BANK OF NEW ZEALAND.

Stratford Evening Post, Volume XXXVII, Issue 62, 13 November 1913, Page 3

BANK OF NEW ZEALAND.

THE NEW BILL UISCUSSED. [Per Press iAssociation.] Wellington, November 12. The Ministel - of Finance, explaining the Bank of New Zealand Bill, re ported on thh first reading, said that with reghrd to the million guarantee proposal now made that the Government should renew the guarantee. There was a difference between the dir ectors and the shareholders which had been ovoiFoino. There should now bt no serious opposition to the Bill. It had been made perfectly clear by appeal to the Courts that the Bank’s capitfiT t'Otiid hot hi increased" without the aid of Parliament, and that was now being done. The State’s interest in the Bailk was'as one to two, and that would be preserved in the Bill. Regarding the issue of new stock the question to bo determined had been the position regulating the interests of the State, and the Bank shareholders. The dividend on B preference shares would be the same as that ondrdlAffry 1 shares. B preference shares would bp a first call (after A preference) on the capital of the Bank. That put the State on a much better foOt> ing than previously. The maximum , of shares the State could acquire was ia million out of the proposed three millions. The maximum premium provided was 100 per cent, so long as the Bank remained as ‘if rial's and belonged mostly to the'shareholders. It was unwise to have the Bank brought continually on the floor of the House. The power of veto by thb'ilinisler was retained. He had exercised it during the past two months. H was an enormous weapon iri the hands of the Minister. The power of ‘ the auditor wait also retained. ■ Whpn the House''resumes! at 7.30, Sir Joseph Ward continued the. debate on the Bank of New Zealand Bill. He could not help recalling the epochmaking happenings of October 19th, 1894. when he introduced legislation affecting the Bank which, at that time, was in a particularly low state. That legislation eaved the Bank of New Zealand. To-day tKe Bank was so strong and its position so good that it was a compliment to all concerned. He paid a tribute to the name of Mr John Murray for the good work accomplished by him in connection with the Bank. It was a gdocl thing; for the country that the Bank was attached to the State,, an^ ( hQ } 'w(|Y|d, say that he approved of the proportion of (.directors —four for the Government > and! two shareholders’ directors I though he would not t>o,,ayor6©| to increasing "hoi'll by two. It wap not exIpedfcilt •to make large changes iri such ua lafge instiiution as t|io Bank of New .'Zealand.'' would 1 have )t>een better Ito have calfecl up' one'half of the amount proposed, instead or million J "It would’ have’'been 1 wiser to have left £1 13s 4d uncalled. That applied to both shares. It was, m his opinion, a mistake to have a nominal 'capital of tlirefe "riußibri’s Sheri' it was not proposed to utilise it at all. tin connection with the States relation $ with ment for a State Bank, he mentioned that'he agr?^ f that while wo-had one miUibik3 l i V n Bank :of 'New, Zealand', ; 500,000 shares, and probabilities. of anpthei million being advanced, ’ which meant ■pbrnttically ~ipv,P Ufn| ’ qft Sft t s’gP??* apaH from current account, the State a interests were well -preserved, and there was no necessity for a State Bank. The bipod of this 4 young country -was’ cheap."money,.,and it must he recognised that cheapness of money in the future would bo controlled by the banking institutions. It would be a good thing if the Bank of New Zealand were., to .sot an example in the matter of minor reforms; He instanoed the charge of 10s for keeping acF counts, and held that that should not be imposed. The Bill on the whole, was' framed on safe lines, and would assist tile Bank to become a greater institution. TKe Hon. - W. Fraser, replying to Sir Joseph Ward, claimed that it was not proposed to call up the whole million and a half of the new capital if it was not wanted, but what they desired was to avoid coming' continually do the House for fresh power. Sis only fear was tlfht they were making the Bank too independent of the House, but in view of the power the State, had, on the directorate, ( ,tho House could be kept’'ill the closest touch with the Bank’s The necessary legislation , could be introduced at any time." ‘ v.The recovery ol the Bank was one of the most remarkable incidents in banking history, and this legislation would tend to make it stronger than ever. Mr D. Buddo said the fact that the Bank' had built up a handsome reserve fund since 1894 was proof that there were few niore profitable businesses than banking. Ho quoted the profits of other banks to substantiate his statement. Ho urged that concessions should he made to the public in the direction of remissions on exchange. Interest, on deposits, at cal) should a|so be paid. If the hanks did not show greater consideration depositors would drift towards the local bodies and large mercantile firms, which wore rapidly taking up deposits on call, paying interest on them. Mr J. A. Millar declared that the Bank was making far too much capital. No bank in Australasia was trading with such a large capital as pro posed. In view of the assistance giver to the Bank by the State, a greatei share of the new capital should be given to the State. Ho strongly do nounccd the practice of allowing nier eantile firms to take deposits on call as unless controlled in some way b; legislation there would be a most dis astrons panic in the Dominion sonv day. Mr H. G. Ell put in a plea for i 'IT

State bank. The proposal to extend the guarantee'for 20 years was a mistake. Ho hoped when in committee that the period would be reduced to

ten years. Mr G. W. Russell pointed out that I the shareholders’ interest in the ( Bank’s capital was only half a million, ! vet with this small investment the. Bank made a net profit of £082,530 last year. In addition it had built up a reserve fund out of profits. Little exception would be taken to the Bill as a whole. There was provision for fresh legislation during the next 20 years. There would come an opportunity of .discussing the question of making, the Bank a State Bank. Personally he could see no reason why the Government should not purchase shares on the open market, so as to convert the Bank into a State institution without' any revolutionsiry process. Hal-fa-million could be borrowed on the London market and invested in this way at a handsome profit. The House went into Committee on the Bill, and progress was reported on the parsing of the short title. . The Hou§e rose at 11.50 p.m.