✨ Canterbury Loan Debentures Dispute
his memorandum to Mr. Marshman, of the same date, which runs as follows :— “If Mr. Ward is not in London, open his official letter. See the Bank of New Zealand at once. Tell them not to sell Debentures, but to hold them to the order of the Colonial Treasurer, subject to advances upon their deposit (by the Canterbury Government) either in London or New Zealand. Be particular about this.”
It is not contended by the Superintendent that it would in fairness have been open to the Government to withdraw the balance of the Debentures from the hands of the Bank when the liabilities of the Government were discharged, for the purpose of placing them in other hands for sale, but that it was clearly understood throughout that the Government had the power of withdrawal, subject to the adjustment of its accounts; that it was at no time in the power of the Bank to sell absolutely, without reference to conditions imposed by the Government or their agent, and that the advantage reaped by the Province from the withdrawal of the Debentures from sale was an advantage of which it did not rest with the Bank, in terms of the agreement, to deprive it; and finally, that the ultimate loss of the sale of the Debentures was the consequence of legislation of the General Assembly, which removed it from the power of the Province to determine how the Debentures should be disposed of.
The fact that the Province thus became incapable of dealing with the Debentures as it pleased, does not, in the view of the Superintendent, as expressed in his letter to Mr. Coster, of July 9th, 1868, make it incumbent on the Government to indemnify the Bank because it failed to make a gain which it might have made if that legislation had not taken place.
In the withdrawal of the Bonds from sale, through Mr. Ward, the Province used no power which it was not fairly entitled to exercise, and, as a matter of fact, the power was exercised as shown above with the knowledge of the Bank, and without any objection being raised to it.
Mr. Coster’s letters of July 4th and July 11th, 1868, embody the arguments adduced by the Bank in support of this claim.
He does not press it on legal grounds, saying that “it is possible that the Bonds not having been absolutely sold through the agency of the Bank, that we have no legal claim;” but he urges as his reasons for admitting the claim:—
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That the Bank agreed to charge, for placing the Bonds, an exceptionally small commission, on the faith that the whole £300,000 would be sold through the Bank.
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That the expenses of advertising and brokerage, both before offering the Loan in the first instance and subsequently, nearly absorbed the whole of the commission earned by the Bank on the Debentures actually realised.
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That in making the agreement for the conduct of the Banking business of the Province, the Bank took into account the profit to be made on the sale of these Debentures.
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Canterbury Provincial Gazette 1871, No 30
✨ LLM interpretation of page content
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Dispute over Sale of Canterbury Loan Debentures
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💰 Finance & RevenueDebentures, Sale, Canterbury Loan, Bank of New Zealand, Dispute
- Ward (Mr), Involved in the sale of Debentures
- Marshman (Mr), Recipient of memorandum regarding Debentures
- Coster (Mr), Correspondent regarding the Bank's claim
- Superintendent