The Temuka Leader THURSDAY, JANUARY 3, 1889. BANK OF NEW ZEALAND.

Temuka Leader, Issue 1836, 3 January 1889, Page 2

The Temuka Leader THURSDAY, JANUARY 3, 1889. BANK OF NEW ZEALAND.

A recent cablegram told us that the Financial News had been attacking the Bank of New Zealand, and throwing doubts upon its stability. It also said the New Zealand papers were afraid to publish anything detrimental to it. It is true that by far the majority of New Zealand papers did their best to hide the position of the bank, but still some of them were more outspoken, and though they tried to smooth over the difficulties into which the bank got, it is not true that they suppressed anything concerning it. For instance, when the Evening Press stated that the object the present Grov eminent had in borrowing the £2,000,000 loan was to help the bank out of its difficulties, the subject was discussed in all the papers of the colony, and other statements equally damaging were commented upon most freely. We do not think, therefore, that the Financial News had any grounds for asserting that the colonial papers were afraid of commenting upon the bank; neither does it appear to us that its present attack is anything more than an effort to damage its position, so as to bring down the price of its shares. We have criticised the Bank of New Zealand freely,lbut now that it has successfully passed the great crisis of the past year without much harm coming to it - we are fully satisfied that there is not the slightest fear of it. Its managers, in our opinion, did all they could to destroy public confidence in the stability of the bank. They first of all laid violent hands on the most of the reserve fund, and con- ' fiscated it to the general business of the institution. This in itself was sufficient to frighten timid people, but the next step was more violent still. To the astonishment of the whole Empire, they refused to declare a dividend, after having been paying dividends at the rate of 15 per cent, for years. Next a committee of investigation was appointed, and the violence of the attach made by this committee on the managers of the bank was such as to cause it to be said that it was the result of animus. It was alleged in that report that wholesale misappropriation of the bank’s money had taken place by the directors lending money in immense sums to bogus enterprises in which they themselves were interested, and that about one million of the assets would have to be written off as bad debts. The shares, which a few years before were quoted at £25, were reduced in value to £7 10s, and special inducements were offered to persons willing to take up new shares. Now to us it appears extraordinary how the bank was able to weather through such murderous management. Had this taken place in any of the older countries there : would hare been an immediate run on the bank, and it would have had to suspend payment. No bank could possibly stand if the holders of it snotes audits depositors were to rush it. The Bank of England could not stand a run on it any more than another, and it is really a matter for wonder that the muddling management of the Bank of New Zealand did not create a panic. But it did not. The people accepted surprise after surprise with a philosophic coolness and indifference that bordered on the heroic, and the result is that the hank is now sounder than it has ever been before. All its

bad debts are wiped off; its new share 1 issue has been taken up, and now it | is so sound and so solid that it can J afford to laugh at the efforts of rings to damage its position. There are in England several papers owned by stockbrokers, and their policy is to cry down certain institutions, so as to bring down the value of their shares. When by this means the shares come down the stockbrokers buy them, and then they employ other means to get up the price of them again, when they sell them. The Financial News has attacked the Bank of New Zealand for this purpose. It wants to frighten the holders of the new shares so as to cause them to sell before the next dividend is declared. No one, therefore, need be put out about the Financial News’ attack. The bank was never in a better position since it was established than it is at present, and, as apparently more prudent managers have taken its helm, it has a long and prosperous career before it. There is nothing to damage it, except what must damage all the banks in the colonies eventually—and that is the balance of trade against them, including the enormous sura we have to pay foreigners in the shape of interest. That is the real danger. Dr Giffen, and more recently Mr Westgarth, have pointed this out, but we have so frequently referred to it in these columns that we do not think it necessary to comment any further on that point at present.