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not say that on the co-operation of the shareholders the success of a bank
depended. If shareholders did not put their shoulders to the whedl,
nothing the directors could do would make a success. It was the datj of
the directors to conduct the business properly, but it was the duty of the
shareholders to endeavour to bring the business. The business would be
a colonial business, and it was intended to develope the banking require-
ments of New Zealand. He would like to take this opportunity <» impress-
ing on ever^r eentleman the absolute necessitv of bringing all his frieods,
relatioiuiy neighboursi and anyone he had anytning to do with, to trauaet

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National Bank (f Nac Zealand. 807

whaiever business they might have with this bank. Without the support
of the shareholders the directors can do but comparatively little, but with
1,600 shareholders, if everyone did a little, ihey would have in a fair amount
of time a good and sound business. Mr. Bumes, their general manager,
left this country in December, and arrived in the colony in February. He
found a great deal of business to be done. Mr. Bumes arrived very oppor-
tunely, and was enabled to be at Mr. Grahame's side in the allotment of
shares. He had stated what took place with regard to the allotment, but it
was very gratifying to be able to announce the names of gentlemen who
had joined the board in New Zealand. At Wellington they had Mr. Pierce,
a gentleman, he believed, known to a good many New Zealand colonists,
and a gentleman whom he happened to have known for a sood many years.
Mr. Pierce was connected with a first-class business family in Manchester,
and he believed him to be one of the best, soundest, and quietest men
of business he had ever met in his life. With him was
asBociated Mr. Fit2s-Herbert, who was a public man whose conduct
had recently been before the Kew Zealand public in a favourable light.
At Auckland Mr. Kiderwood and Mr. Hardy had accepted the post of
directors. With those gentlemen he was not personally acquainted, but
he believed they were very weU known. At Dunedin, Mr. Morris, who
was well known to the New Zealand and London public, there was every
reason to believe, would accept a post at the board. He supposed there
would be another director at Dunedin, but who that would be they had
not vet been advised ; but he had no reason to doubt it would be some
gentleman of equally high standing with those whose names he had already
stated. Having arranged the allotment of shares and secured those
gentlemen on the direction, it was Mr. Burnes' next duty to open the main
sources of business for that bank. In April the office at Wellington was
opened, and that at Christchurch in May. There was in the latter place
considerable difficulty in getting suitable premises, and still more difficulty
in getting a suitable manager. He believed these requirements had been
satisfebctorily supplied at the present moment, and in those places they
were informed that business was proceeding remarkably well. Having
done that, Mr. Bumes next addressed himself to what was a very important
part of their future business, and one which had given the directors an
ixnmeuse quantity of work and labour ; he meant the arrangements with
the Bank of Otago. Although not stated in the prospectus, it was generally
known it was the intention of making an arrangement with the Bank of
Otago to take over the business of that bank. The directors felt it would
save them an immense amount of locked-up money, and put them in
possession of a number of branches. Subsequent to the last meeting, the
directors of the Bank of Otago held legal meetings and received power to
tranafer the business of the l«ink, and Mr. Bumes was instructed to take
it over. He did not think it necessary or advisable to go into the details
of these transactions, and he thought it would be the more out of place, as
he might publish information which the directors of the Bank of Otago had
the right to publish first to their shareholders. He might say that from
the first they had met with the greatest consideration from the directors of
the Bank of Otago. He would, however, briefly say, that Mr. Bumes
addressed himself to take over what was a very important part of the
businesB — the premises and buildings of the bank. Mr. Burnes wrote : '^ It
is my duty to inform the board that the view they expressed to me in
London as to the value of the bank's business is fully borne out from what
has oome under my notice." He went on to say that he considered the
goodwill worth a considerable sum, and, although the first estimates of the
directors of the Bank of Otago were not borne out, still there was no doubt

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808 National Bank of New Zealand.

that this bonk had got a good baaiuess, and at the same time the Bank oi
Otago shareholders had made a good sale. With regard to the buildings, he
stated that he found that a minute in8x>ection would entail travelling all over
the country and the loss of considerable time, as there were altogether
thirteen biuldings and branches which would have had to be inspected, and
he thotlght it therefore desirable, if he could, to come to an underatanding
with Mr. Lamach to purchase the whole of the buildings at a lump sum.
That Mr. Bumes, he was glad to say, had been able to do, and he had
taken over the whole of the buildings, and with the bmldings he had taken
the office furniture, and the house furniture, and the note circulation, which
would entail a profit, because with a large note circulation there were always
some notes lost or destroyed, and at the end of about five years they would
be able to tell what the profit on that would be. Mr. Barnes had occupied
himself by going through the accounts of the Bank of Otago, and from the
details the directors received, they were satisfied that prudence had been
exercised, and they would have no reason to complain that he had taken
over any bad accounts. No doubt they would lose some of the accoontB —
some no doubt were personal, some influenced by directors, some personal
to the manager ; but they hoped a fair number would stick by them, and
none of the bad ones would be taken over, except at such a price, and on
such security, as would save the bank from any loss. With r^ard to the
amount to be paid, surprise had been expressed that they had not received
advice in regard to that. They were not enabled to state the cost, but by
the kindness of the directors of the Bank of Otago he had been furnished
with a telegram they received some days ago, informing them that the busi-
ness of the bank had been taken over on the 1st of July. This bank had had
no telegram ; but, as everybody knew, the telegraph had been working very
badly Utely, and possibly their telegram might have been delayed. The
moment they got the telegram they were prepared to pay the money, and
he could assure the Bai£ of Otago proprietors, if there should be any
present, that the moment they got advice of the amount, they would give
them the cheque.

Mr. Morrison — They are all satisfied of that, sir.

The Chairman continued : — Although they had done very well with the
money, it was not easy to employ it at a good rate of interest, and they
would be only too glad to hand it over to the Bank of Otago shareholderB
as soon as they got that intelligence. They would have a business repre-
sented by eleven branches and two agencies. He had received this morn-
ing a statement, showing that the Bank of Otago had nearly 2,200 deposit
and current accounts, and he thought it would be evident to everyone that
that presented a satisfactory nucleus for a good and profitable business.
Reference had been made in the report to Mr. Grahame's services, and he
might mention that he received yesterday a telegram from fifr. Grahame
from Suez, so that that gentleman might be expected home in the course
of another week or ten days. It was duo to him (Mr. Graliame) that some
expression should be made in recognition of the services he had undoubtedly
rendered the company, and he (the Chairman) mentioned this in order that
the matter might be placed on record ; for if nothing were said now it migfat
be forgotten what Mr. Grahame had done, and possibly when he returned
here some gentlemen might feel disposed to initiate a movement by which
that recognition of his services should take a tangible form. £veryo&e
knew how extremely well the shares had stood in the market ever fiinoe
the bank had been iu action. It could not be supposed by those who
knew anything on tlie subject that a dividend could be paid at this early
stage of the bank. Of course the accounts which were submitted to the
shareholders now had reference only to the 31st of March last, and to the

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National Bank of New Zealand. 809

London business, for up to that time absolutely nothing had been done in
the colony. Mr. Grahame and Mr. Bumes had done nothing more than
allot the shares, and appoint the directors, and open one of the offices ; that
at WeUington had been opened a few days, so that the business could be
nothing, and it was rather surprising, witn all that, that their shares should
have held their position as they had done. He thought the explanation
of that was to be found in the extraordinary respectability — he used the
word respectability as a City term — ^the extraordinary respectability of
their body of shareholders. Anyone who went over the fist would find that
they had an unusually solid list of shareholders. When they had to
make a call to pay the shareholders of the Bank of Otago, tiie call was
responded to in eight days. The call was for £66,666 ; in eight days they
received £66,219 ; the balance (£1,400) could be accounted for within a
few hundred pounds by gentlemen who were away and abroad, and those
who invariably paid a week after they owed anything. One lady addressed
a letter to the directors, stating that instead of a call she expected to
receive a dividend. He hoped that their explanation had proved satis-
factory to her, and he trusted that by the next meeting they would be able
to give a small dividend. Those were the facts connected with their
business ; they were very dry bones, and it was utterly impossible for
him to make an eloquent speech out of them. With regard to the future,
he thought their prospects were very satisfactory indeed. They had been
received with very considerable cordiality in the country as a bank, and a
vast number of country bankers had availed themselves of their services
to make remittances to the colonies. That was a very important business,
for every £10 note sent by a friend to a friend in the colonies meant a
new constituent to the bank, for he regarded it in this light, that the
recipient of the £10 note would one day become a rich man, and be a
customer to the 1)ank. He hoped that point would bo kept in mind by
those who had it in their power to influence any business. With regard
to shipping business, he need not say there was good business and bad
business. It was the anxious desire of the directors of this bank to con-
fine their attention strictly to the good business. He believed it would not
be to the advantage of the bank to pay an inflated dividend one year, and
nothing the next. A great many commimications had been addressed to
him on a subject that appeared to occupy the minds of merchants. He
had been asked, ^ Is this bank going to do a banking business, or is it
going to cut the throats of the merchants ? " It was the assurance of tho
directors that they intended as far as possible to confine their business to
banking busmcss, and banking business only. He was a merchant him-
self, and knew how banks had encroached on the business of merchants,
and therefore he wished to state the more emphatically that they did not
wish to compete with merchants, but to do a pure banking business, and
he believed if they did that, in twenty years' time this bank might
take a place second to none in the world. He referred to the way in
which private banks had held their own against joint-stock banks, and said
that twenty years ago it was stated that in five years there would not be a
private bank. First-class private banks had, however, held their own, and
were not inferior in standing to joint-stock banks, and the cause of that
was, they had done a banking business. They must not be impatient if in
the first few years this bank could only pay a moderate dividend, for it
could only pay a high dividend by doing a risky business, which he was
sure it would not 1^ the desire of any shareholder for them to do. The
directors were willing to devote a great deal of time and trouble to the
duties they had undertaken. He felt perfectly satisfied that the directors
would do their utmost to get a good dividend ; but the chairman of a large

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8l0 City and County Sank.

bank said to him, the other day, he hoped they woxild not cnt each oiher's
throats to do a large business, and his reply was that rather than do a bad
business they woind do none. He believed they would do a good and
remunerative business, and that in the course of ten or fifteen years they
would see the shares at such a price as would compensate them for any
moderation in dividend in the first few years. It was now his duty to
move the resolution, that the report now presented be adopted and entered
upon the minutes.

Mr. D. K. Smith seconded the motion, and confirmed what the chairman
had said with regard to the progress of the bank. They had gone through
the infantile complaints of youth, which every bank had to pass thioogh,
and had proved that they had a strong constitution. Their progress bad
been slow, but it had been sure. They could not run before they had
learned to walk. He thought thatbv the next meeting they would be in a
position to declare a dividend, a declaration so acceptable to every share-

The motion was put and carried unanimously.

The Chairman— That is all the business of tlie meeting. K any gentle-
man has any question to ask now, I shall be happy to give any information
I can.

A Shareholder said — Before parting, they ought to pass their wannest
thanks to the chairman and directors for the manner in which they had
established and carried on this institution. He did not suppose thai any
of them expected to receive a dividend at this meeting, as it would be an
unreasonable expectatiou at so early a period.

Mr. J. R. Morrison craved leave to second the motion, not that he could
do so altogether con amorey but simply because he had a hand in the laie
negotiations between the two banks. As a shareholder in the National
Bank of New Zealand, he heartily concurred in this motion. As one of
the liquidators of the Bank of Otago, it was not without some regret he
was imable to extort better terms. He and his colleagues did &e best
they could, but they were afraid of incurring the responsibility of missing
the oppoi-tunity of merging into what promised to be the strongest bank
in New Zealand. He thought the time was not far distant when the
bank would be the most prosperous bank in New Zealajid.

The motion was put and carried unanimously.

The proceedings then terminated.


This first annual general meeting of this bank was held on the 90lh
July, at the London Tavern ; Mr. Grodden in the chair.

Mr. W. Bussell Crowe (the secretary) read the notice convening the
meeting, and the following report and statement of accounts were taken
as read ; —

^^ The directors, in presenting to the shareholders this their first annual
report, beg to submit a statement of accounts up to the 30th June last,
embracing a period of twelve months' business. The capital subscribed
to that date consists of 4,791 shares of £6 each, amounting to £23,955,
of which £8,581 has been paid, leaving a balance of £16,^4 in respect
of uncalled capital, calls not yet due, and arrears. The arreara and caQs, as
they become due, to the extent of £2. 10«. per share, are now in oouiae of
payment, no further call being contemplated. The accounts show agroes
profit of £4,177. 19*. 3d., which, after providing for all current expenses,

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Citff and CtAmty Bank. 8ll

and the payment in January last of an interim dividend at tlie rate of 5
p9r cent., and of half-fees to the directors, leaves an available balance of
i;631. 17s. bd. The directors therefore feel justified in recommending
a dividend for the past six months at the rate of 6 per cent, per annum, free
of income-tax. While great and satisfactory progress has been made in ex-
tending the business of the bank, it must be observed that, owing to the
small amount of the paid-up capital, the directors have been obliged to re-
discount to a much larger extent than they would otherwise have done,
and, in consequence of the high rate of Bank discount, heavy interest
had to be paid, the result being that the net profits do not represent so
large a proportion to the gross earnings as the directors have every
reason to anticipate they will in future. The expenses of management will be
but nttie added to when the paid-up capital is larger, and the margin for
profit thereby increased. The directors have set aside a sum of £3,000
oil account of preliminary expenses and for contingencies ; but of this
amount about one-third only has been at present expended for furniture
fittings, and alterations of the bank premises, brokerage, advertising, tkc.
The sum of £3,000, which appeared in the accounts as the purchase of the
goodwill and connection of the City and County Investment Company
(Limited), which formed the nucleus of the business of the bank, was for
the most part taken up by the shareholders of the company exchanging
their sliares for shares of the bank, credited to the extent of 253. per
share. This money has not been paid in cash, but appears in the capital
account per contra. Owing to the peculiar state of the money market
during the past year, the directors did not consider it advisable to incur
large expen^e8 in placing their shares among the general public, but pre-
ferred working with their present small capital to prove the soundness of
the principle upon which the bank was founded. The result of the year's
trading, the stead v progress of the business, and the prospect the direc-
tors have before them of a largely increasing business, fully justifies them
in earnestly requesting the present shareholders to use their best endea-
vours to increase the capital of the company without incurring the great
expense of advertising and brokerage. The directors beg to report
that they have elected Mr. Samuel Smiles a member of the board,
subject to the oonfirmation of the general meeting. In recommending
the payment of 6 per cent, dividend, the directors wish it to be under-
stood that Clause 110 of the Articles of Association, by which their
remuneration could be increased, is not to be put into operation."

Bakmee'sheeifor year $nding Jum dO/A, 1873. -
Nominal capital £500,000

Capital subscribed, £23,955 ; less uncalled, calls not due, and

arreara, £15,373. lis 8,581 3

CmxeBt, deposit, and other accoants, bills re-discounted, and

loans on secorities 46,6i0 18 1

AcoeptaaoeB 3,180

Net profit for year, including rebate, £875. 55. ^, ; less du«c-

tora' half-fees, and interim dividend to Slst December,

1872, £243. 7«. ^d, *


Cash on hand










Camod forward ... £6,181 4 7

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812 CUi/ and County Bank.

Brouglit forward £6,181 4 7

BilU discounted, loans, and current acconnts 43,606 3 11

Stamps .... 66 10

Preliminaiy expenses account, of which only about one- third

has been expended 3,000

Purchase account 8,000

Securities against acceptances, per contra ... 3,180

£59,033 18 6


Current and other expenses, as under :—

Salaries, incidental expenses and petly cash, printing and sta-
tioneij, postages, rent, interest paid to depositors on current
accounts and on loans and re-discounts, interim dividend and
directors' half-fees for half-year ending 31st December, 1872

Balance of profit and loss

By gross profits

3,546 2
631 17


£4,177 19


£4,177 19


£4,177 19


The Chairman said that, before moying the adoption of the report, be
would be happy to hear if there were any questions to be asked.

Mr. Harvey said there was a lump sum in the accounts of £3,546, and
he thought it would be satisfactory to the meeting if they had some
particulars of that.

The Chairman — I will give an epitome of those sums : saUrieSi
£1,168. 14ts. 4(2.; incidental expenses and petty cash, £162. 19s. 7d.;
printing and stationery, £130. 5^. 3(1. ; posta^, £26. 6s. ; rent« £340 ;
interest to depositors and on loans and re-(iisoount8, [£1,473. ds. 7d. ;
interim dividend and directors' half fees, £243. 7s. 9d. ; total, £3,546. 2*.

Mr. Harvey expressed his satisfaction with the explanation.

The Chairman said he would now move the adoption of the report. He
thought it hardly necessary to enter into details on the various paragnphs.
The second and fourth paragraphs, however, he wished particudaily to call
their attention to. It would be seen that without going to the public at
all, merely by the efibrts of the manager, the secretory, and the diiectors
and their friends, they had been able to carry on the bank, although on a
very small capital, for now a period of twelve months. The number ol
shares since the report was drawn up had been increased to 5,000, and in
two or three months he hoped to see the number increased to 15^000 or
20,000. The prospects they had before them were such as he thought
perfectly justified any capitalist in investing their spare capital in the
undertsbking. To a certain extent they had passed through haxd tbaM,
especially as their capital was so small. Their expenses had neoeManly
been heavy on so limited a capital, whereas they would not haTe been
increased in any appreciable degree if the capital had been treble or qmd-
ruple ; notwithstanding the limited capital, they were able to preaent the
shareholders with a dividend of 6 per cent. He did not know that then
was anything in the accounts that he need dwell upon. If there wore any
questions, he would be happy to answer them, and would now move that
the report and the accounts attached to it be adopted.

Mr. Boberts said that it afforded him great pleasure to second the

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Ciiyand County Bank, 813

motion. He thought they ought to congratulate themBelyes on having
achieved a result so highly satisfactory. It is perfectly dear that in these
great commercial times there were opportunities for investment on a large
scale, and there was room for numbers of banks to do successfully a very
large amount of business. He was quite sure that the report presented ail
the features of success which was possible for a bank to present in this
eariy stage.

Tne motion was put and carried unanimously.

The Chairman moved that a dividend at the rate of 6 per cent, for the
last six months be declared, and the interim dividend made at the rate of
5 per cent, at Christmas last be confirmed.

Mr. Cropper seconded the motion, which was put and carried.

The Chairman moved that the election of Mr. Samuel Smiles to a seat
at the board be confirmed.

Mr. Marsh seconded the motion, which wasput and carried.

Mr. S. Smiles thanked the shareholders. He said he believed the bank
to be based on sound principles, and likely to be conducted in a safe
manner, otherwise they would not have found him here. Gentlemen he
saw around him had approved liis action in other quarters, but the greater
part of his life had been spent in commercial undertakings, and therefore
he hoped to be of some use to {he bank.

The sum of forty guineas was voted to the auditors, Messrs. B. G. M.
Oreasey and Walter Thomas Salton, and they were re-elected.

Mr. Pooley proposed a vote of thanks to the chairman and directors.
It was a matter of surprise that a bank of this kind could be conducted
with so small an outlay as £1,600. If all companies were conducted with
the skill which had been displayed in the admmistration of this company,
much more satisfactory results would have been attained.

Mr. Roberts seconded the motion, and bore testimony to the skill of
the directors. He called attention to the small amount of the salaries,

Online LibraryJohn Tilden PrinceThe Bankers' magazine → online text (page 106 of 150)