The Stratford Evening Post WITH WHICH IS INCORPORATED THE EGMONT SETTLER. SATURDAY, JUNE 28, 1913. BANK AND STATE.

Stratford Evening Post, Volume XXXVI, Issue 45, 28 June 1913, Page 4

The Stratford Evening Post WITH WHICH IS INCORPORATED THE EGMONT SETTLER. SATURDAY, JUNE 28, 1913. BANK AND STATE.

Some special light is thrown on the position which has arisen over the, desire lor the complete severance of the Bank of New Zealand from State cnotrol, by an article in the Wellington Dominion, which gathers that the purpose behind Mr Skerrett’s resolutions is the repayment by the bank at due date of the £1,090,000 worth of Stateguaranteed 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. The Dominion continues: “We quite fail to see how this matter can be regarded in any way as private—to us it appears to be ot vital public interest and con 1 cern. 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 i some millions, and is still-responsible I for one million sterling; but above all j 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 I doubtful whether the institution would | be in quite so good a position as it is j ■ to-day. Messrs Kennedy and Watson,! the representatives of the sharehold-! ers on the Board of Directors, are i ■

Hie prime movers in the scheme of, severance, and no doubt believe they I are serving the best interests of those they represent. But the shareholders must be careful not to be carried away by the special pleading of their i>epresentatives on the Board, nr they

may, by grasping at too much, overreach themselves. The'contention that those who suffered through the bank’s embarrassments twenty years ago should be recompensed now by getting for £.’s Gs Bd, shares which will rank equally with those quoted,at over £ll in the 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 iss*•<- of now shares to the shareholdcis 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, Hank of Australasia, Union Bank of Australia, and Wellington

Gas Company, and in every instance a premium was placed on the neu shares. Moreover, we understand that only about one-third of the shareholders who were on the register on June 301894. and who suffered by the writing down of share capital then rendered necessary by the bank’s difficulties, are still holding their shares, the remaining shares having been acquired by speculators and investors who were shrewd enough to see that State control would rehabilitate the bank. Many of these shareholders have sea' 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 are confident most people will regard as of an unreasonable, nature. Neither the Government nor Parliament are likely tr entertain for a single moment sucl proposals as have been suggested. It is impossible to believe that the shareholders really expect Parlia ment to approve anything like th< proposals that their representative! on the Board are said to have n view, and we assume that they hav< been formulated on the extravagan lines indicated to allow for the in evitable whittling down which mus take place when they come up fo serious consideration. Before agree ing to any scheme for readjustinj the control of the affairs of the bank it will be the plain duty of the Go vernment to take reasonable piecau tions to ensure that the future man agement of the institution will b conducted on lines which will mini mi so as far as possible the risk o a repetition of the experiences c 189-1.”