GENERAL ASSEMBLY.

Temuka Leader, Issue 2687, 19 July 1894, Page 2

GENERAL ASSEMBLY.

LEGISLATIVE COUNCIL. The Council met at 2.30 p.m. on Tuesday. MARRIED women’s PROPERTY BILL. The Married Women’s Property Bill passed through Committee. SECOND READING. The Legitimation Bill was road a second time and refeprqd t.g the Statutes Revision Committee. HOUSE OF REPRESENTATIVES, The House met at 2.15 p.m. on Tuesday. BANKING LEGISLATION, Mr Ward moved the suspension of the Standing Orders in order to enable the Bank of New Zealand Share Guarantee Act, 1894, Atnendmeut Bill to be put through all its stages at one sitting. Captain Russell asked why this extraordinary course should bo adopted, os the

position was of quite a different character to. that of a fortnight ago. Mr Ward said that bnt for his illness he would have asked the House to assent to this Bill some days ago. The present Bill was altogether different from those passed by the House earlier in the session, and its introduction was consequent upon an important communication received by the Government from the Agent-General, and it was necessary that no delay should take place in passing the Bill. Captain Bussell said that the House had readily agreed to pass the two Bank Bills brought down by the Government earlier in the session in order to meet a grave emergency, leaving the responsibility with the Government, but he contended that the House should now be informed of the reason for this legislation, and the causes which had . led to the introduction of these Bills. He held that the whole question should now be sent to a Select Committee to report fully upon the matter.

The Premier said that all that this Bill provided for was to change from shares to stock. There was a great difference between issuing preferential shares at a short period and issuing stock. The Government were informed that it would be a great advantage to go on the market as soon as possible, and that it would also be beneficial to issue stock instead of shares. It was important that this Bill should be passed without delay in order that the highest amount obtainable in the market might be realised, as the stock, according to the press cablegrams, was to be issued on Wednesday. The Government had asked that the bank should clear the amount which had been guaranteed, and the issue of stock instead of shares would, they felt satisfied, clear that amount. He declared that the Assets Company had not depleted the Bank of New Zealand. That company had paid interest on the debentures held. Ho quite concurred with Captain Bussell that the appointment of the president of the bank ought to be clear of politics, and when that responsibility was oast on the Government he thought they would rise to it. Mr Mitchelson said that if the Premier had been in opposition at present he would have strongly protested against Bills of this nature being rushed through the House at one sitting. Dr Newman said that the House was entitled to know whether or not they had put this bank in a sound position. The whole matter should be referred to a Select Committee. Mr Duthie supported the views expressed by Captain Bussell. Mr Ward, in reply, said that it was wel 1 known to the present and previous Governments that the Bank of New Zealand was not strong, and it had been a source of great anxiety to' Ministers. Captain Bussell had stated that the Government were guaranteeing the shareholders, but they were doing nothing of the kind. The last Bill provided that the shareholders under certain conditions, if it were found necessary, were to provide £500,000, and unless 4 per cent, were paid on £2,000,000, the shareholders were not to receive interest on new shares. The present Bill contained no new principle at all, but it was necessary that there should be no delay over important measures of this nature. The motion for the suspension of the Standing Oorders was agreed to. In moving the second reading of the Bank of New Zealand Share Guarantee Act, 1894, Amendment Bill, the Colonial Treasurer, Mr Ward, said: I desire to point out to hon. members that there is no contentious matter in it; that there is no interference with the main principles of the Act which the House passed in connection with this matter a week or two ago. What has transpired since the passing of this 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 the legislation, and they requested him to keep the Government informed of what was being done in England in connection with this matter. The Agent-General thereupon communicated by cable with the Government,and stated that a difficulty had arisen; that it was found that under the deed of settlement of the bank no shareholder oonld hold more than 3000 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 the 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, that the colony had given a guarantee, and that, therefore, we would not permit this capital to be obtained at anything less than par, W e 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 p*r. The Agent-General advised us that it would be expedient—and I may also say that the financial advisers who represent the bank in the colony concurred —to substitute stock for shares, and that if this were done the capital would be got at not below par. That being so the Government carefully considered the matter. It felt that the colony’s credit was attached to this, having passed the legislation, and after various cable communications with the Agent-General we agreed to the proposal, subject to the House ratifying it, to substitute stock for shares, and that is the reason why it is now asked, and the only reason. The Agent-General further pointed out to us that the autumn holidays were 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 ou there until after the holidays. The Government saw the expediency of avoiding any delay, and authorised the Agent-General, subject to ratification by Parliament, 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 past week stating that tomorrow or the day after the shares would be put upon the market. That alone is the cause of the information being put in this way. It has all been a part of the negotiations and the directions of the Government, acting under the advice of the Agent-General, If you look at the Bill you will find that iu 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 wpre treated as ordjqary shareholders they would be entitled to vote. ~ When the colony stepped iu and had given its guarantee the Government safeguarded the interests of the colony by appointing a president i»qd auditor, the tho former with power to veto. It is not, therefore, under the circumstances in the interests of the colony that those subscribing to that stock should have tho right to vote as ordinary shareholders, hi

the Bill yon will also find that power has been taken to enable the president to delegate his powers. The reasons for that axe 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 per cent, stamp duty, and as we are advised thatthis being a loan for only ten years the premium is not likely to exceed 2 per cent, there will not be much net premium left. Again I should like to say a word or two upon 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 that the directors undertake to co-operate in giving effect to the conditions. I may say in connection with the Assets Company, as the question has been raised, that the Government fully recognise the desirability of having the Assets Company dissociated from the bank. I said that before, and I repeat it now. The time is not opportune to do it, but it is a matter upon which the 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 befdre'the House at a later date. Finally, I need hardly point out 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 appreciably improving effect this will have upon the trade .and. industries of the colony, because until that money comes here you may, and I say it deliberately, expect to see a continuation of the tightness of money and the want of proper employment in many places, and to some extent a continuation of the uneasiness prevailing so long. Hon. members on both sides of the House will agree with me in saying that since the legislation was put through the other evening, the people of the colony have approved of what has been done. If there 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 has been applauded by all shades of opinion in Hew Zealand musk clearly prove to their minds—as it must also clearly prove to the hon. member for Hawke’s Bay, who is mote sceptical than he was a couple of weeks ago—that in taking the bold course which the Government adopted they did what was justifiable under the peculiar circumstances that had arisen. Captain Bussell : What about the second million 1 Mr Ward: 1 will tell the House that the second million appears to be a matter of some concern to my hon. friend. , I do not know if he is anxious that all interference with the second million will be deferred until he has the pleasure of sitting here, bnt if that is so I am afraid that the second million will be likely to be looked up for a considerable time. I would point out to hon. members, however, and there is a great amount of misapprehension about this second added million, that the second million has been not for the purpose of carrying oh the government of the colony, not for the purpose of doing that which some hon. members fear, but it has been raised for the express purpose of strengthening the bank. I pointed out to the House the other evening that one million would be used for enabling it to meet its legitimate trade requirements. Supposing the other million were invested iu British consols the bank would hold the consols and they would have the million of security for the ordinary purposes of trade. Isay if inch an investment were made it would provide the Colonial Treasurer for the time being with what might be regarded as a proper investment; and at once ease the minds of the members of the Opposition, for they would be able to see that that million of money was not to bo used for the purpose of making railways, roads, or bridges. I desire to point out to the House that before that extra money can be used for any other purpose than that for which it has been raised, for strengthening the bank to enable it to conduct its business, nothing can be done except by legislation passed by this House. We purpose that it should be invested safely in the interest of the bank. That is a very proper thing to do with it. It must be kept in a liquid state; there can be no question about that. 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 the sole desirable object of ensuring that the financial stability of the bank should be such that it would bo 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 Bussell: *ou have not said how you intend to invest the million. Mr Ward: I had better refresh Captain Bussell’s memory by reading clause 4of the Bill. It is 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, the Colonial Treasurer, if he acted wisely, would see -hat it were made. lam not able to tell the lion, member where the million will be placed, but I have no hesitation in saying that it will be invested for and used for the purpose for which it was intended. It was put in primarily for the purpose of strengthening the bank, and that being so the Government may be depended upon to see that it is not invested in an improper way. Mr Orowther pointed out that the Colonial Treasurer could iuvest it without coming to the House. Mr Ward : If the Colonial Treasurer came to the House I doubt if it would be invested at all. There would be such a great diversity of opinion as to where it should be invested, that it would be difficult for the Colonial Treasurer to como to a decision. His duties 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 the House a second time to deal with this important matter, and i foel perfectly sure that both sides of the House are desirous of seeing last qf it and getting it completely out of the way. After considerable debate Captain Russell protested against the Bill being disposed uf in auoh a hasty manner, and moved as an amendment that the Bank qf Now Zealand Share Guarantee Act, 1894, Amendment Bill bo referred to a Joint Committee of both Houses. The debate was interrupted by the£-30 p.m. adjournment.

The House resumed at 7.30 p.m. After further discussion, in the course of which the Premier said that although there was nothing to con'ceal in this matter, it was not advisable to appoint a committee to obtain information which it would not be proper to make public on the floor of the House, The amendment was put and lost by 41 to 13. Mr Ward, in replying on the Bill, said that the Government had received a cablegram to the effect that the directors of the Bank of New Zealand in London were willing to confirm everything done by their representatives here in connection with the original Bill. He denied that the £1,000,000 was intended to be used for the ordiuary finance of the Government. It was simply intended to strengthen the position of the bank. The motion for the second reading was agreed to on the voices. Mr Ward moved the second reading of the Bank Shares Transfer Bill to limit the power of shareholders in the banks to transfer their shares. He explained that the Bill was merely meant to provide that no shareholder of a bank should have power to transfer his share to what might be called a “ dummy ” without the directors of the bank considering the application and . giving their consent in writing. The motion was agreed to. In committee on the Bank of New Zealand Guarantee Act, 1894, Amendment Bill, Dr Newman moved a new danse that no new branch of the bank shall be opened except in New Zealand. . The motion was lost by 44 to 5. The Bill passed with verbal’amendment. In committee on ihe Bank Shares Transfer Bill a new clause was added providing that the number of directors in a bank be not less than five and not more than seven. The remaining clauses were agreed to. Both Bills were read a third time and passed. . TWIC auctioneers’ bill. The Auctioneers’ Act Amendment Bill was read a third time and passed. TOT STANDING ORDERS. The rest of the new Standing Orders were considered in Committee. The-House rose at 1.5 a.m.