PARLIAMENTARY.

Feilding Star, Volume XVI, Issue 15, 18 July 1894, Page 2

PARLIAMENTARY.

■"•J** HOUSE OF REPRESENTATIVES j BANK OF NEW ZEALAND. FURTHER LEGISLATION, [PEB ]?BESS ASSOCIATION.] Wellington, July 13. In moving the second reading of the Bank of New Zealand Share Guarantee Act, 1894. Amendment Bill, in tbe Hi/use last evening, the Colonial Treasurer (tho Hon Mr Ward) said — I desire to point out to Hon. members that there is no contentious matter in, that there is no interference with the main principles of the Act which he House passed in connection with this matter a week or two ago. What has transpired since the passing of tbat Act is this : The Government immediately put itself into communication with the Agent-General as representing the colony in London. They apprised him of the nature of tbe legislation, and they requested him to keep the Government informed as to what was being done in England in connection with this matter. The AgentGeneral communicated by cable with the Government, and stated that a difficulty had arisen, nnd that it was found that under tbe deed of settleof tbe Bank no shareholder could bold more than 4000 shares. It was pointed out that in consequence of this the capital which it was proposed to obtain could not be got advantageously. The reply that was at once sent by the Government stated that under no circumstances would the Government agree to tbe floating of the capital unless the Bank received par, or not less than par. We said that the Colony's credit was attached to this transaction tbat tbe colony had given a guarantee, and that we would not permit this capital to be ob tamed at anything less than par We thus put the Agent-General in the position of advising the Bank authorities in England, and of enquiring whether they were prepared to take the responsibility of getting the capital under the share system at par, or above par. The Agent-General advised us that it would be expedient, and the financial advisers who represent the Bank in the Colony coucurred, to substitute stock for shares, and that if this were done the capital would be got at not below par. The Government carefully considered the matter. We felt that the Colony's credit was attached to this, having passed the Legislation, and after various cable communications with the Agent-Gen-eral we agreed to the proposal, subject to the House agreeing to substitute stock for shares, and that is the reason why it is now asked, and the only reason. Tbe Agent- General further pointed out to us that the autumn holidays are approaching in England, and that in consequence of this, unless the matter were expedited, delay would be occasioned, as no business of this character could be carried on there until after these holidays. The Government saw the expediency of avoiding any delay, and informed the AgentGeneral that, subject to ratification by Parliament, we authorised him to have the whole of the negotiations put in hand to have the capital subscribed or underwritten so as to ensure its being got quickly after the legislation had been passed by the House. And that accounts for the cables you have seen in the papers during the last week stating that to-morrow or the day after the shares would be put upon the market. Now, sir, if you look at the Bill you will find tbat its connection with the removal of the limit of shares or stock to be held by any one person it is provided that those who hold that stock are not to vote as ordinary shareholders of the Bank. If these were treated as ordinary shareholders they would be entitled to vote where the colony has stepped in and given its guarantee. The Government safeguard the interests of the colony by appointing a President and Auditor — the former with the power of veto. It is not therefore under the circumstances, in the interests of the colony, that those subscribing to that stock should have the right to vote as ordinary shareholders. In the Bill you will also find that power has been taken to enable the President to delegate his powers. The reasons for that are obvious : absence or illness for one thing. The necessity for having to delegate the signing of the London register for another. I may also be asked, assuming that the capital is obtained at a premium, who is to get the premium, as the Bank will have to pay H per cent stamp duty, and as we are advised that this being a loan for only ten years tbe premium is not likely to exceed two per cent there will not be much net premium left. Again I should like to say a word or two upbn the question of the shareholders! accepting on behalf of the Bank what has been done, The question has* been raised in this House. I wish to inform Hon. Members that the Government have now in their possession a communication sent direct to them from the Directors of the Bank, at the request of- the Government, to the effect tbat the Directors undertake to co-operate in giving effect to the conditions. I may say, sir, in connection with the Assets Company, as the question has been raised, that the Government fully recognise the desirability of having the assets of the Company disassociated from the Bank. I said that ibefore, and I repeat it now the time is not opportune to do it, but it is a matter upon which Government do not intend to remain quiescent. We are determined to maintain a careful watch over the Bank, to see that it is brought back to that position which unfortunately for the colony it departed from years ago ; that it is brought back to do legitimate Banking only. It is probable that some further information on this subject will be placed before the House at a later date. Finally I need hardly point out to Hon. Members how important it is that the institution in question should have at its command the extra million which the proposals already consented to by this House will give it. I need not tell Hon. Members what an appreciable and improving effect t}iis will bavp upon the trade and industry of the colony, because until that money comes you may, and I say it deliberately, expect to see a continuation of the tightness of money and tho want of proper employment in many places, and to some extent a continuation of the uneasiness prevail-

for so long. It tliere-were any doubts in the mind of the Government before, the very fact that in a difficult and intricate matter such as this the action of the Government had been applauded by all ' shades of opinion in New Zealand, most clearly proved, to their minds,- that in taking the bold course which the Government adopted they did what was justifiable under the peculiar circumstances that had arisen. Captain Russell : " What about the second million ? " Hon. Mr Ward : I will tell the House. The second million appears to be a matter of 6ome concern io my honorable friend I would point out to honorable members that there is a great amount of misapprehension about this second million. That second million has been raised, uot for tbe purpose of carrying on the Government of the Colony, not for the purpose of doing that which some honorable members fear, but it has beeu raised for tbe express purpose of strengthening the Bank. I pointed out to the House the other evening tbat one million would be used for strengthening the reserves of tbe Bank, and the other for enabling it to meet its legitimate trade requirements. Supposing the other million were invested in British consuls, the Bank would hold the consuls and they would have oue million of security for the ordinary purposes of trade. 1 say if such an investment were made it would, provided the Colonial Treasurer for the time being regarded it as a proper investment, aud will at once ease the minds of the bon. members opposite, for tbey would be able to see that that million of money was not to be used for the purpose of making railways, roads, or bridges. We propose that it should be invested safely in tbe interests of the Bank. It must be kept in a liquid state. Now, sir, I repeat that the extra million of money was not put in for any ulterior purpose, or with the object of obtaining a million of money to expend on public works. It was provided for tbe sole desirable object of ensuring tbat the financial stability oi the Bank should be such tbat it would be trusted both outside and inside the colony. When the investment is made it must be made in liquid securities, made under such circumstances that it would be as good as a million sovereigns. Captain Russell : You have not said how you intend to invest that million. Hon. Mr Ward : I think I had better refresh the Honorable gentleman's memory by reading Clause 4 of tbe Bill. It is possible, sir, that some very acceptable securities may in the future arise in this colony which the Colonial Treasurer would regard as a proper investment for this money. If it were a safe investment tbe Colonial Treasurer, if he acted wisely, would see that it were made. I am not able to tell the honorable member where that million will be placed, but I have no hesitation in saying that it will be invested, and used, for the purpose for which it was intended. Mr Crowther pointed out that the Colonial Treasurer could invest it without coming to the House. Hon. Mr Ward : If the Colonial Treasurer came to the House I doubt if it would be invested at all. There would be such a diversity of opinion as to where it should be invested that it would be difficult for the Colonial Treasurer to get a decision at all. I think that the duties of the Colonial Treasurer are quite arduous enough without having to go through such an ordeal as that. I regret exceedingly that there should have been any occasion to come to tbe House a second time to deal with this important matter, and I feel perfectly sure that both sides of the House are desirous of seeing the last of it and get it completely out of the way. After further discussion the amendment was put and lost by 41 to 13. The second reading was agreed to on the voices. The Hon. Mr Ward moved the second reading of the Banks Shares Transfer Bill to limit the power of shareholders in banks to transfer their shares. A new clause was added providing that the number of directors in a bank be not less than five and not more than seven. Both Bills were then put through their final stages.