BANK OF NEW ZEALAND BILL.

Press, Volume XLIX, Issue 14829, 21 November 1913, Page 5

BANK OF NEW ZEALAND BILL.

SECOND READING DEBATE IN LEGISLATIVE COUNCIL. (tress association tblegbam.) WELLINGTON, November 20. In the Legislative Council this afternoon, the Hon. F. H. l>. Bell moved tho second reading of the- Bank of New Zealand Bill. He explained that the objects of the Bill were:—(l) To move and make provision for the renewal of the State guarantee of £1,000,000, which falls due in July next year, and (2) to enable the Bank, as it finds necessary but with the consent of the Minister of Finance, to increase its capital to a sum not exceeding £3,000,000. Uβ explained tho details of those proposals on the lines of the speech delivered by tho 'Minister of Finance in the Lower House.

The Hon, J, Rigg said the Minister had failed to give any reasons which justifiod the policy of the Government in regard to the Bank. What was necessary at the present time was a measure of much wider scope, and proposals to take over the Bank as a State institution should have been submitted. The present Bill only made the future acquisition of the Bank by the State moro difficult, because it entrenched the Bank "more securely in its position, and that was seen jn the fact tho shareholders now felt they no longer required the aid of the State, and were prepared to act accordingly. If ever there was a "barefaced steal," it was contained in the proposals of tho shareholders, and it was to the credit of tho Government that they had not given effect to these proposals. The proposals in the Bill were really those of Mr Harold Beauchamp, Chairman of tho Bank, and were much fairer to the State than those put forward by the representatives of tho shareholders. Tho liill was not satisfactory to him, because it wns not proposed to pay off the £'1.0:X),000 guarantee. It was not proposed to call up the uncalled capital on the present shares.

Air Bell: That -has not been done because it might ruin the poorer shareholders.

Continuing. Mt Rigg said that it was not the business of the State. If shareholders could not pay up, they should forfeit. He also noticed it was not proposed to remove the. restrictions on the A preference shares in rtwpect of dividends. As to tho proposal to increase the capital, , it was not an increase of £3,000,000, Bufc of £4,500,000. The increose was not required, but was intended for investment in London, which was a very profitable business, but it meant that millions that ought to have been circulated in New Zealand was being; used in London. The policy of the hour should be the buying out of the shareholders and making the Bank a State institution. Tho State could do without the shareholders, but the shareholders could not do without' the State, for the reason that the, moment the guarantee was withdrawn the public would lose confidenco in the Bank, and it could not carry on. The shareholders should be given the option of selling out or facing opposition. The Hon. J. Duthfe strongly deprecated the interference of the State in the management of the Bank. It was a mistake to suppose that the State's influence had contributed in any way to_ the Bank's phenomenal recovery. What had contributed to that end was the general prosperity of the country, and tho profitable business resulting from tho £30,000,000 which the country had borrowed during the last ninoteon years. With this, business the could not go wrong, bnt so far as its, management was concerned, it would havo enormously helped the credit of tho country m London if it was known that the Bank was-severed from all connexion with the State. Ho was sorry this Bill did not tako the "bold step and propose that severance. A etrong bank should be built up on the shareholder*' own capital. The. Hon. J. Anstey argued that the bulk of tho money oil which tho Bank traded was provided by the public, and complained that there was nothing in the- Bill to protect tho interests of the public. Sixteen millions were takea from tho public in deposits on which no interest was paid, but eeven millions of that money was sent away to London and .invested there, to the benefit, no doubt, of the Bank, but to the detriment of tho Dominion. The first duty of the Government was to consider the interests of the public, and not the interests of the shareholders exclusively. The Minister, in reply, said the speech delivered by Mr Rigg was altogether up in the clouds, and had no bearing on the Bill before the Council. Ho advised patience and waiting for the result of the Commonwealth ex-perience-before we talked seriously of setting up a State bank. Hβ did" not agree with Mr Anstey that Parliament should bring pressure to bear on the Bank, juet because at ono timo the State came to its assistance. _ Parliament did not come to the assistauce of the Bank in 1894 so much as it came to the assistance of the country as a whole, and looking at it in that light the Government had not sought to take advantage of the Bank because of the peculiar position in which thoy found themselves towards each other. The Government had in any war coerced its representatives on the directorate, but -t had not hesitated to veto tho original proposals of the shareholders, and the Bill now represented the views of all parties so far as they were prepared to go. The Bill waj then read a second time.