Page:Life·of·Seddon•James·Drummond•1907.pdf/227

 business after business was thrown upon its hands, and that in many cases the estimated values were not equal to the values of the securities. It was compelled to take over many kinds of business concerns, and to endeavour to conduct them, very often in an unbusinesslike and unsatisfactory manner.

It had a mass of securities, which had been accepted in support of weak accounts. The values of these securities had fallen greatly. Many accounts were in liquidation, and the cover for them was very inadequate. These involved losses which the directors had not faced in 1888. The losses would have absorbed not only the whole of the bank’s reserve fund, but also nearly one-third of the paid-up capital of the bank as well, amounting to £800,000 in all. In face of this, the bank had for years been paying a dividend that it had no right to pay. Securities were held and accounts kept going in the vain hope of a recovery of the values placed upon them at the time of the inflated prices. On the top of this, there came heavy losses in the bank’s Australian business, brought about by the Australian depression.

Mr. G. Buckley, the President, saw that the institution was drifting on to the shoals; and in 1889 he resigned from his position, stating that he had cause to feel dissatisfied, and that at the first convenient opportunity he would give the reasons that led him to the conclusion he had formed. This announcement, coupled with the rumours that had been afloat for some time, raised the public’s curiosity.

Mr. Buckley’s opportunity came at the annual meeting of shareholders held in October at Auckland, where the bank then had its headquarters. He startled the shareholders and the colony by stating that the balance-sheet was not a correct statement of the assets and liabilities, as there were old losses and deficiencies not provided for. Half the bank’s capital, he said, had been lost. The liabilities were under-estimated by at least £300,000, and he urged that some properties ought to be written down to one-third of the value placed upon them; and even if that was done, the times would have to improve very greatly to enable the bank to sell the properties at the reduced values.

Mr. Buckley’s statements were the principal topic of discussion in the colony next day, when they were telegraphed to the