BANK OF OTAGO.

Southland Times, Issue 735, 11 October 1867, Page 2

BANK OF OTAGO.

(From the "London JUxamiuer July 30th). The fourth ordinary general meeting of the shareholders was held at the London Tavern, Bishopsgate-street, on the; 18th inst. ; Mr George Hay Donaldson in the chair. ■ ' The Manager:' (Mr Alex. GratSe) jead the advertisement convening the meeting, .and the _ director's report and; statement of accounts were taken as read; The subjoined is a copy : — : *" " In consequence of the high rfifes; of interest* paid-in "London for special loans during the year -1866, the directors issued very stringent instructions to the •.Colonial -manager i to have some classes of business considerably curtailed ; and for their own satisfaction and that of their; shareholders, they were fortunate enough to induce Mr James D. Thomson, one of their ;. number, to proceed tp ;i New Zealand for the purpose of inspecting the different branches, of ascertaining in what manner their expenses could be reduced, and of expediting as far as possible the settlement of any objectionable accounts. Since Mr Thomson's arrival in the colony, he has succeeded in arranging with the general; Government of New Zealand for the delivery of certificates of indebtedness for the balance due by the Southland Provincial Government, which will be payable not later thaii 31st December^ 1868 ; and he has secured the remittance to this country of a considerable amount; of the bank's funds, thereby enabling the directors materially to reduce the special loans. Mr Thomson reports that he did not. consider it prudent to close those branches which had not" yet "paid the charges of management, as they were found to be oi considerable service to the bank ; but =some alterations were -being made which would lessen the general expenses of' the bank so far as it was either practicable or prudent to dp so. The directors were in hopes, down to a very recent period, that the effects of the severe and unprecedented financial crisis \ p London- in r 1866 would riot -have been felt to such an extent in New Zealand as to occasion any .considerable loss';to this bank; but they regret to. say that they have been disappointed,^ and there has-been a necessity for writing off the sum of £12,019* 12s 6d : for b?ad [debts, which will preclude the payment of any dividend on the business for the last six months of the year. This is no exceptional misfortune, however, for there are few colonial banks, which have escaped without heavy losses. The auditor in New Zealand, a gentleman of. great i colonial experience, has gone most_care|fully" througir" all the~ securities" in the. possession of the bank at' Duriedin, and has reported that in his opinion a further sum of £8,777 may be considered bad, ordoubtful, Mr Bathgate, on the other, hand; expresses a strong conviction that the auditor's estimate should not be acted upon ; but the directors have thought it advisable to carry this amount to a " suspense account" in the meantime. Mr Bathgate has placed ; his resignation at the disposal of the directors, which they have accepted, and he holds office only until the appointment of his successor. The result shown inthe balancesheet will no doubt occasion great disappointment to the shareholders, in. whicfy the directors fully participate ; but they have from its commencement had every confidence. in the future prosperity of the bank— a confidence which ■ they have amply proved by giving their persPnal guarantee in support of its credit;, ,qn several occasions. There is^ reason to believe that under different management their expectations of success will be fully realised. The bank possesses a valuable business connection ; and after the thorough scrutiny which has taken, place, the directors remain satisfied that ...its affairs are in a sound and hopeful position. " " 'i hree directors, viz. — John Harbottle, Esq. ; Alexander Morrison, Esq. ; "and Joseph Robert Morrison, Esq., retire from office on this occasion, in accordance with the provisions of the articles of association, and being eligiblej_they offer ""themselves^ for re-election. The retiring auditors, Joseph Sawyer, Esq., arid OH. Robinson, Esq., again offer their services for the ensuing year.'.' The. Chairman, in moving the. adoption of the report and accounts, said—-Grentle-men. It is a fact too well known to us all that the panic of ' 1866 has fallen with peculiar severity upon banking institutions'. ■'■■•■ (Hear.) Soriie ra ve been utterly ruined, others have lost- a considerable portion of their capital, others again have had to sacrifice the whole or .a; large) por-; 'tion of their reserved fund, while thPse banks which have only been forced to: forego the payment, tp^their, shareholders of drie or more dividends, may be v considered fprtuijate; by. comparison. Amidthe general chorus of misfortunes to 'which we have beeri listening with more or less anxiety and- interest during the; past miserable twelve months, it was only to be expected that the Bank of Otago •should suffer some loss j but t can, at the same timej honestly : assura you that neither my colleagues not I expected that these losses would be of anr serious

would have been of sufficient magnitude or importance to render it necessary as to withhold from you a second dividend upon the profits of the past year, however 'small it might have been. Under these circumstances, jl am sure you willjfeel that it is "only natural that we shoHld^cqme ? before you with considerable disappointrflent and mortification, in laying before you the. report and balance-sheet that we now submit for your approval. There is one consolation, however, for you and for /us ; I think that we now know the worst we have to tell, and I am truly thankful that the real state of matters was disclosed to us in theTast advices we received from the Colony in sufficient time to enable us to lay the whole facts before you clearly and without reservation— for I think you will admit that we have done all this — (hear, hear)— in the report now under consideration. That document is not very pleasant reading, I must admit — few reports are now-a-days ; but at the same time there is nothing in what we have told you which v ought to occasion any serious despondency as to - the future prospects of the bank. (Loud cheers.) Despondenoy, did I say ? If there ever was a case for despondency, it was that of a bank which I had in my eye when I made the remark just now that some banks had been obliged to part with a considerable portion of their capital,^— l allude to the Anglo-Egyptian Bank: At their meeting, which took place a few weeks ago, shortly before our report was issued, the chairman addressed the proprietors of the bank in the following . words., i lam only going to give you one sentence in his speech in order that you may take encouragement from it:— "l wish to tender the thanks of the board for the support you gave us in the hour of distress and adversity. When in -November last we were under the terrible necessity of telling you that £205j000 of your capital was lost, we found at your hands nothing but kindness and forbearance." (Cheers.) .' I need hardly say: of that bank, that at the late meeting no dividend was declared, but the chairman had the great satisfaction of telling his shareholders that in the short space of ten months they had recovered £155,000 of this lost capital, and that he . expected to recover the balance before the end of the year. (Cheers.) Such is the noble way in which Englishmen grapple wibh diffical and overcome them, and. after that shall r we be discouraged, and dismayed because we have experienced a > loss of £12,000, and possibly a loss of a few thousands more ? ' (Loud cheers.)^ W/e v tell you in the report : that ' W have incurred a loss ;X)f- £12,000, which we have written off out of the' half-year's profits lof the banks, and that there is a- further . ,sum_Lof -nearly~£9,ooQ,-^which we have carried to suspense account, for the reason mentioned in our report, that there is a 'difference of opinion on the other side as to whether it will be a bad debt or not. (Hear, hear.) But, gentlemen, let us suppose that the £8,777 — which after all is only the depreciation of securities which may prove in six or twelve months' time to be of the value they were said to be — let us suppose that every penny of the amount is all lost-r-r.what then? Why, : after all, it is only equal to a loss of 8s 2d per -share, and -yet our shares are quoted, outside at a discount of about 50 per cent., showing to my mind very clearly that the outside imagine us to be in a far worse condition than we really are. (Cheers.) Then, gentlemen, as, to the dividends..' No doubt we all like to receive dividends, and we are apt to be sensitive when these are withheld (hear, hear) ..;"< but if you take into account the dividends we have paid since we first began business, with the one , or two occasions upon which we have paid nothing, you will find that, having reference to the amount of capital paid-up at the time, we have paid an average dividend throughout of 4 per cent. (Cheers.) In fact, it seems to me that we have struggled bravely against many difliculties from our first starting, up to the present moment. Many gentlemen present will no doubt remember that my excellent friend on my' left : (Mr Elder),"at the first meeting •yy-e had under this roof, made a clean breast of it, and told you all about thatunfortunatetran saction with the Southland Government. Many now before me were no doubt present at the meeting, and will remember that-it -was— then thoughtrfoy some shareholders that my colleague took too gloomy .a, ; view of the transaction. (Cheers.) Since then, we have had very serious :difiiculties to contend with. There was the minor crisis in 1864, when we had to pay theinterest at 8 or .9 per cent. Then .followed the • awful crisis last year, wheri.it was,.not so much a question ; as. to what interest ; we should ..pay, 'h.ut. rather^ whether^we could obtain ,any. assistance at all. "(Cheers.) In spite of all we Have been ; struggling on* and I think we have now . :reached ■■- firm- ground, that we have emerged into the path of safety, and info that; path . which leads to fortune and ; prosperity,: '(Cheers.) 1. will just state, i with, your permission, a few; of the \< reaaenja 1 1 have for thinking so. In this ! $m test im ftftV «lefeH»«ttft^ %

£160,000 ; it has now been reduced to £83,000, nearly one- half less. (Hear, hear.) Besides that, it is put upon a much better footing. Previously we only held the security of the Provincial Government; we have now the security — an excellent security, as all colonial ijien know — of tho General Government of New Zealand. (Cheers.) We have received from the General Government of New Zealand certificates of indebtedness, representing the whole amount due to us, bearing interest at the rate of 6 per cent, per annum, and payable on or before the 3 1st -December, 1868. (Cheers.) .In the _ second . place with regard to the special loans, these were rendered necessary, as you all know, by the lock-up of our capital in that Southland Government account. Fifteen months ago, these special loans amounted to £109,000 ; they are now reduced to about £40,000^ and the high rate of interest which we paid last year is now reduced to 3^ per cent. (Cheers.) I mention this in order that you may comprehend the item in the balance-sheet for interest on special loans. That, gentlemen, is a dissolving view, and I hope in future balance-sheets ib will disappear altogether. (Cheers.) I would mention as the third ground for confidence in the future, that when our capital becomes disengaged we may hope to employ it advantageously, and I may state that we were lately offered a very valuable account, which, if accepted, will probably give us a large exchange business. "(Cheers.) Now I come to a short and pithy paragraph in our report, which I wish to touch upon with all possible delicacy. I refer to the resignation of our late manager, Mr Bathgate. Gentlemen, I have no~ desire to say a single word in reference to Mr Bathgate which he would have reason to take exception to if he were now sitting among us. (Hear, hear.) Mr Bathgate is a man of very considerable ability, a man of great integrity, and high religious principle — he had made himself popular in Scotland before we appointed him, and he has made himself popular in New Zealand. Therefore, I have not the slightest desire to say one word about Mr Bathgate which could be offensive to the feelings of any of our Scotch shareholders, or to the feelings of the many friends he now possesses in New Zealand. (Cheers.) The utmost that any man can say — and some have no doubt felt rather sorely on the subject — is that Mr Bathgate has not been so successful as a bank manager as we could wish, but I need not remind you that when he was appointed, there was a general feeling of satisfaction among the shareholders, and the opinion was expressed that we had made the very best appointment we could" on the subject. ~Mr Bathgate is, I am sure, the very man to feel keenly the fact that we have not been so successful 'as we had a right to suppose we should have been when the bank was first introduced. (Cheers.) Mr Bathgate has placed his resignation at the disposal of the directors, which we have accepted, and there is little use in discussing the past. The subject that is of most importance to us now to consider is, not any shortcomings or possible mistakes which Mr Bathgate may have committed, but how we are best to carry on the bank for the future, and who is to be his successor? (Cheers) Well, gentlemen, my colleagues and I am happy to say that we are able to, satisfy you on this subject. Before.^e could hear from Mr Thomson, we had written out, suggested Mr Morris, who is the bank's auditor in New Zealand, and who has given the highest satisfaction as the manager of the Otago and Southland Investment Company. (Hear, hear.) He is a gentleman of great colonial experience ; he is a man of large financial ability, who has managed estates and property for people on this side with very great satisfaction, and I believe 1 may without exaggeration say that he has never made a bad debt for any of the parties for whom he has been concerned. (Cheers.) He has already earned our confidence as manager of the T nvestment Company, which was started to take up a class of business which the bank could not undertake, and tbat company has been highly successful under his management. (Cheers.) Mr Thomson's letter, reporting a conversation he has had with Mr Morris on the subject, has crossed ours on the way, and I expect that we shall soon hear that Mr Thdmson has actually arranged that Mr Morris is to be the future manager of the bank. Well, gentlemen, I look at our balancesheet ; there are some matters which have 1 dare say have been unsatisfactory to some of you. I may just mention one item in the. profit and loss account— the expenses in New Zealand. These charges arise from branches which have been opened with the best possible intentions by Mr Bathgate. I have observed in connection with many banks that it has often been found that branches which were opened and found for a time to yield no profits, have been the very branches which have subsequently proved the BlOSt SUCCfcßßful Of liny, (Hear, hear.) We have ha£ a eertam amemst .of $ffiesty «i 'tb^ 'totter

—it would have been easy for us to have written back to Mr Bathgate, telling him that he had formed these branches without our sanction, and instructing him to put an end to them I would, however, advise you to leave this in the hands of the directors. Now that Mr Morris is expected to take charge of our affairs, I think it better to await his opinion upon the subject. (Cheers.) We are quite prepared to give up some of them, but we prefer to await the opinion of Mr Morris, and if he should point out that certain branches are not likely to pay we will at once discontinue them. (Cheers.) I think I ought to say one word about Mr Thomson, our colleague who is now in the colony. (Hear, hear.). Mr Thomson has given the greatest satisfaction to his colleagues by the ability and discretion with which he has iulnlled his very delicate and difficult mission. (Cheers.) He deserves thanks for all he has done and is doing for us. (Pear, hear.) I will only add a few words about your directors as a body. You can never fully know, and therefore you cannot adequately appreciate, the Bervices which we have rendered to the J>ank from its commencement, through all these perilous times down to the present moment. I state with the utmost fearlessness that the directors have exerted an amount of- energy, fertility of resources, and a moral courage, which I feel confident very few boards would have exerted under similar circumstances. (Cheers.) For all this we fairly deserve your confidence, and i am very much deceived as to the spirit which usually actuates a body of English gentlemen, if you do not rally round us and give us your cordial support on the present occasion. (Cheers.) The Chairman then moved the adoption of the report. Mr Alexander L. Elder seconded it. After some discussion the resolution — that the report be received, adopted, and entered upon the minutes — was then put to the meeting, and carried unanimously. Mr T. D. Thomson said he had the greatest confidence in the future prosperity of the bank. He would, however, suggest that the directors should exercise some caution in respect of the advances made on deposit and current accounts. He did not think this was a mode of banking that would be very successful in a colony. Mr John Smith then moved the reappofntment of the retiring auditors, Mr Joseph Sawyer, and Mr C. H. Eobinson. Mr L. Stewart seconded the resolution. Mr Jones said he. spoke frpm a twenty years' ■' acquaintance with Mr Morrisand he was sure that if appointed, his services would be a great boon to the bank. The resolution was thea put and carried unanimously. Mr Park had very great pleasure in moving the best thanks of the proprietors be given to the directors for the attention they, had paid to the affairs of the bank. - Mr Bait seconded the resolution. The resolution was put and carried. The Chairman.— Gentlemen,— l beg to express on my own behalf, and on behalf of my colleagues, our thanks for the sincere confidence you continue to express in us. In regard to the very important suggestion made by Mr Park, I beg to say that we shall give it our best consideration. (Cheers.)