security for the advances, and, if the money owing, with the interest at 4 per cent., was not paid, the Colonial Treasurer was authorised to appoint a receiver, who would act as a liquidator. While these shares had currency, no dividend was to be paid without the consent of the Colonial Treasurer. One million of the two millions guaranteed was to be at the bank’s disposal for use in its ordinary business, and the remainder was to be invested under the approval of the Colonial Treasurer. Until the guaranteed shares were called in and cancelled no dividend was to be paid to ordinary shareholders without the consent of the Colonial Treasurer, who was authorised to satisfy himself that any proposed dividend would not unduly affect the security of the colony in connection with the guarantee. The Colonial Treasurer was authorised to instruct the bank to call up £500,000, which was one-half of the reserve capital, within twelve months. The Act stopped the movement to remove the headquarters of the bank to London, and provided that they should be in Wellington, and the Government was empowered to appoint a president of the bank, and an auditor for the business outside the United Kingdom, while the Agent-General appointed an auditor in the United Kingdom. By an amendment of the Act in 1894, Parliament consented to the guaranteed shares being issued in the form of negotiable stock.
While the Goverment’s action was the subject of conversation, and there was much praise, Sir Joseph Ward found that there were other circumstances surrounding the bank’s affairs, and they were not of a satisfactory nature.
The Bank of New Zealand Estates Company was very closely associated with the affairs of the bank itself. The company owned large areas of land. In many places this land was suitable for closer settlement, but it was not worked to the best advantage. As the company was closely connected with the bank, the Government came to the conclusion that it should be dealt with, and that the two institutions should be separated, or, at any rate, that their relationship should be modified. At the same time, it felt that hasty action might do more harm than good. It therefore decided that a joint committee of both Houses should be set up to inquire into the position of the two
