THE GREAT BANK BILL.

New Zealand Graphic, 27 June 1906, Page 33

THE GREAT BANK BILL.

But by far the most striking of all the measures promoted by the Liberals and passed by Mr. Seddon in 1594, was the Bank of New Zealand Share Guarantee Bill. Nothing but the sudden occurrence of a terrible emergency would have justified either the course that Government adopted, or the measures that Mr. Seddon took to pass the Bill; for it was rushed through all its stages in both Houses in a single night. But wa know now, as few but the Premier seemed to realise then, that nothing but some such apparently desperate step could have saved the situation. Remembering only the splendid success that has attended the Bank of New Zealand during the last ten years, many people may find it hard to gauge to-da- the magnitude of the crisis that Mr. Seddon had to face on that eventful evening. In the face of strenuous opposition, and at the risk of burdening the country with a monstrous load of liabilities, Mr. Seddon took the Bank into partnership with the State, and the results of the Bank’s subsequent operations have fully justified his statesmanship. What those results have been we may gather from an article which appeared recently in the Auckland “Star,” dealing with the splendid outcome of that eventful night of inspired and masterful statecraft: “The final restoration of the institution to a position of absolute solvency and wonderful financial opulence may be regarded as an appropriate time for referring to the bold and far-seeing policy of the late Prima Minister, which saved not only the institution from bankruptcy, but New Zealand from a period of depression that would have arrested its progress for a decade at least, and brought ruin on thousands of its people. When, on the 29th of June, 1894, after the banks had closed for the day, the first Bank of New Zealand Act, committing the Government to a liability of two million pounds sterling on behalf of the institution, was rushed through both Houses of Parliament at one night’s sitting, it was well known that the bank was on the verge of suspension. If that At had been rejected, the bank’s doors would not have been opened on the following day. It was a grave step for any Minister to take. Parliament threw upon the Government—it could not do otherwise—the entire responsibility of the measure, and Mr. Seddon accepted it unflinchingly. His action was the more public-spiritM because the bank and its faction hail been the open opponents of the party to which Mr. Seddon belonged; but the welfare of New Zealand was always his first consideration, and he was not the man to shrink because a step involved danger and risk to his reputation. Besides the guarantee of two millions of capital in 4 per cent, stock, a call of £500,000 was made upon the shareholders. The whole of th* proceeds of that call (estimated at £450,000), together with the original £900,009 capital, was written off in 1895, when the depths of insolvency to which the bank had descended had been fully plumbed, and the Government then rendered itself liable for another £500,000 in shares, while a similar amount was called up from the unfortunate shareholders. The latter then stood in the position of having forfeited £l3 6/S per share, while only the last called up £3 6/8 remained good, carrying a liability for an equal amount, which has never been required. The bank’s credit even then stood at such a low ebb that these shares, which now fetch £8 17/, on the market, were freely offered at 10/ a share. But the £2,500.000 guaranteed by the Government was not the end of the liability undertaken by the State on account of this bank. Unde - the Act of 1895, the Assets Realisation Board was created, which took over from the bank properties standing on their ledgers at £2,731.700. Debentures bearing 3i per cent, interest were issued for this purchase, and the consolidated revenue of the colony became liable for any deficiency arising from the realisation. The bank w-as required to pay £50,000 a year out of its profits towards this object. As a matter of fact, it has paid a great deal more year by year, until bedrock is reached at last. Not. only does the colony come out of the tram.etion without losing one penny; by the ‘Bank of New Zealand Act, 1903,’ it gains £500,000 worth of shares, carrying a preferential dividend of five percent., and with' a right to share in profits with other shareholders up to ten per eent. These shares are now worth considerably over a million pounds sterling.” The s -.hsequent l-'jfis-lation in connection with the bank has followed as a natural and inevitable corollary from the original Act; and so far as our share, direct or indi.ect, in the prosperity of that now flourishing institution is concerned, it was made possible solely by the dauntless confidence, and the keenly prophetic vision of our great Premier. It is easy now, when success is assured, to laud the merits of the Bank Act. Here again we may cite, on Mr. Seddon’s behalf, the judgment of one of his most inveterate opponents, to the effect that he “saved the country from one of the most terrible financial disasters with which it was ever threatened. It was an enormous responsibility which the colony undertook at Mr. Seddon’s instance,” says the “ Evening Post,” “in guaranteeing the greatest of our banking institutions, then tottering to its fall, but the result has amply justified the wisdom, the decision, and the courage which prompted the step.” It is easy to be wise after the event; and while we congratulate ourselves and the Liberal Partj on the success of this great measure, wa way spare a moment's thought for the statesman who, ten years ago, facing a responsibility that might well have appalled the boldest, pierced the future with prophetic eye, aud in spite of evil omens and timorous protests and awe stricken warnings held stedfastly upon bis chosen way.