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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.