The bank went on its way for three years in full enjoyment of a State guarantee, and it increased its business year by year, so that it was not necessary to appeal to the Government again. In 1898, Parliament abolished the position of president, with the right of veto, and gave the Board of Directors a new constitution. The Board was now to consist of six members instead of five, four to be appointed by the Government and two to be elected by the shareholders, the State thus having the preponderance of voting power.
After passing through another period of freedom from legislation, the bank was brought before Parliament once more in 1903. The time when the £2,000,000 worth of State guaranteed stock would reach maturity was approaching. It would expire in July of the following year. It was generally known then that the bank had been doing an excellent business. The State, of course, had not been called upon to make good its guarantee, and had not incurred any actual expenditure. The bank was in a position to redeem the whole of the guaranteed stock issued under the Act that was rushed through Parliament on the night of June 29th, 1894. The bank also repurchased the £500,000 worth of preferred shares issued in 1895, which were cancelled by the new Act, and in their place the Government purchased 75,000 preference shares, fully paid-up, representing £500,000 new capital. These shares carry a preferential dividend of 5 per cent. and a right to share in profits with other subscribers up to 10 per cent., which is the limit of dividend that can be paid upon them. They give the State a permanent interest in the bank’s affairs.
The transaction has been more than satisfactory from the start to the finish. The results have been magnificent. The Government saved the bank from bankruptcy, the colony from financial depression, and many firms and individuals from disaster. In doing that, the State has not been called upon to pay one penny, and it holds £500,000 worth of shares, which are now worth more than £1,000,000, and which may be looked upon as some return for the colony’s promptness and courage in coming to the bank’s rescue.
