 1890 paid working-expenses and interest at current bank rates at 7 per cent, on £900,000 were now barely paying working-expenses." With this statement before him, the editor of the Insurance and Banking Record states, "The depreciation of the past three years has been unprecedented, and that it is no reflection on bankers that it was not foreseen and its possible effects understood." While the published reports of the various Australian banks for the past two years are all written in specially guarded language, I would direct attention to the address delivered recently by'the Chairman of the English, Scottish, and Australian Bank of Bth December, 1893, of the Bank of Australasia of 6th April last, and of the Commercial Bank of Australia of 7th February, 1894. Begarding values at present : Taking the land- and income-tax for the landed properties, and our own book-values for the trading concerns, live-stock, and liquid assets : — £ Trading concerns (book-values) ... ... ... ... 620,033 Liquid assets (book-values) ... ... ... ... ... 502,702 Live-stock, including Thames Valley Land Company's shares-book-values) ... ... ... ... ... ... 239,683 Station lands and implements (land-tax values) ... ... ... 698,656 General assets (land-tax values) ... ... ... ... 415,705 Australian assets (book-values) ... ... ... ... 45,290 Balance due on account of sales ... ... ... ... 156,129 2,678,198 Assets per balance-sheet ... ... . . ... ... 3,202,261 Shortage ... ... ... ... 524,063 Add— Cost of debenture issue and preliminary expenses ... ... 201,498 New Zealand Thames Valley Land Company's shares, Morrin's shares, Barrow Creek, Holmhurst, Ironworks, and sundries ... 250,000 £975,561 Other deficiencies in London balance-sheet, £200,000. On realising balance of the assets these deficiencies are practically ascertained. The final loss it is impossible to estimate. The station properties, which have been written down £300,000, are, I should say, with good seasons, worth the land-tax assessments. Of course, we have taken special pains to get values reduced wherever possible on account of taxation. The reductions are, roughly : North Island stations, £295,460; South Island stations, £23,822; town, suburban, and country lands, mainly reductions in Dunedin and Auckland, £230,069. At the values as stated above the returns equalled—ln 1891, 4-48 per cent.; in 1892, 4-81 per cent.; in 1893, 3-17 per cent. ;in 1894, 2-81 per cent.
EXHIBIT 72a. [Handed in by Mr. Hanna, 28th September, 1896.] Memorandum for the Banking Committee, House of Bepresentatives. Wellington, 4th August, 1896. Addenda to my written Statement placed before the Committee on the 3rd August, 1896. Clause 21. —Henry Beynolds also assisted in the valuation of the Waikato properties. He is a man of standing and experience in the Waikato. 37—1. 6.
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Clause 43.—The returns sent to Mr. Murray at Wellington gave land- and income-tax value for landed properties, and book-value for the other assets. My memorandum of the 9th June, 1894, gave the same information; also, an estimate of my own as to the further probable deficiency. In my letter to Mr. Glyn, dated December, 1892, I said I received a " backing " from some of the attorneys. Mr. Horton, up to the date of his retirement from the board in January, 1893, generally supported me ; as did Major George during the short time he was in power. The former was opposed to any further capital outlay on certain trading dependencies in Australia and New Zealand, on the grounds that the ventures were more or less speculative.
Memorandum. I take it that what the Committee will want to know from me is this :— 1. When did I assume charge of what is known as the " Globo Assets" ?—At the annual meeting of the bank for the year ending 31st March, 1888, held at Auckland on the 26th April of that year, the shareholders were acquainted with the position of the bank. A committee of investigation, consisting of John McLean, George Buckley, W. W. Johnston, Captain Colbeck, and Judge Gillies, was appointed. That committee then examined the special returns prepared at the instance of the general manager and the executive of the bank in Auckland by the various managers and agents throughout the service. The returns in question showed (a) the total indebtedness of every obligant, and (b) the security held and the estimated deficiency. The value of the landed securities was based on the local rating and property-tax assessments. Where these were not obtainable a special valuation was made by an outside expert of standing and character. In the case of advances, where the security consisted of shares and the like, or where there was no security held, managers and agents assessed the ultimate loss (if any) that would fall on the bank on final washing up. A certificate of correctness was placed on each return and duly signed by the managers and agents. The committee of investigation, on examination, accepted in the main the figures put before them as set out in these returns. The next thing the committee did was to separate the good business of the bank from the bad or doubtful business ; and, accordingly, the whole of the bad and doubtful advances were transferred from the bank's live business to a separate heading in the books of the bank. The advances so transferred were known as the " Globo Assets." A new department styled " The Consolidated Properties Department," was then created to administer the globo assets. Early in 1889, Mr. George Buckley being then president of the bank, I was brought up from the South Island to Auckland to organize a new department and inaugurate a new system of accounts, and arrange for administration generally. 2. What was the total of the advances transferred from the bank's general business to the new department ? —The total transferred was £4,250,269. 3. What was the assessed value of the relative security, or the amounts ultimately recoverable?— The amount ultimately recoverable was put at £3,450,269, and the deficiency at £800,000. 4. What was the amount set aside by the committee to meet the deficiency?—£3oo,ooo was written off capital and £500,000 off the Beserve Fund. (This is independent of £125,000 written off the Beserve Fund in 1887, and £35,000 written off profits in 1888.) 5. Had you full control of the globo assets? —I administered them ; but, being a subordinate, my actions were of course controlled by the president, directors, general manager, and inspector of the bank. 6. Were you in any way responsible for the loss sustained by the bank ?—No; on the advanced transactions initiated by me during a period of sixteen years at thirty odd branches and agencies the bank never lost a shilling. 7. The writing-off reduced the bank's paid-up capital to £700,000, and wiped out the Beserve Fund ?—Yes. 8. When and how was the new capital created to replace the capital written off?—ln October, 1888, the new board of directors sent a deputation to London, consisting of the Hon. Walter Johnston and Mr. A. G. Horton, to arrange for the issue of 50,000 shares : 25,000 shares in London at £10 each, £250,000 ; and 25,000 shares in the colony at £7 each, £175,000 : total, £425,000. This more than replaces the amount written off the capital by a sum of £125,000. 9. Did the deputation succeed in getting the new issue of shares taken up? —Yes. 10. When and what was the cause for the formation of the Bank of New Zealand Estates Company (Limited) ?—The heavy writing-off in 1888, and subsequent dissension amongst the directors in Auckland, especially at the meeting in 1889 (September) seriously affecting the bank's credit, depositors, especially in London, were steadily withdrawing their deposits, and something had to be done to stop the process of bleeding that had set in. At the meeting in September, 1889, there was a pretty general washing of dirty linen all round. It was decided to transfer the head office of the bank to London, and thereafter arranged to relieve the bank of the globo assets by sale or transfer to a new company. 11. Did the London board agree to assume the control of the bank?—No ; not until an investigation had been made by their nominee. Accordingly, Mr. Hean, lately inspector of the National Bank of New Zealand, was selected, and sent to the colony to report on the bank's live business, and specially on the globo assets. He arrived in January, 1890. 12. What was the result of Mr. Hean's investigations ?—On the bank's ordinary live business he wrote off a further sum of £88,000, and on the globo assets a further sum of £349,000. 13. How were these amounts provided for?—By writing down the bank's capital £300,000, and by appropriating undivided profits and reserves, £137,000. 14. How did the bank's capital then stand?— The original capital, £1,000,000; written off in 1888, £300,000; leaving £700,000. New capital, 25,000 shares of £10 each, taken up in London, £250,000; 25,000 shares of £7 each, taken up in the colonies, £175,000: bringing the capital up to
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£1,125,000. A further call on the new issue to colonial shareholders, made by the London board, of £3 on 25,000 shares (in 1890), £75,000 : total, £1,200,000. Written off for Mr. Hean's deficiencies, £300,000; leaving £900,000. 15. How did the Beserve Fund stand ?—The original reserve —that is, prior to 1887 —stood at £625,000; appropriation made from profits in September, 1887, £137,000; further appropriations from profits, £35,000 : total, £797,000. This was all absorbed. 16. The total writing-off, then, from 1887 to the date of Mr. Hean's investigations in 1890 was : capital, £600,000; reserves and undivided profits, £797,000 : making a total of £1,397,000 ?— Yes. 17. Did the London board agree to take control of the bank on receipt of Mr. Hean's report ? —Yes; they took it over on the basis of Mr. Hean's valuations. The first half-yearly meeting in London at the head office was held on the 22nd August, 1890. 18. What arrangements did the London board make regarding the globo assets ?— According to Mr. Hean's reports, the globo assets stood in the bank's books at £4,250,269 ; less amount written off in 1888, £800,000; gives a total of £3,450,269. A further amount written off according to Mr. Hean's reports, £349,000; less sundry adjustments, £6,724 ; or leaving a net value, according to Mr. Hean, of £3,107,993. The net revenue upon which Mr. Hean put at £117,075. 19. Arrangements were then made to form the Bank of New Zealand Estates Company (Limited) to take over the assets from the bank?— Yes ; the head office of the company was fixed in London, and the assets were transferred as from the 15th August, 1890. Major George was appointed managing director in the colonies with full powers. He appointed me colonial manager. Subsequently, Messrs. A. G. Horton, Arthur Bull, H. J. LeCren, John Murray, and W. T. Holmes were appointed to act as co-attorneys in the colonies. They had co-ordinate powers with Major George. The Bank of New Zealand Estates Company handed the bank in payment for the assets the following proceeds of £1,500,000 : Debentures redeemable in 1910 at 103, or before 1910 at 105, £1,312,500; paid-up shares in the Bank of New Zealand Estates Company (Limited), £1,850,000: total assets, £3,162,500 or £54,507 in excess of Mr. Hean's valuation. 20. Why did the London board tack £54,507 on Mr. Hean's valuation ?—I do not know. I frequently asked the question (vide the minute-book and official correspondence with London), but could never get a satisfactory reply. The £54,507 was always shown at this end under a special heading (vide the balance-sheets). 21. How did Mr. Hean arrive at his valuations ? —He valued the assets in the light of average results for the five years previous. The stations and live-stock and larger landed properties were valued for Mr. Hean by Messrs. Brydon, J. B. White, and Thomas Carter. The value of the remaining assets was fixed by Mr. Hean after he had conferred with the various managers and agents of the bank and personally inspected the properties himself. 22. Did Mr. Hean, in estimating the profit of £117,075, make full allowance for outgoings under all headings ?—No ; as the bank did not pay the property-tax is respect of assets transferred, he naturally assumed that the Bank of New Zealand Estates Company would not have to pay it (the land- and income-tax subsequently took the place of the property-tax). This made a difference in the income of, say, £11,000 per annum ; the exchange, remitting debenture interest, amounted to £3,000 ; cost of management in New Zealand, which was formerly charged against the bank, £5,000 per annum : total, £19,000. Begarding the." exchange," I frequently urged the directors to allow me to send sufficient wool and produce Home to meet the debenture interest; but, as that would be interfering with the bank's profits, my recommendations were not adopted. (Vide board's minutes of October, 1892, and March, 1893.) If the three amounts referred to above are deducted from Mr. Hean's estimate of £117,095, the net earnings according to his forecast must be put at £97,475. 23. What were the net actual earnings annually from the date the properties were transferred to the Bank of New Zealand Estates Company?— From the date of transfer on the 15th August, 1890, to the 31st March, 1891 —that is, seven months and a half —the profit amounted to £63,000. (It is impossible to quote definite net earnings for this period owing to the adjustments with the bank prior to the transfer of the assets to the Bank of New Zealand Estates Company (Limited). The revenue for the three years ending 31st March, 1894, was as follows : 1892, £129,387 4s. 4d. ; 1893, £81,249 ss. 4d.; 1894, £75,352 17s. lOd. During the latter period the cost of manuring, grassing, &c. (first time), repairs to buildings, fencing, &c, amounted to £75,555, the whple of which was charged against profits. Cost of management at head office in the colonies, land- and income-tax, bank exchange, remitting debenture interest, up-keep of house properties, law-costs (£4,000 exceptional) were chargeable against the revenue, and amounted to : 1892, £19,957 lis. Bd. ; 1893, £23,328 Bs. 3d. ; 1894, £24,889 16s. Id. After deducting these amounts, and allowing for bank exchange improperly charged—say £3,000 per annum—the net profit for the three years was £75,400 os. Bd. per annum. Between the date of Mr. Hean's examination in August, 1890, and the 31st March, 1894, there was a shortage in the revenue from trading concerns and stations of £36,182 as follows : The falling-off in the profits of the Globe Timber-mills, Vale Colliery, and Canterbury Mills, which in 1890, 1891, and 1892 returned over £13,000 per annum, but which in 1894 showed a positive loss of £3,000 —£16,000. Falling-off in the price of wool, frozen meat, live-stock, root- and grain-crops generally, between the date of Mr. Hean's valuation and March, 1894, £20,182. In other words, if we allow for the taxation, London exchange, and cost of management in the colonies, amounting to £19,000 per annum, which Mr. Hean did not deduct, the net actual earnings of good seasons and bad seasons for three years and seven months and a half are in line with his estimate. 24. What was the capital outlay under all heads during your management ? —The capital outlay from the 15th August, 1890, to the 25th June, 1894, was as follows: —■ (a.) On stations : Outlay on permanent improvements, £161,010 6s. 9d. ; outlay on live-stock, £126,638 lis. 6d.; outlay on lands, £27,977 14s. 4d.: total, £315,626 12s. 7d. The difference
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between the number of sheep carried by the properties at the date of the transfer of the assets to the Estates Company on the 15th August, 1890, and the number carried at the present time is 125,222, which should net at least 3s. per head annually (with decent prices for wool and mutton, 4s. fid. per head would be nearer the mark), or a total of £18,783, equal to 686 per cent, on the capital outlay (that is, after deducting £42,015, value of stock sold during same period, which brings the net outlay down to £273,611 ss. 9d). (b.) On trading concerns : Payments on bank's overdrafts taken over at the date of the transfer from the bank, £134,000; additions to stock-in-trade, £51,000: total, £185,000. It would serve no good purpose at this time to go into lengthy particulars of the outlay, because most of the assets purchased have since been sold or replaced. Any of the concerns which borrow from the bank or the company have always assets in sight to represent the amount borrowed, and I am safe in saying that such assets are good value, and return current rates on the purchase price. As to the other additions to capital under various headings amounting to £153,302, as detailed in the accompanying list. To ascertain the actual outlay we must deduct : Transfers from one dependency to another, £46,017 ; the purchase of assets at the bank's request, Auckland Agricultural Company, Guthrie and Co., and the Onehunga Ironworks, £55,000. Which, deducted from the above amount, leaves a net expenditure of £52,285. (See my letter dated 3rd September, 1894, addressed to Mr. John Murray, at Wellington.) 25. What were the sales during the same period^? —To the 31st March, 1894, the sales of assets, as per balance-sheets, totalled £734,496 4s. lid. 26. On what basis did you work the assets transferred to the Bank of New Zealand Estates Company (Limited) ?—My operations were controlled by the attorneys in the colony. The chairmen for the time being, Messrs. Murray and George, personally inspected the stations and directed the management. I controlled the trading concerns and general assets. 27. What supervision did you exercise generally?—At the commencement of each year the managers of stations and trading concerns sent in a forecast showing—(l) The requirements of the bank working account for the year; (2) the estimate of income and outgoings ; and (3) an estimate of the profits, on the year's operations. 28. What returns did you receive from the managers of stations and trading concerns ? —From stations: Monthly, copy of cash-book, time-sheets, and stock-returns. Yearly, at the close of each financial year on the 31st March —(1) detailed list of live-stock ; (2) detailed list of implements, and value of same ; (3) estimate of receipts and expenditure for the year, showing expenditure on permanent improvements separately, and estimated profits on the year's workings ; (4) list of stores and station products on hand, and value of same; (5) comparative statement showing area under crop, yields, &c, and net price realised; and (6) explanation of differences between estimated profit for the year and profit actually earned. From trading concerns : Monthly report from auditing officer as to turn-over, stocks, book-debts, and general operations. Yearly statements (1) of the estimated receipts and expenditure for the year; (2) requirements on bank working account; (3) forecast of year's profits ; (4) explanation of the differences between estimated profit for the year and profit actually earned; and (5) general report on the business. The town, suburban, and country lands, and all other assets outside station and trading concerns, were controlled by the managers and agents of the bank, who acted for us and under our instructions. 29. How did you check the working of stations ?—Each station had a practical man in charge, who prepared all forecasts and specially reported on all contemplated capital outlay. We also had three station superintendents. All outlay on stations, capital or otherwise, was first submitted to the superintendents and then placed before the attorneys for approval. 30. The year's operations then on each station were always authorised by the attorneys ?—Yes ; and the superintendents or inspectors were constantly moving about amongst the stations to see that the work was being carried out in accordance with the programme passed by the attorneys. At times the chairman for the time being and the General Manager of the bank authorised outlay, and varied the programme originally submitted. This did not often occur, but when it did my plans were much upset, and my forecasts were generally thrown out. 31. Did the chairmen or the attorneys interfere much in the control of trading concerns and the general assets ?—Not as a rule ; the whole management was left pretty well in my own hands, although I experienced difficulty with the bank executive, who frequently wanted me to pursue a certain line of policy opposed, in my opinion, to the company's interest, on the grounds that it would be beneficial to the bank. 32. I believe you complained about the bank executive engaging in the active management of the business of the Estates Company ? —Yes, I complained ; and mainly on that ground resigned the management in December, 1892. (See my letter to Messrs. Glyn and Murray in this connection.) 33. You stood out for having your responsibilities clearly defined ?—Yes ; it was unreasonable to expect me to assume responsibility for commitments about which I knew nothing, and which were made without reference to me. 34. You did not, however, finally retire from the service?— No. About this time Mr. Horton and the other attorneys resigned. Mr. Glyn then made certain rearrangements, under which Mr. Murray was practically left as the sole attorney of the company in the colonies. On the representations of Messrs. Murray and Glyn (vide correspondence of January, 1893), I agreed to remain in the service. 35. Did the new arrangement with Mr. Murray work satisfactorily ?—For the time it did. I was anxious to keep my records and the course of the company's operations all in proper sequence, and that could only be done by keeping the actual administration in my own hands, and making the various managers responsible to me only, I in turn being held responsible by the local attorneys and the London directors. Mr. Murray, however, preferred to direct operations on the stations in his own way.
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36. Was not the cost of management excessive ? —No ; comparing our salaries and wage-sheets throughout the colonies with those of similar concerns, the management was not too costly. At the same time I was in favour of reducing the salary paid to the manager in Sydney, and effecting a general all-round reduction in the wages paid on the stations; but, though the matter was brought up several times in 1893 and 1894, my recommendations were not adopted by the chairman. The consideration of the matter was deferred. (See the board minutes, also my letters to Mr. Murray, and Mr. Murray's reply of 14th July, 1894. Also Mr. McCaw's letter re Wright Stevenson's estimated cost of management.) 37. The bank was in serious difficulties in June, 1894 : is it a fact that it had to do one of two things, reconstruct or get Government aid ? —Yes, it had to do either one thing or the other, it could not go on. 38. Mr. Murray was appointed by the London directors to negotiate with the Government ?— Yes. 39. Did he confer with you on the position ?—Yes. 40. Any one else ? —Yes ; Mr. Michie and Mr. Butt, who were then acting as joint managers of the bank. 41. Are you satisfied that the bank would have had to shut its doors if they had not obtained Government aid ? —Yes, I am quite satisfied. 42. Did you prepare for Mr. Murray any returns setting out the position of the Bank of New Zealand Estates Company ?—Yes, I did. Mr. Murray was supplied with a full and accurate statement of the company's position. 43. Was Mr. Murray explicit in calling for a plain and accurate statement ?—Yes, most explicit. The returns sent to him were all copied in the press-copy hooks of the company, and are available for examination. (See also my letters to Mr. Murray of the 15th and 25th August and 3rd September, 1894.) 44. At what did you put the deficiency in the Bank of New Zealand Estates Company (Limited), say, in June, 1894 ?—Between the date of Mr. Hean's investigation in January, 1890, and June, 1894, I reckon that, valuing properties in the light of results, there was an ascertained drop in the value .of the Estates Company's assets of over £1,000,000. 45. Where does the shrinkage principally occur? —Principally in the Waikato, in the North Island: North Island stations, £295,460; South Island stations, £23,822; suburban and country lands, mainly reductions in Dunedin and Auckland, £230,069; New Zealand Thames Valley Land Company's shares, Morrin and Company's shares, Barrow Creek (Adelaide), and Holmhurst (Fiji), Onehunga Ironworks, and sundries, £250,000 ; cost of debenture interest and preliminary expenses, £201,498 ; then there were other deficiences for £250,000, on realisations in Auckland Agricultural Company, &c, which I put at £250,000, but I cannot speak definitely without scrutinising the London balance-sheets : total, £1,250,849. 46. How do you account for such a serious drop in value? —There was a drop in land-value of fully 30 per cent., which is explained in my annual report of the 31st March, 1894, as follows : — Comparing the returns of 1894 with those of 1891 and 1892, there is a falling-off in the profits of £05,000. The cause is not far to seek. In 1891 and 1892 our wheat-crops were worth £4 7s. 6d. per acre ;in 1893, £2 10s. per acre; and in 1894, £1 10s. lid. per acre. Never before in our recollection have wheat-growers been faced with so many reverses. This year the yield per acre, owing to unexplained causes, is the smallest on record; and, to crown all, prices ruling are lower probably than ever previously reached, and, at the time of writing, there is no immediate prospect of improvement. Between 1891 and 1894 there was a fall in the revenue from sheep and cattle handled by this compauy of exactly £20,182. When it is remembered that during the period under review we have spent on improvements up to date the sum of £315,000, which costs, say, £15,750 per annum in interest, on top of which the additions to live-stock involve us in extra outlay on shearing, management, and other expenses, the drop in the returns is all the more serious. Five years ago the value of the wool-crop from the colonies was put at £21,000,000. Between 1889 and 1894 the increase in the sheep carried is estimated at twenty-four millions, producing, say, four hundred and sixty thousand bales of wool; and yet th,-' market-value of the total wool-production in 1893 and 1894 is not on a level with that of 1889. Thus, while sheep farmers have had to depasture extra sheep, pay interest on cost of improvements, shearing, and other expenses, they have not received a penny more for their wool than they did four years ago, when the sheep carried numbered twenty-four millions less. A return to prices ruling in 1888 and 1889 for wool would mean, on the present output of the colonies, an advance on current prices of at least from £6,500,000 to £7,000,000. In addition to this, the town and suburban properties were, in my opinion, overvalued by Mr. Hean. As to trading concerns, and in further explanation of the reduced returns: "Prior to 1893 the Globe Timber-mills, Vale Colliery, and Canterbury Mills produced between them an average profit of £13,000 per annum. Since March, 1893, the operations of the same dependencies have resulted in a loss of £3,000 per annum." 47. In 1895 and 1896 there was a considerable improvement in value? —Yes. 48. In the light of past experiences, what do you put the profits at under Mr. Foster's management ?—For the three years ending March, 1894, the average annual net revenue was £75,400. The increased value of wool and other products in 1895 and 1896 should have increased these figures as follows : Advance in the value of wool-clip in 1895 and 1896, say, 2d. per pound, and increase in the value of live-stock generally, £20,182 ; reduction in interest paid to the Bank of New Zealand, £5,000. [The company does not lean so heavily on the bank, neither is it charged such a high rate of interest.] Saving in administration under new management, as per Mr. Foster's estimate, £14,000 ; London exchange on remitting debenture interest, £3,000; improved returns from trading concerns, mainly Morrin and Company, Auckland, Globe Timber-mills, Adelaide (owing to minmg-boom in Western Australia and Auckland), and the Northern Boiler Mills (where a lucky purchase of wheat resulted in a profit of several thousands), £16,000 ; at a low estimate the increase may be put at £58,182 ; average net profits for 1892, 1893, and 1894, £75,400 : total, £133,582. In other words, the net revenue available for payment of interest on debentures and dividend to the bank during the first clear year of Mr. Foster's management ending 31st March, 1896, should have reached, say, £133,582.
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276
49. You have stated that the Bank of New Zealand Estates Company (Limited) was run in the interests of the bank ? —Yes ;• the bank being the only shareholder, it was run in its interest. On many occasions the attorneys were influenced in their decisious, because the General Manager of the bank stated that, if the company acted entirely in its own interests, it would be harmful to the bank. 50. Were the London directors and the local attorneys pleased with your management ?—Yes ; thoroughly (vide minutes and auditors' reports). The Bank of New Zealand Estates Company's accounts were considered the most complicated set of accounts to be met with anywhere. I was the first to bring them into line to permit of effective administration on systematic lines. 51. What did the London auditors say about your system of accounts? —They stated that the accounts as prepared by me, and my system generally, was a better one than they had ever previously met with, although they had been auditing the accounts of companies in all parts of the world for a period of twenty-seven years (vide their letter of the Bth January, 1894, to the London board). 52. When did you leave the Bank of New Zealand Estates Company?—ln March, 1895. 53. When did the new attorneys assume charge, and remove the head office to Wellington?— The head office was removed to Wellington in December, 1894. The new attorneys — Messrs. Johnston, Watson, and Booth —met together in Wellington about the middle of January, 1895. 54. Did they intimate to you that they were dissatisfied with your work ?—No. 55. Did they supersede you on their own motion, or make the change at the instance of Mr. Murray ?—They had no personal knowledge of me or my management. According to evidence placed before the House last year, they did not get a proper grip of things until June, 1895, four months after I left the Bank of New Zealand Estates Company. Although I have been told that Mr. Murray was responsible for the change, I do not believe it, as he was instrumental in keeping me in the service when I wanted to leave it in 1893. 56. Was your management of the company ever called in question by Mr. Murray or the London board, or by Messrs. Watson, Booth, and Johnston?—No; the first I ever heard about mismanagement was in Hansard, in a speech made by the Hon. Mr. J. McKenzie (vide my letter to Mr. Johnston, as chairman of the Bank of New Zealand Estates Company's board, dated the sth October-, 1895). 57. When did you receive the first intimation of the change in the management?—l received the first intimation of the change on the evening of the 7th March, 1895 ? —Mr. Foster's appointment appeared in the morning newspaper of that day.
EXHIBIT No. 73. BANK OF NEW ZEALAND. [Handed in by Mr. Butt, 30th September, 1896.] Amounts Written Off, 1888-96, as below, as extracted from the Books of the Bank.
Total for New Zealand, £1,184,697. Beturn prepared by bank officers. J. M. Butt, Colonial Auditor.
EXHIBIT No. 74 not printed.
Year. T5 . ■a . _- a >> &Cr3 2 w I* la o „ o •815 K a O I a i« ®(2 Otago and Southland. Australia. Fiji. London. Not specified. Total. .888 .889 .890 £ £ 65,378 6,091 24,436 2,437 379,439 988 lean's adjustment of d< Dt available 177 2,139 4,012 800 7,359 368 610 385 15,358 50,692 luction of Estates Com ntingencies Fund Accc 1,329 915 498,098 64,815 £ £ 40,831 52,245 28,287 6,315 160,370 128,282 sficiencies dealt with b; £ 51,455 45,652 140,897 London, £ 885 2,438 10,579 detailed pa £ irticulars £ £ 216,885 109,565 Mr. H( 349,000 j- 1,169,555 no .891 .892 .893 .894 .895 .896 To red ToCoi 6,247 4,763 3,523 899 1,070 859 1,223 308 100,747 77,974 lpany's Share Account mnt, Cr. I 2,678 5,163 344,976 276,808 5,623 10,955 3,876 11,978 292,566 I " 9 '660 1,100 3J879 764,306 171,136. 18,949 20,198 13,532 15,164 I 1,477,758 '43,988 l" •• 'i 120 54,193 3,095,799 606,990 15,671 3,999 1,284,442
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EXHIBIT No. 75. [Handed in by Mr. Foster, 1st October, 1896.] Realisations from 18th July to 18th September, 1896.
By Authority : John Mackay, Government Printer, Wellington.—lB96.
Dependency. Area. Property. Sale Price. Payments on Account. Balance. Deficiency. Book-cost. Latest Valuation: Land-tax + 10 per Cent. A. R. P. £ s. d. 146 5 4 1,375 0 0 20 0 0 100 0 0 130 0 0 1,300 0 0 200 0 0 60 0 0 6,147 19 0 1,400 0 0 50 0 0 840 0 0 £ s. d. 146 5 4 137 10 0 10 0 0 100 0 0 65 0 0 100 0 0 10 0 0 60 0 0 250 0 0 1,400 0 0 12 10 0 70 0 0 £ s. d. £ s. d. £ s. d. 146 5 4 £ s. d. 146 5 4 Christchurch Wellington Tauranga 7 0 0 0 1 18 8 0 0 3 1 16 Proportion of realisations, Belfast sections Section 2, Block I., Thorndon Reclamation Allotment 191, Te Puna Lots 85 and 190, Section 1, Tauranga Section 2a, pt. Fencourt Estate Lot 18, Section 6, Newmarket „ 10, „ 68, Surrey Hills .. „ 17, 63, Pt. Carnarvon Estate Sections 59 and 60, Napier Section 23, Bishopscourt Sections 13, 14, and 20, pt. Glenside Estate 1,237 10 0 10 0 0 I 26' 0 0 20 0 0 Auckland 65 0 0 1,200 0 0 190 0 0 2,lo6' 0 0 800 "o 0 1,320 0 0 I •• I Wellington Gisborne Dunedin Auckland 1,069 0 34 1 0 7-5 0 0 31-4 5,89719 0 •• I 1,400" 0 0 1,430' 0 0 37 10 0 770 0 0 ■■ ■• •• Sales to 31st March, 1896, per statement .. 18th July, 1896 11,769 4 4 63,337 12 5 15,390 19 0 90,497 15 9 2,361 5 4 27,391 9 2 2,668 18 0 9,407 19 0 35,946 3 3 12,722 1 0 32,421 12 6 58,076 3 3 Uncompleted Sales as under : Sales outstanding to Land Purchase Board „ other purchasers 99,028 0 0 3,206 9 7 192,732 5 4 Sales as per return supplied at 18th September „ since advised for same period 192,586 0 0 146 5 4 192,732 5 4 Memo.— In cases where book-cost or latest valuation is not shown, the sales comprise only portions of properties which have been valued as a whole. Surpluses or deficiencies consequently cannot be shown.
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Bibliographic details
REPORT OF THE BANKING COMMITTEE. TOGETHER WITH THE MINUTES OF THE PROCEEDINGS AND EVIDENCE, AND APPENDIX., Appendix to the Journals of the House of Representatives, 1896 Session I, I-06
Word Count
742,448REPORT OF THE BANKING COMMITTEE. TOGETHER WITH THE MINUTES OF THE PROCEEDINGS AND EVIDENCE, AND APPENDIX. Appendix to the Journals of the House of Representatives, 1896 Session I, I-06
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