The Dominion. THURSDAY, JUNE 20, 1913. THE BANK AND THE STATE.

Dominion, Volume 6, Issue 1786, 26 June 1913, Page 4

The Dominion. THURSDAY, JUNE 20, 1913. THE BANK AND THE STATE.

The shareholders of the Bank of New Zealand will hold their annual meeting this morning, and, unlike previous.meetings in recent times, some momentous questions will come up for consideration. We understand that Me. C. P. Skeeeett has given notice of a .series of. resolutions, having for their object the elimination of the control of the bank by the State. The exact terms of the resolutions have not been made public, and an application to Me. Skeeeett for leave to publish them met with no success, it being intimated to our representative.that the matter was private. "VVe gather, however, from various sources that the purpose behind Mr. Skerrett's resolutions is the repayment by tho bank at due date of the £1,000,000 worth of State-guaranteed debentures, the reduction of the number of Government nominees on the Board of Directors from four to two, and the issue of fresh shares to shareholders at par. The terms are more or less in accord with the resolutions agreed to at a meeting of shareholders on the London Register, in April last. We quite fail to see how this matter can bo regarded in any way as private—to us it appears to be of. vital public interest and concern.' The shareholders of the bank must not overlook the fact that the State has a direct interest in the bank by reason of its holding of preference shares that the State guaranteed, the bank- when in desperate straits for some millions, and is still responsible for one million sterling; but above all the shareholders must not forget that the State virtually has had control of the; institution for something like nineteen years, and has raised it from penury to opulence, from threatened bankruptcy to a position of solid prosperity. The weight and influence of the State has been at the . back of the bank, and were it not for" that it is doubtful whether the institution would be in quite so good a position as it-is to-day. Messrs. Ken-very and Watson', the representatives of the shareholders on the Board of Directors, are the prime movers in the scheme of severance, and no doubt believe they arc serving tho best interests of those they represent. But the shareholders must be careful not tu be curried

away by the special pleading of their representatives on th:; Board, m' they may, by grasping at 100 much," overreach themselves. Th." nmlenliun that those who suffered through the bank's embarrassments twenty years ago should lie recompensed now by setting for £:i Us. Bd. shares which will rank equally with those quoted at over £11 in tlic open

market to-day is asking too much, even when it is taken into account that the issue of the new shares must, for a time at least, lead to some drop in the market- value- of the bank's shares generally. The issue of new shares to the shareholders at par would be wrong, and opposed to the general practice in company affairs. Several joint stock concerns have issued new shares.recently, and we have but to name the National Bank, Bank of Australasia, Union Bank of Australia, and Wellington Gas Company, and in every instance a premium was placed on the new shares. Moreover, we understand that only about onethird of the shareholders who were on the register on June 30, 1894, and who suffered by the writing down of the share capital then rendered necessary by the hank's difficulties, are still holding their shares, the remaining shares having been acquired by speculators and investors who were shrewd enough to sec that State control would rehabilitate the bank. Many_ of these shareholders have, seen their shares appreciate enormously in value, they have drawn substantial dividends, and now they are seeking a further advantage of an unusual, and what we arc confident most people will regard as of an unreasonable, nature. Neither the Government nor, Parliament arc likely to entertain for a single moment such proposals as have been suggested. It is impossible to believe that the shareholders really expect Parliament to approve anything like the proposals that their representatives on tho Board are said to have in view, and we assume that they have been formulated on the extravagant lines indicated to allow for the inevitable whittling down which must take place when they come up for serious consideration. Before agreeing to any scheme for readjusting the control of the affairs of the bank, it will be the : plain' duty of the Government to take reasonable precautions to ensure that the future management of the institution will be •_ conducted on lines which will minimise as far as possible the risk of a repetition of the experiences of 1894. •: To-day's meeting may be cxpected to throw further iight on the proposals of the shareholders, and the result .will certainly be' awaited with; a good deal of interest.