21

I.—2b

409. Hon. E. W. Stafford.] It is just the other way as to recent arrangements which are for an indefinite period and subject to notice?—lt is some time since I read the papers referring to it, but my impression is that the agreement is for a definite period, and that Mr. Shepherd Smith sought to make the extension of the agreement the condition upon which he allowed a higher rate of interest on a special deposit. 410. In Victoria the account is kept with the Associated Banks, is it also for a definite period and not subject to notice ?—I believe so, but I cannot speak positively with regard to Victoria.

Mr. J. Palmer.

7th Sept., 1875

Wedn^day, Bth Septembeb, 1875. Mr. E. W. Moeeah, Inspector Bank of Australasia, examined. 411. The Chairman.]. —Do you represent the Bank of Australasia? —Yes. 412. The Committee desired your attendance to get from you such information as you can give respecting the banking system which exists between the Government and the Bank of New Zealand? Are you aware of the terms upon upon which the Government account is kept by the Bank of New Zealand ? —Only so far as I can judge from a perusal of the published Loan correspondence. 413. You observe the terms set out there ?—Yes, but I do not think they can be the complete terms. 414. What is your opinion as to the general fairness of the arrangement a made between the Colony and the Government ?—As far as the agreement goes, I think it is fair, but I think the agreement is imperfect. 415. In what respect mainly ?—ln the first place I notice that there is no engagement on the part of the Bank to allow the Government any stated assistance, and further I observe that there is no maximum amount of deposit agreed upon. Again, there is no exclusion of loan money, as there is in almost all other banking arrangements; that there is no arrangement made for " set-offs" by way of interest. There are also one or two other minor matters, which Ido not remember at this moment. 416. The general rates for doing business, as far as interest and exchange go, you think are fair ? —Yes. There is no rate given for transferring money from London to the colony, but I have seen from certain papers what that rate is, and it appears to me reasonable, although possibly it might be done cheaper. 417. Is it you opinion that the Colony would, or would not, be likely to obtain more favourable terms from other Banks? —That is a difficult question to answer, because I really do not know what terms the colony does obtain. As far as the agreement goes, I think the terms are reasonably fair. 418. In case a Bank took the account and pledged itself to make a certain amount of advance that might be required by the colony, is it probable that terms, even as favourable, might permanently continue ? —I think so, were the advance for any reasonable amount. 419. Such as ? —Such as £50,000, the amount named here, or more. 420. The Hon. E. W. Stafford]. —You used the term "set offs." Would you explain what you mean ? —Setting off interest on a creditor balance against interest on a debtor balance. So far as I can understand from reading up the papers in connection with the Government account, there is only one public account kept, or rather, there are two public accounts kept, one locally and the other in London. The public account here, judging from the averages of the Bank of New Zealand, is always largely in funds, but there is no knowing what the state of the public account in London is. I assume, from what I have read in the Treasurer's Financial Statement, and other things, that the account in London must at times be overdrawn. If so, there is no provision made for any " set off," and through its absence interest might be charged on an overdraft in London, and an equivalent rate not allowed as a " set off" on the credit balance here. 421. I hardly understand the answer. The expression "set offs " refers to the possible difference in the balance of the public account in the colony, and the public account in London ?—Precisely, assuming as I do (I have only been in the colony a few months, and am therefore unfamiliar with the way of keeping public accounts here), that the whole of the Government moneys go into the public account here, and that it is the sole account. 422. But would there be any difference if the money were kept in one account in the colony ?—I say that the Government account should be treated as a whole. 423. Is it the case in the Australian Colonies that the London and Australian accounts are treated as one ?—Yes. I believe so ; the Government of New South Wales excludes money raised on loans, and therefore their balances are probably never very large in London. 424. Have you seen the papers showing the result of a Select Committee lately appointed in New South Wales to consider the banking arrangements of that colony —papers which purport to disclose the arrangement under which the Government account is kept by the Bank of New South Wales ?—I have not seen the papers, but I have read the discussion that took place in the House on the subject. 425. Are you aware what interest is allowed on the credit balances of the New South Wales Government? —Three per cent, up to £150,000. 426. And are you aware that when it exceeded that amount the Bank had the use of a certain amount of money without interest ?—The arrangement was that the Bank allowed three percent, up to £150,000; when the balance amounted to between £150,000 and £200,000 there was no interest paid on the excess over £150,000, but when it reached £200,000 the Government had the right of making special terms with the Bank, or of lodging the money elsewhere to the best advantage. 427. That statement is not in accordance with the published terms in the papers I have referred to It is stated that interest is paid at the rate of 2| per cent, on sums over £200,000? —Subsequently such an arrangement was made up to a limited amount. 428. Hon. Major Atkinson]. —Are you acquainted with the arrangements existing between the Government of Victoria and the Associated Banks ? —Unfortunately it is so many years since I had to do with it that I cannot speak positively. 4—l. 2b.

Mr. E. W.Morrah. Bth Sept., 1875.