Memo, by the Secretary of the Treasury. The principal Act (1861) did not provide for ex tension of business beyond the colony of New Zea land, and the subsequents Acts giving extended powers are silent as regards limit of liabilities. I think it may, therefore, be fairly argued that the limit defined by section 93 of the principal Act (“ not to exceed three times the amount of coin, bullion, and public securities within the colony”) is the legal limit which we may properly ask to be maintained ; but that no objection should have been made on a previous occasion when the pro portion was even lower than the present cannot be accepted as an argument against exception being taken now. Mr Holmes excused the position of the Bank in New Zealand by asserting that the resources of the institution in Australia are largely in excess of what are needed for its business there, and that these excess resources can -be readily brought to New Zealand should occasion arise, and therefore the reserves in Australia should be treated as part of the New Zealand resources. Ido not see how the Treasury can recognise this line of explanation, for if the Bank chooses to do business in Australia it must not do so at the cost of imperilling their New Zea land assets, and if an actual shrinkage takes place it is oar duty to draw attention to it. I at once allow that the requirements connected with the conduct of the Government business necessitate an exceptional treatment, but the Bank of New Zea land having undertaken to do the business of the Government, must conduct their whole business upon lines which should not challenge adverse criticism. The introduction of the Estates Com pany deposits into the question of the adequacy or otherwise of the Bank's resources is, 1 think, unfortunate, because it is impossible to separate the Estates Company from the Bank proper. Mr Holmes’s explanation shows how completely the two concerns are interwoven. The percentages quoted by Dir Holmes are more a matter of opinion (taken from the peculiar standpoint of the onlooker) than of actual fact, and do not, in my opinion, remove the necessity for calling upon the Bank to strengthen their cash resources.— J.B.H. 4th January, 1894.
