FINANCE AND TRADE.

Wairarapa Daily Times, Volume XVI, Issue 5123, 3 September 1895, Page 2

FINANCE AND TRADE.

, Specially complledfor tlio" Walrarapi Daily Tim M..

THE BANK QUESTION. It is impossible to get clear of the Bank of New Zealand. Incorporated by Act of the General Assembly, July 29th, 1861, it has therefore boon with us 34 years, and during the most of ; that time has been the cess-pit of -jjkk financial villainy and pious fraud. It Ww is unnecessary, however, to refer to this,fontis.too well-known. To Mr George Buckley is .due the credit of setting a match to tho touch-hole which exploded in 1888 with.great results. Mrßuckleywasscoutedand hounded for his plain speaking, but time has proved the correctness of his assertions and opinions. Mr Buckley was right, the others were wrong through ignorance, or wrong with fraudulent intent.

In 1888, it was found necessary to writeoff thereserve fnndof £500,000, and reduce the then capital by £300,000, a total of £BOO,OOO. Purther shares to the extent of 50,000 at £lO each were then issued, and the colony breathed as fresh, feeling that finality.had been reached; but two years later, in 1890, the dream of finality was dissipated, for it was found necessary to extinguish a deKciency, and the capital was written down by £300,000. Theshareholders who two short years ago wore in- '? ducetl to subscribe for the new issuo, J were lined for their temerity to extent of £2 10s per share, which amount was written off the shares. Once more we began to feel that tho worst was over; that the bed-rock had been reached; and this belief received confirmation when, in 1891, ut dividend of 5 per cent, per annum was declared, repeating each year until 1891, when the colony was induced to find two millions of money and the shareholders were dropped upon for another half million, On this occasion, we were assured by bankers and politicians, that by giving this sum to the bank wo would avert a great disaster and place the bank in it sound position. Coming f rum such sources, the assurance was accepted at full value, and the press and the people were loud in their praises for the statesman-like action of the Government. How very easy it is to play at statesmanship is apparent. A man holds up apistol to you: " Money or your life " ! you open your pockets and give him all he wants, You arc a statesman, because you have given away money somebody else has entrusteiM to you. W The dream of stability that wo entertained in 1894 has been sadly distut bed by the events of last week. The Committee of investigation coolly tell us that the Bank has lost £376,900 with a contingent dependency of £200,000 or a total of £576,900. This does not include the Estates Company or the Agricultural Company, but relates purely to the Bank's own affairs. So that since 1887 the sum of £1,676,900 has been consigned to the dust heap, and the amount of crime, comedy, and tragedy that sum represents will never be known until the secret history of the Bank of New Zealand is written.

But £1,776,900 does not complete the amount lost, there is still £7G3,5(J8 to he added to that on account of the Estates Company and the Agricultural Company thus ; making the grand total £2,440,468, which equals an annual loss of. ; £71,778 10s for (lie whole 34 year| the Bank has been in existence,' This huge sum is gone, absolutely lost, how vc are not (old, but that it is dead there is no mistake, No attempt has been made to punish anyone, no elVnrt made to fix upon the guilty persons, hut wo are told who is not responsible, Tho directors appointed under the Guarantee Act ' of lust year are not responsible, so the Select Committee tells us, a piece suporlluons information, for wo all know that to them we owo.the knowledge wo now possess respecting tho ( Bank. The Select Committee's report discloses the fact that tlio Bank of New Zealand and its dependencies, taken together, is just solvent, and it is only reasonable to suppose that in this, the best case for the Bank has been presented. The position is obtained by wiping out tho wholo of the capital, including the call of £3 (is 8d per share made under tho Guarantee Act of last year, Tho Bank is to be rehabilitated, and we are led to understand that such a course would he in the bust interests of the colony, and the lesser of evils. The greater evil, appnrentl ™ is the suspension of the Bank, and of this evil some gruesomo and wholly incorrect pictures have been painted. This individual opinion has been accepted at a greater yaltie than it is worth, mid no account lias been taken of the ability of the individuals to give such' opinions'. The effects of liquidation did not form the order of' refereiico '{o (.ho Committee! kit notwithstanding, }|io opinions of the members of tliaf Committee! as to the terrible results of liquidation, were accented as authoritative. The suspension of the Bank qf New Zcalapd woulfj undoubtedly have caused great ju : cpnypnience, but that is only a. matter of degree, for every hank, ruptcy causes trouble and' misery,, but to say that terrible results would follow the bank failure is simply "tommy-rot." It was only a fo\v months'ago thi}t all the banks (twpj in Newfoundland suspended. Thg shock fpr thg momont was great, but tho country has steadied down, and is recovering rapidly. Does the legislation of 1895 bringus fothe bed 3 rock? Assuredly not! It is thpl opinion of several members of tho Select Committee that it does not, The Act of 1895 is a stopgap, and \vb must not blind ourselves with the hopo. that we have seen the last of tho Bank of New Zealand, We.are pouring water through a sieve, and so long as we do that we cannot hope for fiuaKty. The Bank will conie'to Parliament again, and will be justified in ddiilif so if tho estimates of the committee are nofrealise'd. The estimate 1 of £500,000 being realised by a' call on tlio shareholder'to'start'wi(h; " savours 'of stupidity,"'lf"t]ie c'alj made in Ifoyefliber last year lias realised only £45.0,000, is'it to'Jja eypected that a second call pn shareholders already jmppverjshefj will yield'a greater'sum.' The hait . of a 5 per cont. dividend on the second call Is poor inducement, for It must bo borne in mind that tho dividend has to earned before it caK bo paid. The call will not realiak. £500,000, or anything like fcT amount, and if the sum named in the act is not obtained, the bank will have ample reason for again intruding upon Parliament. The estimate of profits is based upon llimsy material, and pro-supposes tliat the Bauk will retain the confidence of its client, and will eulargo the num» bcr of its customers, and increase its profits by purchasing the businessiof the Colonial Bank,' Jf the,o6tiniated< •■ '•' i ■! i: ,:.. \i- ,:■■■,. v, '"

profits aro not realised there would exist a ekiin for damages against tho Colony. The piuclias'mg of another Bank lias roused the curiosity of almost ovcryO le. Why tho Colonial Bank, which year after year has shown excellent baluiice-slicete and paid regular dividends, should wish to sell oi& is a mystery. If the National ij&k of New Zealand which washed up it affairs some yoars ago, and then settled down to steady business, wished to quit its property, ono could understand the mutter, for tho reason that the National is a small Hank, paying a small dividend (5 per cent.), and its shares are at a discount of 50 per cent. But tho National Bank refused to sell or amalgamate its business with the other two, simply because it is doing a sound and profitable business, and is in a position to continue operations. Tho persistency with <#b. which the amalgamation or putchase has been kopt in the foreground is amazing ; tho general opinion all along has been that an understanding existed between the two Banks, and the clause in tho Bank Bill this year in a measure confirms public opinion, The legislation of last week was the lesser of two evils, that we must accept as a fundamental fact. It is to prevent a great calamity that the r-oui'Sß was recommended by the f&initteo, but there is no escape from misery in this matter, . The shareholders are to be greatly pitied, for many of them must go under with tho crushing weight of the second call. The amalgamation of tho_ two banks will let loose upon society a horde of hungry clerks, while those who havelongoverdrafts in either bank must pay up or go through the mill. This will be silent suffering, imperceptible, and therefore unnecessary to consider, but had the bank been forced into liquidation we should have probably scon many of the leading lights of the day in the gutter, a spectacle too horrid to contemplate. The Colony Ims paid a heavy price fur the pi ivilege of having a baby bank, it would have been better if we had stifled it. Liquidation is the proper thing to • have done, even if the Colony had to guavantco to tho creditors of tho bank 20s in the £. It would be cheaper in the long run to adopt this course, but Parliament has seen fit to do otherwise, and we shall appreciate its work in years to come. ljffi;ers and politicians cannot be slicfed together safely, the one is surs to buy the conscience of the other, and we shall get a taste of this in time to come. We have now to await the results of the meeting of shareholders. How will the shareholders outside the Colony, who are liable for £597,000 out of a total of one million, view the situation. The London shareholders are bound to give trouble, and litigation is not unlikely. When the last call was made, an effort was made to resist it, but upon advice this course was abandoned, but shareholders were led to believo, by a cablo message from the Bank, and by tho utterances of the Hon. J. G. Ward, in London, that no further call would be made. Supposing they jib, what will be tho | result? The position is far from satisfactory, and those who iudulgo in the hope,that finality has been reached, will be greatly disappointed. > Tho more closely the matter is looked ijfothe more apparent is it that the Gwfty is undertaking a stupendous task hedged in with dangers. Protests are of no use now, we are committed to the Bank beyond all hope, and must go on with the business, The great Liberal Party has had its turn in governing this country, and liqw well it lias run tho ship of State on to the rocks. The wash-up of the , Party cannot be longer delayed. Pi:itcv Pmv.v,