1.-6

LII

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