THE BANK OF NEW ZEALAND.

Dominion, Volume 6, Issue 1787, 27 June 1913, Page 4

THE BANK OF NEW ZEALAND.

The proceedings at the annual meeting of shareholders of the Bank of Now Zealand yesterday were interesting, not to say acrimonious, &t times. A series of resolutions had been submitted by Mr. C/P. ■'Skerrett, wliioh concerned tho capital of tho bank, and were therefore of vital interest. Tho chairman of directors, Mr. Harold Beauchamp, ruled that this ather business could not como before the meeting, stating that the board in coming to this decision had acted upon the opinion of the bank's solicitors. Tho ruling was received with something approaching consternation by the shareholders, and it, was plainly, unwelcome. Finally, as the'subsequent report shojs, the meeting broko up without considering the new business, but it, was. decided to adjourn until 3>.m. to-day to consider the chairman's, right to make such ft ruling. All the directors wero present at the meeting, namely, Messrs. H. Beauchamp (chairman), M. Kennedy, W. Milne, D. J. Nathan- J. H. Upton; and W. iWatson. The general manager (Mr. W. Callonder) end tho-chief auditor (Mr. B. M. Litchfield) were also present, and about thirty shareholders wero' in attendance. •

The chairman of directors moved the adoption of the report and balance-sheet. In doing so he analysed tho report and "balance-sheet with 1 a view to showing that the bank had. had a satisfactory year. . The Unpopular Ruling. "The paid-up capital remains the same as previously, namely £2,000,000," said Mr. Beauchamp. "As indicated at tlio last half-yearly general meeting, tho question of. an increase, in the bank's capital has been .engaging our attention. A recommendation on the subject has been inade to the. Government, and in duo course no doubt a measure will bo brought forward in tho session of Parliament now about,to open, embodying, we trust, proposals ' that will bo fair and, equitable to all'the interests concerned. Until tho views of the Government are made public, it would he premature for us to enter into any discussion on the subject. A committee, acting in tho interests of the' Ordinary isharoholders generally, has called,„':for July 1 proximo, a meeting. ■in terms of Clause' 79 of the Decxl of Settlement for?, the. purpose ■■ of considering the question; fjtoij*; [thehjjP.wn .particular standpoint and arriving at resolutions on the subject,.which,will no. doubt bo.comlnunioated to" the Government in duo • course. At that meeting you will, have full opportunity for voicing your views on the subject.- It iis proposed, therefore, to limit tho business of this meeting to tho matters usually dealt with at an ordinary general meeting,, leaving the capital "question, 1 fojr discusion at . .the special', general meeting called for 4th proximo.' 11 ; vMoney Scarce^thei■ Causes. • "It will iio dftubt be expected of me that 'I-'ehould make some Temarks with regard to the present financial and commercial' conditions," continued . Mr. BeaueTiainp. "Unquestionably stringent monetary conditions continue to prevail, and are more accentuated than on the oocasioii when- five • last - met ■ you. .The causes of tho existing tightness are, in the . maiß,;'not local, but general, and, it is because 1 of tie , of ins circuraBtanceS'that have produced them, and tbe extent".'of the.area- over, which, the causes >. are operatingi'that .I.am. pot too sanguine of an .Nearly.'return' to 'easier conditions. An exceptidnal ieature influencing the European money'markets during the last few mtmths has been.the war in the Balkans,'; conjoined with the political uncertainties'' whiohf- that war - has involved. As a; consequence, l , each of, tho great European Powers.-has been making strenuous endeavours to,;strengthen its' own finanoial position, and to obtain tnt control of gold. supplies so as to prepare as effectively iiS possible for the contingency of itself becoming, involved ii hostilities. At London, Paris, Berlin, ant Vienna, ,higli bank rates have consequent, ly been ruling for many months past with. that objeot in view. ,

r- : War Waste, of the events of recent years serves to show that there must have been an enormous waste .of the .wealth- and substance of tho world in tho wars that have taken place since the commencement of the twentieth century. An abnormal and increasing : expenditure armaments h&9, fit the sain© < time, "won ?oing on among all the leading nations the world, and so tremendous has this sxpenditiire been 'that it is, becoming a menace, to the finances of some who are bent upon persisting in the race lor naval and military .supremacy... Other nations are also coming into the held. Turning to the East, we see Japan taking her place as a world power and calling for th'o-.financial backing necessary to enable lier to maintain her fleet and army in a. stato compatibles with her. pretensions. "-Further, China is bestirring herself, slinking oft the lethargy of centuries, and displaying a disposition to follow the lead of- lier island neighbour. Her call for tho. means to acquire modern arms and armaments, anil for capital to exploit her vast undeveloped resources, hi already being heard in the money markets 01 the world. Industrial Activity. "These are ■ considerations of national and political significance to which 'the financial barometer is keenly sensitive. They constitute'in themselves a situation sufficiently disturbing to' account for a largo part of tho monetary Btress which the civilised world lias been and is experiencing; but there aro other features to which I desire briefly to refer thai aro also exercising a most potent influence, on the financial position and outlook. Concurrently with, and to som< extent as a consequence of, the deploriblo destruction of life and property thai las been entailed by actual hostilities, md tho absorption of capital in the bulking of battleships and growth of armies t keen industrial activity has been experienced in almost every quarter of th< civilised world, involving a very stronj demand'for capital supplies :to hnancc manufactures and production. Developing New Lands. "The steadily improving social conditions of tho world, and tho higher standard of living which is now being general ly adopted, may also bo set down ai among tho originating causes of thf scarcity of money.,.. Then there is tlu assimilation of Western ideas that i ironic on among the Eastern nations o1 tho world, and the resulting tendency fe frame tho requirements ot life-andivi-dual and social—on the basis of Westerr, models. But perhaps more important and weighty than all these is the heavj iiTPimial demand arising in connectior {vith tho colonisation and development of tho i unoccupied lands of the world, work which, year after year, goes on ir continually increasing vo:lume. Apari from the natural increase of populatioi occurring yearly in the new world, ant tho necessity for o p en^'- u P n f t l ' a ° f ne Employment whereby tlio-units .of thesi growing nationalities may earn fiood, a- steady stream- of erngruboi from the old world is continuaUj flo* ing to tho now lands across .the Atlantic S It may, however, assist in cmpha sising 1 the point to mention that, durinj - the year' 1912, the immigration int. Canada reached the largo. aggregate o nnarly 395,000 persons, Bhowing an lncreasi of over 13 per cent, on thi total for 1911, which was itself a reccn Vf-ar The call for capital to assist n coftiin.f (his large \ population in it; i'ltw home, and to furnish., it with ...th means of earning its. subsistence, is .in it self enormous. During tte jcar 191& Jiea*

/ WHO SHALL CONTROL IT? SHAREHOLDERS V. GOVERNMENT. SUDDEN END TO MEETING. i CHAIRMAN'S ANNUAL REVIEW.

ly £17,000,000 of the new capital issues on the London money market were on .Canadian account, and over on account 1 of tho Argentine. I(t will be readily seen how fertile a channel this is for tho drawing off of surplus supplies ot British and Continental capital. Trade Boom. "In sympathy with tho increased activity oi industry, the volume of British trcfde sliows a large expansion, the totals for 1912 having reached the enormous aggregate of -£1,31-1,169,000, the highest ever recorded, being an inorease of .£107,133,000 over tho figures of tho previous year, 1911 —which was itself a record year. Since June, 1909, continuous quarterly .trade increases have taken place. The 'boom' in that great industry, shipbuilding, which commenced some time ago, is fully maintained; and nothing .points to an early decrease in activity: ... It is natural .to' expect that, in- the circumstances, the appeal to the London market for the capital to finance such a huge volume of business would be extensive. As a matter of fact, tho capital issues on the London market in 1912 reached the large total of .£210,850,000—an increase of 090,000 over the figures of 1911. The amount is, of course, far short of the figures for 1910, when was raised on the London market—an altogether abnormal sum; so much so that tho business was clearly overdone, and the future heavily discounted. Tho 'slump' which subsequently occurred (and from the effects of which wo are even now still suffering) is undoubtedly attributable to the - excessive amount of this class of business at that

time undertaken. ; , "The combination of adverse influences above-msntioned, operating fit on© and the same time, have constituted a drain upon the' financial resources of ,tho world that has been .stupendous, and the marvel _is not tliait there has been financial stringency, but that the stringency has not been much more pronounced. Hoarding of Gold. "The world's gold production shows steady expansion in recent years. In 1912 tho output was tha highest on recofd—about XD7,000,000; and it lias treb ed ■within the last twenty years. Neverthor less, tho growth is in no 6enso commensurate with the increased credit requirements, and there is reason to fear that, at the present time, the available gold reserves,' forming the basis upon which tho huge superstructure of credit rests, nro quits inadequate. The efficiency of the existing supply of the precious metal is, to a considerable extent, impaired by the tendency on tho part of some nationalities to noard—a disposition to prefer the possession'of tho gold to the command or the credit which the gold can secure. At the present time, the most persistent Call upon tho gold reserves of the world is from India—a country which, with comparatively light external indebtedness, exports Yearly a large surplus (last year 58 per cent, more than sho imported), and is, therefore, in the position of always being able to command gold in settlement oi her trade balances. . . . . Ilnfortonalwly, the disposition to hoard is a'failing not confined to countries such 09 India. JMiropcan nations resort to it occasionally, es- . pecialiy in the. face of a national crisis, such , ad the imminence of .-,wax. in tnt recent critical state of international relationships, the practice was freely resorted to in Europe. The President of the Imperial Bank of Germany, giving evidence before tho Budget Committed of th« Reichstag- a few months agtf, remarked ■ -upon it, and stated that during the lasl quarter of tho year the ,8^ the Imperial Bank wh2rea9 the normal amount for the corresponding period in provioiis years was about, ,£2,750,000 only. The German Sayings Banks also lost some millions at th( game time, whereas, m ordinary oircum ' stances, the Savings Banks deposits woult hav® shown a largo increase,, ihero ireason to think, too, that a similar pro 1 coss was concurrently going on in France 1 but cxact figures are not available.

Early .Improvement Possible. "I have go-no into .this subject thus •ullv in order that, you _may liara a dear idea of the mam influences that have contributed.to bring aV,out tho pr<> rent financial tension. I am not with-out-liopo that tho re-establishment of peace on a firm and enduring basis may, Sn the course of a few months, effect an improvement in the present situation and outlook. Tho restoration of confidence may bring about, the releaso of tho boarded European millions, whicli will How again into the old channels and lelievo the strain; but I am not of a speedy change, as the settlm 0 up of the liabilities incident to the war will involve a heavy demand on credit supplies. It is satisfactory to note, however, that tho Bank of England, which had been under'the necessity of maintaining a 5 per cent, rate unitormly since October 17 last, was able to sco its wav, on-April 17 last, to reduce its rate to pei cent. Slump in Securities. "It is, as many,of you no doubt know, a financial axiom that the price; of investment stocks rises as trade prosperity declines. Tho converse of this is, .oi course, equally axiomatic, and in a period of intenso industrial activity, such a. that through which we have been, and are at present, passing, heavy , depreciation in. investment stocks was inevitable. The 'slump' in prices that has taken place has not been peculiar to British securities. Those of other countries have depreciated in an equal, and in some cases even a slightly greater, degree. . . . It ierroneous to treat the depreciation as a loss. It is not a loss except to those whoso circumstances necessitate realisation at this unfavourable juncture, ine yield upon the investment, while held, remains the same, and, peace being assured, and trado conditions becoming less active, the hiarket prico will almost cer. tainly again advance. . "As far as this tank is concerned, ful appropriation for tho deficiency disclosed by the market quotation of all our London investments lias been made. He dc not, however, look upon tho appropriatioii as lost money, but merely as. funds helc; in reserve. Our investments in securities of tho character referred to aro mostlj of a permanent nature, and we believt that, when financial and political con : ditions change for tho better, thero W il, be a recovery in prices. Leading financial authorities at Homo enteftain decidedly sanguine opinions in regard U tho prospects of a substantial future re covcry. * ' j "Tho year has naturally been a raos unfavourable one for the flotation ol public bodies' loans. Many local authorities have been holding off the niarkel in the hope that fin improvement in the conditions would enable them, befon long, to place their, issues at the low rates previously obtainable. They ha\e ; however, so far been disappointed, on< while we have, since the beginning of th< vear, successfully placed a few loans oi behalf of leading public bodies, the rat( of interest thev have had to pay has beer higher than, in ordinary circumstances would have sufficed to attract all ths funds they required. The loans handlei by us have been as follow: Auckland Harbour Board ,£250,001 at 5 per cent. Issue price, par Auckland City Council £100,00( nt'H per cent. Issue price, pur Auckland and Suburban Drainage Board ■S loo ' oo ' at -1J per ccnt. Issue price, .« Auckland City Council XIoO.OW at \\ per cent, Issue price, ptir Tho rates and terms of Issue compart favourably with those ncccpted bj municipalities in other parts of tm world who have pimultaneously appealed jiwlop." Maxkat /unua «

lengthened lean. There is 110 prospect of an early improvement in the attitude of the London markofcitowards loans of public bodies. There is reason to fear that lenders,- iu sympathy with tho'nersistent demand and the "prices which leading borrowers .aro prepared to pay tor accommodation, h<ive i adjusted their, rates at a permanently higher level. ' "Early in the year the"' Now Zealand Government concluded arrangements -iu London for the issue of> it- J.'3,000,000 -1 per cent loan.of 30 to 50 years' currency. The issue was made in February last, mid although, iu. consequence of its having struck an unfavourable market, the.underwriters were loaded with a consider-, ablo percentage of their commitment, we understand that in loss thnn two months the whole amount had been'absorbed by bonn-fido investors.' This speaks well for tho good reputation which tlie Dominion a securities enjoy in - the London market. The State' Government of the Australian Commonwealth, in. their own loan issues, have fared no better than ourselves. • -_lt is safe to predict that, while existing conditions continue, Australasia's _ applications 'for loans in London will need to be upon a more favourable basis to the purchaser than was tho case a few years ago. This should servo to 'point a moral and adorn n tale.' It indicates pretty clearly the wisdom of the Governments of these lands initiating a moro self-re-liant policy in matters of finance, undertaking only such development work as is distinctly remunerative, and appealing to the London market for the present as little as possible.

High Prices for Products. "The activity in British trade end commerce, to whioli :I have referred, is reflected in the prices of our produce. Practically nil New Zealand products are selling at hi»h prices, ana it is to be feared that importers havo based their ideas of requirements on these high export values. It must: not be overlooked that'the cost of production, the cost of transport, «nd tho cost of marketing have all increased, and while higher pi ices are being obtained for our produce, tho net return does not show any material addition to the purchasing power of the community. The values of tho exports from and imports into New Zealand for tho past eight years to .March 31,. 1913, are instructive. The figures (which are exclusive of 6pecio in every case) are as under:— Tear ended Exports. Imports. ' '

"Tho imports for 1813 show an increaso of i£G,535,b07 over those for 1910. That is the expansion in three years. Comparing- tho export for tho same period, there is an increase of only .£1,175,878., Bearing the Strain Well. "It must be admitted that tho Dominion is bearing tho strain of dear money better- than many people .anticipated. The State finances exhibit'a healthy condition. The Minister for Finance is able to show a surplus of about .£700,000, which is practically the 'amount of the increase shown by the ordinary revenue. Domestic trade 19 not so active as it was a year ago, but' still it cannot bo described as dull. With prudence, care and economy on tho part of the people, we shall wea.ther tho present financial stress without 6erious consequcnces. * "Settlement and development are proceeding on satisfactory lines. Quito a large number of estates have been ucquired for close settlement. According to ollicial figures, the estates purchased during the financial year ended March 31, 1913, comprised 50,819 acres, distributed as follows:— ' Hawke's Bay .......... 26,447 acres Canterbury 22,572 acres • Otago 1)800 acres 50,819 , , Since the close of tho financial year—that is. in April and furtlaer V --119;87-1T acres freehold and 90,788 acres* leasehold have been acquired. 'The division of large estates for close settlement must bring about —indeed,'has already brought about

—some changes in the pastoral industry. The tendency is now towards' the production of butter and cheese, and the development of the r dairy -industry.. ••is.-: .a _ .'striking'' feature of New Zealand farming. 'So long as present high prices rule, the industry will be popular, and we may be sure that most of the estates that are acquired for.close settlement will eventually be helping to expand the output of the dairy industry. The result must inevitably be to retard the ; growth, of.shpepfarming. Consequently,; it wouldfoppear that, notwithstanding' the brealdng-iii of new lands.,in the future, it is unlikely that our maximum gheep-carrying capacity will exceed 25,000,000 head.:;', This, roughl}v would enable, '.us to produce' .annually ' about 500,000 \bales oi wool,and provide" about 6,000,000. carcasses of mutton and lamb for export.

The Fruit Industry. "Closer settlement is also helping to develop the fruit industry. Although this . industry is still very much in its infancy, giant strides have ken made during the past tour or tivo years, thanks to the zeal of the Government Departmental experts. The industry is being developed on scientific lines, and I am optimistic enough to believe that New Zealand will, in the near future, take a very prominent'' place as., an exporter, of apples and. other fruits. According to figures that I have been able .to obtain from official sources, it is estimated that there are at present about 36,000 acres under orchard. The price of land for apple-growing, before planting, varies from .£5 to .£IOO per acre, according 'to district. Areas of very suitable land are readily obtainable at J!2O per acre. The average price of land with trees in full bearing, is from ,£l3O to .£2OO per acre. During tho season of 1912, New Zealand exported between. 16,000 and 17,000 cases of applos, and tho prices realised in Londqn ranged from 9s. to 18s. per case. Tho charges are -estimated at ss. 6d. per case, and it is claimed that a net return to the grower of even Id. per lb. gives a satisfactory profit. It is expected that about 30,000 cases this season will leave New Zealand for South America alone, and there are other markets to be exploited. Trade With America. "The pending alteration of tho American tariff, involving as it does lower duties on some of our principal products —notably wool—will almost certainly have a hardening influence on prices—to what extent it is of course impossible at present to say, tho tariff not being as yet "Another approaching event which has in it the seeds of great possibilities, is the neariug completion and opening to commerce of the Panama Canal. What its effect will be on the trade of this Dominion I cannot at present pretend to say. Owing to tho absence of trustworthy information and reliable data, no ono can in tho meantime gauge the prospects or tho possibilities of the trade ' which tho completion of tho Canal may ' open up, with North and South America, 1 but I firmly believo that the establish--1 ment of this new trade route will ulti- ' mutely prove distinctly beneficial to this country. . „ . . „ > "Bright and Promising."

"Viewing the position as a whole, and notwithstanding the temporary inconvenience of dear money, I am of opinion that the prospects, before isew Zealand are bright and promising. Given more workers and fewer shirkers, a respite from labour disturbances, and a sensible and reasonable co-operation 'of labour and capital, I can see nothing to hinder her continued progress and prosperity. THE SHAREHOLDERS' VIEWS. MR. MARTIN KENNEDY SPEAKS. Mr. Martin Kennedy seconded the motion but he added that he did so pro fonna. He made this reservation not because of the matter of the speech, but because of the chairman's pronouncement—his exceptional pronouncement— that the business of tho meeting would 1,0 limited to the resolution-" proposed. Tt was a very unusual course for, a chairman to pursue, and he (Mf;. 'Kennedy was not aware under what aiitliority.it was made. When he concluded, lie intended to move that the meeting be adjourned until 3 p.m. the following daj, in order that that ruling could be considered, and that the chairman luignt■ ex-ulain-tho schema he hftd put before thejiowfl&wA WitaiJ

It was unnecessary for him to say a»ain that ho was highly pleased witli tho satisfactory position of tho bank's business;.ho, hddkcvery reason to be satislied. Although the net profits of the bank were not. quite so much ns he had anticipated, tho little falling-oil was not, in his-. opinion, .due to decreased earnings in tho current year. In fact, there was sufficient -ill -the report to lead him to suppose that the earnings for tho year iu New Zealand had been as good ns ever. .Tho difference was due to the extra provision for depreciation in consols and other gilt-edged securities wluch he ascertained at the London office. The London Meeting. ■ He would take tins .opportunity of telling the shareholders' wnat he had told tho London shareholders, that he would be.' a candidate for re-election to the .directorate in December next. In spito of what had been said in some quarters,

io did'not*■ think that any defenco of his iction in Loudon was required. He acid that- ho was justified in seeking the i-'iews of the shareholders before putting his promisal before the board of directors. Ho understood the gravamen of tho ;harge against him was that he had not lone so. But how could he have gone :o consult the shareholders handicapped a resolution of tho board of directors, :or ho knew beforehand what that resolution would be. Undoubtedly before 10 submitted himself to the shareholders !ie said to the Minister for Finance that 10 realised it was unusual to approach :he. Minister concerning bank affairs except through tho board, but owing to tho jxceptional constitution of flic board, tho ijoard would presumably reflect tho opinions of the Minister, and he, therefore, addressed himself to tho Minister first. Mr. Allen said that ho could not entertain the business unless it came through the board. . lie made 110 complaint about tho Minister saying this, because his reply was quito true, but it was only technically true for all that. He (Mr. Kennedy) had then put it to the Minister that a resolution of the board on a matter so important must bo held to be the opinion of the Minister himself. Hie had, therefore, invited discussion in London on the matter, and the course of action he took would, he hoped, be endorsed hoTC. ' . ' Who Shall Control? He had said in London that it was not the question of tho dividend which was paramount, but the question; of who should control the securities and finances of the bank. That was to him tho vital point. He did not want exclusive control, because he. realised that the Government were shareholders in the bank. Ho had said to tho London shareholders that if he were not himself a." big shareholder ho would not sit as a director on the board as at present constituted. This was what nb had told the Minister also. Hi 9 reason for saying this was not because he had not received evory courtesy from the otlier gentlemen on the directorate. To tho gentlemen on the board lie could take no exception, but when lie sat as a member of the board ho wanted to know, and he was entitled to know, that the other directors wero acting oil their. own opinions, and not on tho opinions of tho Minister who appointed them. What independence could u man ■ liaye who was'coming tip for reappointment in tho next six months, and who wag likely to havo his actions challenged by the Minister? They had been told hundreds of times that the members of the Upper House, by reason of their being nominated for only seven years, had -no independence at all. If this wero tho case, how could tho members of tho board bo'independent of tho will of tho Government when they were appointed for only two year terms? Ho had told tho Minister that the shareholders 'had evory confidence . that his Ministry woaild make only good appointments, but Ministers • and 1 Cabinets came and went. .They saw what was' happening ••in « Australia—that a Cabinet. Minister could not be appointed "unless with - tho sanction of tlie caucus. How long would it bo before that'state' of. affairs camo liere, and then who would appoint members of the •boards •, A good deal had boon said about the tho; . shareholders' dircotors wanting now to kick away the ladder on which it had climbed to affluence. Had anything ho had-done indicated tliatr Hut the legislation had never intended that the shareholders should have no controlling voice in the Bank of New Zea* land, and what share had they now? They could be deprived of any dividend, or have itreduced to 5 per cent., and" ;v thQ- could-'''be deprived of any interest except the right of attending meetings. \Vhen be left New Zealand he had previously indicated in his speech,to,tho shareholders that ht intended to convene a meeting in Londoii to consult- his'- 'constituents, with "regard to his possible-' re-election. The chairman knew .Unit lio was going Home, and to have that meeting, and ho made nc objection. '..The' protest'riow was.not ..because lie had cohveheU tho meeting, bul because he had. put tho proposition thai the shareholders, should have a wal voic< in tlie control of' the bank. .

The. Rights' of the; Government. In 18.03 the bank had been generous n giving to tho Government .£500,000 in | ireierenco shares at par at a tiuio when ;he ordinary shares were at a premium if from 10 to 50 per cent. The bank gave lie Government those sharers in recogniion of the assistance the Government had riven to tlio bank. But surely this did lot entitle tho Government to take any nore shares in the bank or x> seek any more powers than ;hey had under the original Act, under vhich.it was provided that the Governnent would keep control of tho bank only » long as tho bank liail considerable liability to the Government. If any mora jowors had since been taken by the Crown iiad, ho held, been taken surriptitiously. The whole gootUvill of the bank must belong to tho shareholders, and it had always so been understood by them. Tho Government w-cro in the position only of mortgagees in possession. .Now. thero was a proposal that the: Government guarantee should be renewed, and the Minister had said the Government would grant the renewal if the board asked for: it, and would charge nothing for it. For his part, ho was not going to be a party to tho renewal, if it were to make a reconstruction of the board impossible. He hoped he had justified himself for holding tho meeting of shareholders in London. He had said to the meeting that he saw no objection to the Government holding and acquiring in the future, as new capital was issued, a continuous third share in the bank, and with this London shareholders agreed. Ho did not say that the Government had any legal or moral claim to this or anything of the sort; they had had absolutely full requital for all they had done. In any 'case, the Government had not come to the aid of tho bank, not to save the bank, but to save the people of the Dominion. There was no love for the bank at that time. There was great commiseration for those shareholders who had dropped out of the bank owing to their being unable to pav their calls. This was perhaps quite right, but the lot of those who had, owing to their holding assets, been unable to cscapo tho liability for calls, was not less unfortunate. 'Even taking the present market value of tho shares at .£l2, tho man who had not paid his calls, but had forfeited his shares, had saved ,£3 per share. He urged again that it was an anomaly for tho bank to be managed by gentlemen who had no interest in it, men who wero not allowed to have any shares in the bank. The Government directors should at least have a longer term of appointment. He had no doubt as to the integrity of the Government nominees, but how" was he to know as a shareholders' representative that the acts of the Govrenment nominees on crucial question! were not directed by the Minister foi Finance? People said the public should be considered. Of coursc the depositing public had to be considered, and if tliev were not considered by the bank they would consider themselves, and then what sort of position would the bank bo in? . . In conclusion, Mr. Kennedy again inti mated that lie would move that the, meet, in;' should stand adjourned till 3 p.in. tin following day. The chairman: 'iou are seconding, tin motion? . Mr. Kennedy: les, pro forma. Mr.. Skerrett's Position. Mr. C. P.'Ejkorrctt rose to sneak to tin motion for the adoption ot I lie report am As the shareholder wlu gave notice to move certain resolutions, hi resnoclfitllv, but emphatically, protests at the attitude of the chairman, apparent lv on his own authority, in attempting ti stop- » .almwholdor bringing before tb< waste Sat. ftfteak

ing .the general policy of the business of tho bank. ii.ii ' Tho chairman:-1 will point out that that'is not'tho business before the meeting now. The business is the motion for flic adoption' of fho report and balanceSt ?lr' Skerfett: lam speaking on'that. I shall not have another opportunity to sneak 011 it, for you havo intimated that von will not allow mo to. speak to, or move the resolutions I have given notice ot. it I am incorrect in that 1 shall at once abstain from any further-'comment-oil. tiio matter. ~ , T . The chairman: I did not say that. , i said that at tho meeting which has Ken called for July 4, you would ,ha\e full opnortunitv -to discuss matt?r3. . 1 Mr. Skerrett:.l think I can bo excused for misunderstanding a statement in your speech. Will you answer, this question; 110 vou. as chairman of the meeting pro: pose to permit me to move the resolutions to which I havo given notice f ■ • ■ Tho chairman: I am not called upon to answer , that at the present tunc. It is nuito out of order to ask it. «. ' Mr. Skerrett (turning to. tho shareholders) : Gentlemen, you will now appreciati the position iu which the directors regard tho shareholdtTS. I point out to you that the action of the chairman is tantamount to an explicit declaration that the directors n««<l not consult shareholders on. any matters affecting the policy of tho. tank, and means that shareholders are not to he permitted at official meetings of the bank to express their views and wishes to the directors on general matters of policy. Tho chairman pointed out that *\ir. Skerratt was only ill order so long as lie confined his remarks to something subsidiary to the motion. He was introducing the capital question which lie had given notice to move. Ho (the chairman) ruled that it was nat tho time to discuss

that matter. . Mr. Skerrott: Of courso I have respect for the courtesies which are always exercised at this meeting. I must submit to your ruling. Continuing, Mr. Skerrett saul there was nothing to prevent him making an observation or two which ho believed would be useful to shareholders. He wished to state his observations were not made in any spirit of antagonism to the present directors, and any inference to tho contrary was unwarranted. He desired to make ono observation on the statement made by the chairman in jus speech, iho chairman said that- li© had proposals for an inoreaso of capital to the Government, but lie was not at liberty to disolose what the proposals were, but he proposed, when they had been agreed to, or arranged with the Government, tluit the shareholders would then l>o consulted. (Hear, hear.) "Gentlemen, continued '•Mr. Skerrott, "I want to point this out. To-day a stage in tho life of the bank has. been reached which ha« long been anticipated. To-day a stngo has been reached when the banlcfs prosperity rests on a surer foundation than ever it did in the past. At this stage it must have been anticipated that two or three questions would arise. The chairman had referred to one. I nm only going to mention the other two, beoiuse X don't desire to be again ruled out of order. New Conditions Arisen..

"The three questions wc-ro: (1) "Whether it was not clear that new conditions had arisen which absolutely ijecessitated tt readjustment and review of the relations of-tho bank towards tho Government; (2) whether on that readjustment the Government wero entitled to further interest in the capital of tho bank, despuo tho positive and honourable arrangements made in 1903; and (3) the matter which tho chairman had referred to. and which was probably bound tip in tho seoond, namely, ail increase of capital. I want to point out tho true significance of tho action adopted by tho chairman. It means that shareholders aro merely ciphers in determining what aro the terms of increaso of . capital. Thoy ore not to be consulted. It appears to me, in so dealing with, the matter, tho chairman, and, in this I must include the board of directors, regard themselves not' as representatives of tho .shareholders, but as representatives purely of the interests of the Government.' .Proceeding, Mr. Skerrett said he wanted to point out one mistake made by the chairman with regard to the applicationunder Section 79 of the Deqd of Settlement. That application was properly mado ■by . him and- a number of other shareholders. The directors of tho bank declined t» call that meeting. What was tlie significance of that? It meant that tho directors were deJiberately following a polioy of preventing, sluvreliolders from expressing their, opinions., at an official meeting, and having recorded their opinions in. the minutes. . Concluding, Mr. Skerrett said: I ask shareholders and directors not to believe that I, or anyone connected wi,th -me, desire to ask anything not commensurate with the true interests of tho -banl-i: Remember. that the shareholders,; far. morethan tlio Government' and directors;, are vitally interested in tho ' stability and prosperity of the bank." (Applause.) Mr. John Mill,, speaking to tho motion, said that mention had been made of the good work of tho staff of the bank. Ho hoped that their pen-ices would not be forgotten. Referring to Mr. Sterrett s remarks; lie said ho agreed with a good deal that had been said. Ho was sorry there was likely to be a division amongst tliem. Ho was sorry to think that tho directors should show their hand to tho bank's co-partner, and not show their hand to the shareholders. Ho could assure them that tho shareholders we.ro rain" to get the greatest legal minds to set! to their rights. They were going lo do a little for themselves in the future. It was to be hoped that the bank would go on and prosper. (Applause.) The motion for the adoption of the repovt and balance-sheet was then put and carried.

Statement by Chairman, In' acknowledging that the Ijoard had received from Mr. bkcrrett a notico of certain resolutions which lio proposed to movo at til,a meeting, the chairman said : "The resolutions affett the capital question, which, as stated in my opening remarks, will be brought up for discussion at the meeting which has been called by shareholders for July 4 proximo. I may explain to you that the board wero requested by representatives of the shareholders to convene a special meetin" for the purpose; but, being advised by" the bank's solicitors that the sli areholders have no power to increaso the bank's capital without legislative authority, and'that any resolutions affecting the bank's capital if proposed and passed' would be void, the board felt itself unable to call a meeting for the purposo mentioned. Certain of tlio shareholders then, acting under powers contained in the Deed of # Settlement, themselves convened n meeting for July 4. In connection with that mooting the board have, of course, no responsibility. The present meeting, however, is the ordinary general meeting under the Deed of Settlement at which your directors meet you to give au account of their stewardship; ond it is our duty to see that the business transacted at it is such as is within our legal authority. For reasons set out in the, opinion of the banks solicitors, which is available for perusal by shareholders, we are advised that these proposed resolutions are ultra vires, ond that in any event 110 sufficient notice of intention to propose them has been givon, and wo cannot, therefore, countenance their being put to the present meeting. I have accordingly now to announce that the business of the ordinary general meeting having been transacted, the meeting is concluded. We have no desire to hinder discussion or interfere with tlio right of the ordinary shareholders to freely ventilate their views, but wo do not think it right to permit discussion of invalid resolutions at a meeting of shareholders held under the auspices of (lie board. This, therefore, closes the business of the ordinary general meeting." Mr. Skerrett asked that the ruling for ! such a decision should be read.;

The chairmnn: If in your opinion anything lias been done in an illegal manner you have a remedy in another way. I now declare that the ordinary general meeting is concluded. Mr. Kennedy: Before you adjourn the meeting 1 have given notice to move that the meeting be adjourned till 3 o'clock to-morrow. I submit that it is not withiji■ the chairman's power to adjourn' the meeting till the whole of the business has been concluded. 1 move that tho meeting adjourn till to-morrow afternoon, when the chairman shall give to the shareholders the proposals which havo already been submitted to the Government. (Applause.) . ' , , . The chairman: T cannot accept that, because the business of tho meeting is concluded. Mr. Kennedy Takes the Chair, Mr. Skerrett: 1 suggest that the chairman leave the chair, aud Mr. Kennedy' take the cbfliiv ' ••• • • " " . ilio nasal Jao MWQIw PU

the shareholders, and Mr. Kennedy moved to the chair, whereupon., Mr. Beauchamp and the Government nominees, and officials of tho hank withdrew. As Jlr.' Beauchamp was leaving, Mr. Kennedy remarked that it "was not the first time he had been asked to relieve Mr, Beauchamp : in , th? (;ha\r. ■ W hen Mr. Beauchamp was leaving for. Kngland the shareholders had generously voted JCSOO for expense?, and he had not ruled that out of order. „„ , t Mr. Beauchamp (excitedly): "he 'fact that you voted X'soo to me is not sullicient'bribe to liavo mo alter my opinions with regard to the shareholders. lou could not bribe.liio with .EMGO. ' Laughter followed tho statement, and Mr. Beauchamp left the room. Mr. Kennedy took the chair, and moved that the meeting adjourn till 3 p.m. tho following day. 'ilr. Skerrett seconded, and the motion was unanimously carried. ' LEGAL OPINIONS. WHY MR. SKERRETT WAS RULED

By courtesy of tho Chairman of Directors (Mr. Beauchamp), the following legal opinions by Messrs. I'indlay, Dalziell, ana Co., tho board's solicitors, are published, bearing 011 the requisition matlo by Mr. Skerreit and others for the directors' to call a meeting of shareholders, and also 011 tho matter -of tho resolutions which Mr. Skerrett proposed to move at tho annual meeting:— "We have carefully considered the terms of tho requisition of the 17th instant signed by C. P. Skerrett and others purporting to require the Board of Directors of tho Bank ol Now Zealand to call a meeting of' shareholders' of tho bank, and have to advise thereon as follows:—

"(1) The general object of the proposed meeting is to pass such resolutions as the meeting may think fit, with a view to increasing the capital of tho bank. "(2) If the power to pass suck resolutions is conferred upon the shareholders by the bank's charter.' it is probablo tho notice is sufficiently definite and in compliance with tho terms of Clause 78 of thp Deed of Settlement. (See Isle of Wight Kailway Co. v. Tahourden, 25 C. Div. 320.) "(3) Prior to the passing of tho Banks Act of 1894, it would probably liave beeu the duty of tho board to comply with the terms of the requisition. "(4) The whole management of the business of tho bank was, at, the time of the passing of tile Aot of 1891, and has been ever sinco that date, vested in the Board of Directors subject onljv to the limitations provided by tho Deed, of Settlement, and to tho powers vested by that deed in general meetings of shareholders (Clauso 3, Deed of Settlement); and express power was also given to the board to endeavour to obtain such legislation as it may consider calculated to advanct tho interests of tho bank (Clause 4, Deed of Settlement). "(5) By tho Banks Act of 1898, the number of directors was fixed at six, oi whom four are appointed by tho Governor-in-Council, and only two by the shareholders; and it is provided by .Section li of tho Act of 1903 that no alteration shall ho mado as to tho constitution of ilu board, or the method-, of appointing it; member?, except by Act of Parliament. "(C) Tho State is a shareholder in th< bank, and any increase in tho capita': of tho institution directly affects its in tercsts. It has, however, no voting right: in respect of its slmro interest, but has secured a voice in the government oi the bank by means'of its power to ap point members'of the board. "(7) Jt is clear that tho board is no' required to comply with any requisitioi under Clause 79 of the Deed of Settlement if shareholders have no power to pas: the resolutions contemplated by tlio re ■ quisitiou. "(8) Jt is equally clear that tho boarc has power under Clauses 3 and 4 of tin Deed of Settlement to apply to Parlia ment for legislation'giving power to. in crease tho capital of the bank on sucl terms as it may think fit. . "(9) . Wo think tho. eanno; Eavo-contemplated" that'"the 1 shareholder: should have power by resolution to di rect tho board as to how it shall conduc

the business of tho bank; otherwise, what object could it have liad in conferring upon tlio Grown the power to appoint tho majority of tho members of the board, "(10) It would seem to follow that there is no power in the shareholders -under the bank's present charter to pass nliy operative resolution determining wlmt is to be done by the board as to increasing the capital of the bank. ~"(11), In the circumstances the-proper course for--the directors would seem to be to tako'.up tho attitude' that, as 110 Biich resolution of tho shareholders as is proposed can have any operative effect, it is not desirable that tho board should comply with' tho requisition of _the shareholders/aud wo have to adriso accord-' ingly." ; "(12) It is only necessary to add that the Court will not in any c:\so.order the board to comply with tho requisition, but will.leave it to tho sbareholdcrs'to exercise their powers (if any) nndor Clause 79 (seo Macdougall v. Gadiner, 10 Ch. COG); and, further, that if tho shareholders convene a nicotine, it would seem best that the board should not take part in it, but should, if any resolutions aro passed at such meeting, take into consideration tho question of determining if it should re-' commtmd tho Governor-in-Council to o.vorciso tho power of veto conferred by Subsection (5) of Section U of tho Act of 1698, whether sucn resolution be legally valid or not."

Mr. Skerrett's Resolutions. "We havo carefully considered tho terms of the notice dated June 17, given by.Mr. C. P. Skcrrott to the board, of his intention to proposo certain.resolutions at tho meeting of shareholders to bo held on June '-U. "In tho first place, tho question of tho length of notice given by Mr. Skerristt arises. Ho has presumably given tho notice relying upon tho provisions of claliso 78 of tho Deed of Settlement, which provides that tho business of every lialfycarly general meeting shall be to fill up tho vacancies which thin exist or take place in the board, and to do such other matters and things.as aro by the Deed of. Settlemont .particularly required or allowed to bo done at sucli meeting; and also to consider any rcpont of tho directors, which may then bo made, and to consider and decide such other matters and things as may then bo brought forward by the board relating to the atfairs of tho company, or which may bo broughit forward by any proprietor who shall havo given to tho board seven days' previous notico at tho least of his intention to bring such matters and things forward at such meeting. . • "On a first perusal of this clause, it would no doubt appear that Mr. Skerretts notico comes within this provision. It lias, however, been decided by tho Master of tho Rolls, Sir George Jesscl (one of the highest authorities on this branch of our law), in tho caso of tho Imperial Hydro Co. v. llainpson, 23 Ch. Div., at p. i), that a provision such as that contained in clause 78, giving power to a shareholder to introduce any business of which ho has given the board seven days' previous notice, is limited to something which is ancillary or subsidiary to the business of which shareholders have had nol'co, and which could be properly brought forward under tho terms of tho notice convening tho meeting or under tho Deed ot beittlo'""This decision is based upon the principle that every shareholder is entitled to know the business intended to bo brought before any meeting of shareholders, in order that lie may havo au opportunity of bang present. "It is quite plain that tho shareholders havo not had a notico that the matters set out in Mr. Skerrett's resolutions arc to be brought before tho meeting on June 20, and wo have to advise, thoiefoie, that the resolutions, if passed, would be invalid, and it is therefore the duty of ti c chairman to refuse to put themto ■ the meeting. We think, also, there is a further objection to these resolutions being pi:,t to the meeting on June -ti. r "It is usual to provide ill tho constitution of a company thai the hoard of diver■tors has the solo control ol tho nflnirs *>• the company, subject to such directions n9 may be given to them by the shareholders ill general meeting. This, however, is not what is provided in the bunk s constitution. On the contrary, seeing tho company is in this case a-bank, and the interference of shareholders with its anair.i therefore inexpedient, it is provided bj clause :! of the Deed of Mllenient that the whole management of the busimvs o ■ the company shall be repnsrd in the board ■ of directors, and that, subject'to tations contained in the. Deed of *.etjtie* Linjpnt and tins rpwotr Wiorolw vc&wA in.

general meetings of proprietors, tlio individual members disclaim all right to iutori'oro in the management of tlio aiinirs of the company. "Unless, therefore, tliero call b? found £01110 provision in the Deed of. Settlement conl'errvng upon iho"general 'iriefcting 01 proprietors tile power to do tlio tilings proposed, to bo done by Mr. Skcrrctt s renolutions, it is plain that 110 silcli resolutions may bo passed in manner proposed by Mr. XkcrreU'-s notice. "Wo have been nnablo to discover in the Deed of Settlement any power in a Rentrill meeting of proprietors to past) tlicso resolutions. The only business apparently which the Deal of Settlement contemplates being doalt with at an. ordinary or half-yearly general meeting is that specified in clauses 78, 0), 103, and possibly 123. , . „ . "It is, wo think, perfectly plain that uono of itlieso clauses give to a general meeting of shareholders any power to intoTfcTo with tlio management of the business of the bank conferred upon the board by elauso 3. "In our opinion, it would bo necessary for tlio board or the shareholders, if they desiro to carry out the purpose intonded by Mr. Skerrctfs resolutions, to convene special general meetings of proprietors nil<ler clauses 79 and 85 of the Docd of bottle"'"We have therefore to advise thai it is the duty of tlio board to refuse to submit the resolutions contained in Mr. Skerrett s notice to the proprietors at tlio general meeting on June 21i." THE GOVERNMENT ATTITUDE. MINISTER WILL SAY NOTHING. Asked yesterday whether ho had any remark to make concerning . the proceedings at the meeting, the Hon. J. Allen (Minister for Finance), said: I have nothing whatever. to say. I know exactly what tlio position is, but I have no comment to oifer upon it." . Tlio position, it may bo explained, is that this vear arrangements will have to ■bo made tor tlio renewal or discontinuance of the Government guarantee, which expires in July, 1914. Asked pother the Government -would renew it, Mr. Allen said that would depend on what the Board of Directors decided. MR, SKERRETT'S MOTIONS. FULL TEXT.

Tho motions o£ which Mr. Skerrctt had given notice were as follow:— (1) That the necessary steps be taken to secure that the .£1,000,000 debentures guaranteed l>y the New Zealand Government bo paid off at maturity in July, 1914. (2) That it is advisable that the authorised capital of the bank bo increased by an amount not less than. -£2,000,000 by the issue of 300,000 ordinary shares of id 13s. id. each; and that, if necessary, the directors or shareholders should promote the necessary legislation or pro.ecedings to enable such increase of capital, and any future increase of capital which from timo to time may be thought desirable to bo effected cither in accordance with Paragraph 13 of the Bank's Deed of Settlement, or Section 5 of tho Banking Act, 1908. . I (3) .That the issue of such new capital shall bo within tho discretion of tho directors; but that 150,000 shares of such now capital shall bo fit oneo issued; and shall bo offered in the first instanco to all the holders of ordinary shares in-pro-portion to the amount of the capital held by them at par or on such terms as shall Ijd determined by tho resolution of .shareholders authorising such increase of capi-

(4) That in view of the fact that the Government guarantee will no longer bo required and that the Government will have no further liability with regard to the bank, the shareholders resolve that it is desirable that legislation should be promoted to increase the representation of shareholders on the directorate of . tho bank to four; and to reduce the number of directors to appointed by the Gov-cinor-iii-Council to two; the powers of tho chief auditor, under Section 17 of tho Bank of New Zealand and Banking 'Act''Amefidineiit; : ;A.ct, 1898, ami-tho powers of the Goveriior-in-Council under Section 14 of tho said Act, to veto any resolution parsed by shareholders to be maintained.

(5) That it be an instruction to the directors to take the necessary proceedings | to give effect to tho alwve resolutions. (G) That tho directors bo instructed to forthwith obtain the opinion of the Supremo Court on tho following questions; (a) Whether shareholders are entitled under the Deed of Settlement or Section 2 of the Banking Act, 190S, without further authorisation by legislation to increase the capital of . the bank by the issue; of further shares, and if so, of what class of shares, to what extent and subject lo what conditions. ; (b) Whether, in tho event of such further ordinary shares being issued on tho terms that they shall be offered i in tho first instance to all the liold- ' ers of existing ordinary shares in proportion to tlio amount of capital held by them tho Crown is under Section Ifi of tho Bank of Now Zealand Act, 1903, entitled as tho holder of preference shares to be offered and tako up its proportion of such further issue of ordinary shares, in tho same manner as holders of ordinary shares.

MR. SKERRETT'S VIEW. . . CLAUSE OF ACT QUOTED. ; Mr. C. P. Skerrctt states that tho clause of tlio bank's Deed of Settlement under which his notice was given was Clause 78. Ho quotes it as follows:— "That tlio business of every ordinary general meeting and half-yearly general mefctings shall bo to fill up tho vacancies which shall then exist or tako place in tlio board, and to do such other matters and tilings as are heroin particularly required or allowed to be dono thereat, and also to consider any report of the directors wliieh may be then made, and to consider and decide on such other matters and things as may then bo brought forward by the board relating to the affairs of tho company, or which may be brought forward by any proprietoi who shall liavo given to the board seven daj-s* previous .notice at tlio least of liis intention to bring such matters and things forward at. such meeting. Aaid. also, if tho majority of the proprietors then present shall think fit to consider any proposal or resolution which may, notwithstanding the absence of such notice thereof to the board, bo made by any proprietor then present, provided, however, that said meeting (shall not proceed to determino upon any such matter or thing then first brought forward or any resolution or motion then first made otherwise than by negativing any proposal or motion made if throe proprietors then present and holding thirty vote* iii their own right shall roquiro that tho said meeting lie adjourned for the purpose of further considering tho same, ill which case such adjournment shall bo made and notice thereof shall be given as hereinafter provided with respect to special general meetings."

II arch 31. •£ £ 190S • 16,217,212 12,607,902 1907 • ' 19,43-4,658 14,717,298 190S 17,863,842 17,460,-121 1909 10,767,818 16,313,759 . 1910 - 21,467,387 14,773,821 1911 21,497,187 17,385,066 1912 19,003.851 19,774,517 19U 21,309,038