1.—6

XIII

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 ?