Mr Ward's Evidence.

Joseph George Ward was sworn.

Mr Young, having handed to the witness [unclear: th] balance sheet of the J. G. Ward Farmers' Association at the end of June 1895, asked Will you say by whom that is prepared ?

Witness: So far as I know by the the manager.

Who was the manager ?—Mr John Fisher.

I suppose you were aware of its contents ?-In what respect ?

You were aware of the contents of the balance sheet?—I was aware of the state [unclear: i] the balance sheet as placed before me, but [unclear: no] of the details the balance sheet was made up from.

Did you sign it ?—I did.

His Honor : Were you the managing director Mr Ward, at that time ?—I was, sir.

Mr Young : Can you say who assisted in the preparation of the balance sheet ?—Only in [unclear: the] general way. The staff of the office, I should say.

Did Mr Vigers assist in the preparation it ?—Not that I know of.

Or any officer of the Colonial Bank?—[unclear: Not] that I know of.

Mr Young handed to the witness the balancesheets of the J. G. Ward Farmers' Association to the end of June 1894, and to the end of June 1893. (To witness:) You were aware of the contents of these, and you signed these?—In exactly the same manner, yes.

You notice that the direct liability to the Colonial Bank in 1893 is shown at £26,278 [unclear: 6s 74] in 1894 at £26 584 8s 10d, and in June 1895 [unclear: at] £1185 4s 1d. Do you know whether the association was indebted to the bank at the end of June 1895 was more than £1185 4s ld—[unclear: direct] indebtedness, I mean ?—Well, I cannot give you any specific figures at that date, but I can say this, in a general way : that the association held very large credits outside of the [unclear: Colonial] page 11 Bank—one credit for £50,000 and another for something like £40,000—under which the Colonial Bank had no responsibility whatever.

What was the £40,000 credit ?—It was a general London credit.

From one of the London houses ?—Yes.

And the other credit ?—It was £50,000 from another London house.

Do you know whether a draft for £25,000 was negotiated, immediately before the balancesheet was prepared, with the Colonial Bank ?—I am not aware of it. I know that a cash payment was made in actual cash, and that is probably the matter Mr Braund refers to. I obtained a payment of £25,000 or thereabouts for a sale I made in connection with the freezing works, and the cash was paid into the bank.

Would you mind saying from where you obtained the cash ?—From Nelson Brothers (Limited). It was, speaking from memory, £25,000, less a few hundreds for a contra account.

That was immediately before the balance sheet was prepared ?—I cannot give you the date, Mr Young, but that payment was made, and paid in cash.

Was any draft for 25,000 or thereabouts lodged with the Colonial Bank about that time?—There was a draft, speaking from memory, for £25,000 a considerable time before that.

Was that draft afterwards cancelled before remission to England ?—I do not think so, but I am not certain about it.

Do you know whether that draft was produced to the manager when preparing his balance sheet ?—I do not know it.

And you cannot say, of your own knowledge, whether there was more or less than £1185 due to the Colonial bank at that time ?—I cannot, not of my own knowledge.

And you account for the discrepancy in the balance sheets by the fact that you received £25,000 from Nelson Bros. at that time ?—I do not want words put into my mouth. I have not said there was a discrepancy.

There was an apparent discrepancy, because in the two previous years there was a debit balance of £26,000, and in 1895 it was £1100 odd?—You have mixed up two matters. You asked me whether, at a particular date, the indebtedness was £1100, and I replied that at that date there were credits held by the company, and then you changed to a draft held by the company. There is no connection between the two.

What is the occasion of the drop in the in-debtedness to the bank in the year 1895 ?—Because the liability previous to that date disappeared from the association and went to other people.

And was debited against members of the association ?—No, it was transferred against a special transaction under a special credit, by arrangement, which is not at all an unusual thing to do. It is done, so far as I am aware, by every firm carrying on business in a large way in every part of the world.

I suppose there would be a draft on the other firm ?—There would be an out-and-out payment made under the credit.

What occurred to me as peculiar was the sudden drop in the liabilities to the bank ?—You are asking a question about clause 11 of Mr Braund's affidavit. On the 11th June 1895 I was not in the colony. As a matter of fact I was in England or America. I cannot give you the details of the transaction.

You signed the balance sheet after you came back?—I presume I would have. I could not have done it otherwise.

Would not you inquire into it before you signed it ?—I could not go into details. It is a very large business.

His Honor : In the balance sheet for the 12 months up to June 29, 1895, the liabilities as a whole are comparatively small.

Mr Young: That is a matter I was coming to, your Honor.

Witness : I can tell you how that is.

Mr Young: You say you do not know anything about the matters stated in paragraph 11 of Mr Braund's affidavit ?—I cannot say of my own personal knowledge. I know there was a payment of £25,000 in cash, less £400 or £500, for a contra account, made by Nelson Bros. (Limited), and that amount was paid in to the Colonial Bank. I think that would have been some time in July or August. I am not certain of the month.

That would be after the balance sheet ?—I cannot give the date.

Your books would show the whole transaction?—The transaction is shown. The freezing works were sold for £50,000. I received £9000 and 1600 fully paid-up shares, and afterwards £25,000 in cash. These are the particulars of the payment. I do not know anything of the circumstances respecting the draft referred to in the affidavit of Mr Braund.

I understand you to say that the difference is explainable by the fact that you received £25,000 from Nelson Bros, in July or August?—No; this has nothing to do with that. We are at cross purposes, that is evident. That £25 000 would be paid after the balance sheet was issued. Speaking from memory, it must have been.

How do you account for the previous £25,000 transaction ?—I do not know of any previous transaction.

From what you have learnt since, can you make no explanation of that ?—Of what ?

Of the reduction of the indebtedness to the bank ?—That is a different matter. I said the association held very large credits. The liability of the association would pass under these credits direct from the association.

That would be done by draft, would it not ?—By cash payment.

I take it you draw on members of the association for the amount and lodge it in the bank ?—It would be done by actual payment to the association.

By negotiation of a draft ?—Whether by draft or cheque I cannot tell you.

page 12

His Honor; Where does that appear in the statement of liabilities ?

Mr Young : I want to account for the fact that £26,000 was owing to the bank in 1893, £26,000 in 1894, and only £1100 in 1895.

His Honor: That is in addition to the £40,000 of debentures; and in October, 1895, there was £32,000 odd owing to the bank in addition to the debentures.

Mr Young : There is a sudden drop of about £25,000, and an increase again of slightly more than £25,000 ?

His Honor: Yes, £30,000.

Mr Young: That is what I am hammering at, and I cannot quite understand the explanation. Do you know whether it was a discount of a draft, Mr Ward ?

Witness: Well, my impression is that no draft went forward at all. What is it that you are trying to get out, Mr Young? You are trying to ascertain why there was a difference between the indebtedness of the association after the balance sheet as against the date of the balance sheet. As a matter of fact, sometime after the balance sheet was issued I was advised for the first time by the manager that heavy losses had been made—I was in Wellington at the time,—and he estimated the losses at £25,000. I immediately advised the bank, and requested them to have an investigation made. This was done, and their estimate of the loss was £55,150.

That was after your return ?—I was not here when the balance sheet was made up.

You would have information as to how it was made up ? You had to sign it. Would you not have information as to the draft ?—No. In a general way the liability would pass away from the association.

His Honor: In the balance sheet, though the bank account is reduced, a liability should surely appear to the holder of the credit.

Witness : All I can say, speaking for myself, is that I did not authorise anything of the kind to be done, and I did not know that such a thing would be done.

Mr Young; The balance sheet was prepared when you were away in England ?—It was prepared when I was in England, and submitted to me for signature on my return.

I suppose you had vouchers before you ?—That is a matter for the auditor. If I were to go into the details of the accounts it would take six months.

Did not the big falling-off in the indebtedness strike you ?—I do not exactly know. I considered that the matter was all right or I would not have signed.

Did it not strike you as peculiar fact that there had been such a large reduction ?—There had been a change in the system, for one thing. In the balance sheet to which his Honor has referred there is an apparent reduction of liabilities. The system of dealing with bills under discount and bills receivable is changed. As I understand it, in the usual way bills under discount are looked on as bills sold, and are deducted from bills receivable. That is the ordinary thing to do, and it ought to have been done from the start.

Mr Young: I do not quite follow you yet.

Witness: It is quite usual for bills discounted to be regarded as sold, and instead of the total amount appearing the difference between bills discounted and bills receivable is shown.

His Honor : If you discount a bill you do not consider there is a further liability on it. That is what it comes to, Mr Ward. If joint stock companies do not put bills discounted among their liabilities they are in effect treating them as if they are no liability. You say it is the usual way of doing it ?—I understand it is the usual way. You credit the man from whom you get the bill, and you debit bills receivable.

Mr Young : You endorse the bill to the bank ?—It depends upon whether it is a good bill or not. The natural thing for the bank is to ask for an endorsement.

How do you account again for the increase in the liability to the bank ? On June 29, 1895 there were negotiations for the Bank of New Zealand to take over the Colonial Bank, but after the balance sheet was prepared the direct liability to the bank increased to £32,856.-should like to say here that I have not been in communication either with the liquidators or the directors of either bank or Mr Cook, have never gone near any of them and I have not been at any of the investigations.

Mr Young: What I want to ascertain from the balance sheet is the amount of the over-draft at the time it was prepared.

His Honor: The liquidators will be able to tell you that. The Colonial Bank books will show. This statement represents the statement of accounts practically as it was in October.

Mr Young : Yes, but there is a vast difference between the balance sheet of June 1895 and the balance sheet of October 1895, as found by the liquidators.

Witness : I cannot give details of it because I had nothing to do with the details.

You are responsible, as having signed the balance sheet.—Still, you ask me for details and I cannot give them to you.

Another peculiar thing is that the 1893 and 1894 balance sheets show items of bills under discount and drafts against shipments. In June 1893 these were £32,000 and £12,000, and in 1894 they were £51,000 and £33,000. Those seem to have entirely disappeared from the balance sheet of 1895 ?—Again I can only speak in a general way. If there were £54,000 worth of goods afloat against which bills were issued in 1894, and these ran off, then when the next balance sheet was made, and there were no goods afloat, there would be no drafts against shipments.

Do you know as a matter of fact whether there was more business or less during June 1895 than before ?—I should say there was more, but I cannot speak positively, That does not affect the question of what was afloat.

His Honor: It looks to me, on Comparing the two balance sheets, as if this was done: page 13 In the balance sheet for the year ending June 30, 1894, the association has "Drafts against shipments £51,000" among the liabilities, and among the assets there is " Advances against produce afloat, £74,000," leaving a difference of £23,000. In the balance sheet for the year ending the 29th of June 1895 there are no drafts against shipments among the liabilities, but among the assets are advances against produce afloat to the amount of £34,430. It looks rather as if, before compiling the balance, they had set off drafts against shipments against the advances and put the balance in the assets.

Mr Young: That is what we suggest.

His Honor: Just the same as Mr Ward has suggested in the case of the bills under discount, In 1894 the bills under discount were £33,000 and the bills receivable were £37,400, leaving a balance of about £4000. In the 1895 balance sheet there are no bills under discount, but the bills receivable are £6870. That looks as if the difference was arrived at in the same way.

Mr Young: We say it is arrived at by a process of reduction.

His Honor: A process of subtraction before the balance sheet is compiled.

Mr Young: Do you know, Mr Ward, whether that is so—whether the items were deducted from one another ?—Witness : I understand that was done so far as the bills under discount and bills receivable are concerned.

Would you consider that was informing the shareholders of the exact position ?—I was not here at the time the balance sheet was made out.

And you are not responsible ?—I was not here at the time. As a matter of fact, I am told it is quite a usual thing to do.

The same thing is said of the drafts against shipments ?—I cannot speak of my own knowledge. So far as I understand it, the direct liability of the association against a special account disappeared altogether, but I was not here.

Did it not strike you as a peculiar thing when you were signing the balance sheet that the items did not appear ?—No. I could not know the whole of the details.

There is a marked difference, too, between the total assets of the company. In 1893 they were shown at £87,000 odd, in 1894 they were shown at £166.000 odd, and in 1895 they were shown at £87,000. That is an extraordinary discrepancy. Have you any explanation of that?—I cannot give details. Speaking in quite a general way, in one of those years there probably were considerable advances against stock purchased for the freezing work. Next year they may have disappeared. As a matter of fact a payment of £25,000 was made, which went to the association.

Would that reduce the assets ?—If you make a sale, surely you reduce the assets.

The goodwill account does not seem to have been written down much. Is it not usual to write it down ?—It depends on circumstances.

As a general rule, the goodwill is shown originally and written down in a few years ? In showing the assets of a company, is it not usual year by year to write it down ? In this case it was written down by paid-up shares ?—You cannot write it down by paid-up shares.

Mr Young: The value to the company should be written down ?

His Honor: That is a question of discretion. You cannot lay down any cast-iron rule.

Mr Young : It is a question of prudence.

Witness : I should like to say that I recognise the examination I am being subjected to, and if the opportunity is given to me I should like to make a statement bearing on the matter.

His Honor : Certainly you may do that.

Mr Young : Would you mind stating what is your private indebtedness to the Colonial Bank ?—Witness : £16,000.

What is the guarantee ?—It was an advance against 1600 of Nelson Brothers' shares.

Anything else ?—So far as I am concerned there is £6750 which the Colonial Bank has transferred to the Bank of New Zealand but which I have not.

That is an advance since the agreement was entered into ?—No, it is not. There has been no transaction since then. There was the advance of £16,000, independent of interest, against Nelson Bros.' shares, and there was an advance of £6750 standing against the whole of my ordinary securities in the Colonial Bank. That £6750 has, I understand, been transferred to the Bank of New Zealand.

His Honor : I understand it is in the " A "list.

Mr Woodhouse : It is well secured.

Mr Young : The bank look on it as perfectly good ?—Witness : I cannot tell you. I have nat been advised either by the Bank of New Zealand or by the Colonial Bank if that is the case.

Are your outside creditors accepting a compromise ?—I have not got any, except those on the list.

That shows none but contingent liabilities ?—That is so.

Have you offered any compromise to them ?—The contingent creditors are not in the position of asking me for anything at the moment. There are shares referred to in different matters. To answer the question, I have had no communication of any kind, and no overtures of any kind outside the proposal between the liquidators of the bank and Messrs Reid and Smith.

Are Messrs Reid and Smith agents for you in any respect in this purchase ?—Not further than the fact that they are endeavouring to help me out of a difficult position. They volunteered to come forward.

Do you mean that they are agents to some extent ?—They are not agents in the sense of being paid.

Is there any arrangement by which you are to take over the assets ?—There is no arrangement of the sort.

Is there no understanding?—There is no understanding; on the contrary, I believe that Messrs Reid and Smith are to control the page 14 business themselves. At any rate, to be perfectly plain, I have given up everything I have, and I have done everything I could to get out of it.

Debentures were issued previous to June 1895 of £40,000 ?—Yes.

Why were these debentures issued ?—To ensure fixity of the finance.

In what way was it done by debentures ?—In the usual way. Inscribed shares are not often an acceptable investment.

You mean to say that debentures were more convenient to get off than inscribed shares ?—Yes.

I notice in one of your reports you suggest that the capital of the company should be self-contained. Is it better for a company to have its capital self-contained ?—In my experience I should say it was.

Then the capital of your company in 1895 appears to have been £4200 ? If the balance sheet says so it is so.

£8000 was paid off. That left £4230. Your paid-up shares represent the goodwill. Did you pay £1 a share ?—I did

In cash ?—Yes.

Do you know when they were allotted ?—I cannot tell you now.

The overdraft of the association has been latterly £163,000 ?—It never had an overdraft of £163,000. It never had an overdraft of £100,000.

What would be the liabilities of the bank ?—I cannot tell you upon memory.

You say it was never over £100,000.—You are asking a question which would have to be answered by reference to the books of the association.

Can you say whether the liability to the bank was ever over £100,000?—The direct liabilities to the bank? I cannot tell, but I don't think it was.

Do you remember when the £55,000 was written off ?—I could not tell you that without reference to the documents.

Can you say by reference to any documents what was the association's liability to the bank ? The whole of the detailed information has been got by the liquidators.

You recommended your debentures as a first-class investment to the shareholders ?—So they were. . .

You borrowed from the association apparently ?—I did not in the ordinary sense borrow. I paid everything I had into the association. I paid altogether £27,000 into the association during the time it was in existence.

There was a current account ?—There was a current account in my name.

What was the total debit in the current account?—The total debit in the current account in my name in November I think was £55,000. Included in that were the whole of the investments and losses that had been made in various shipments that had been debited to me.

You were apparently carrying on business outside of the company ?—No; I was not. I have said the shipments were debited to me and the losses were debited to me.

His Honor : I cannot see how that was done for the shipments were made on behalf of the company.

Mr Ward: They were not made on the association's behalf.

Then they were made on your behalf?—It practically was so. . . .

Mr Young: The losses were not ascertained ?-The losses were not ascertained till November. They were said to have run into £20,000 or £30,000 In November last there were said to be £50,000.

What position do you take up with regard that account and with regard to shipments? I took over the losses. I was advised to do it, and I agreed to take over the looses.

Voluntarily ?-I took them over when I was advised it was the case.

Mr Young asked if it was because the dealings were in Mr Ward's name ?

Mr Ward replied in the negative, and state that it was because he was desirous of seeing the association made a success, and he thought that the greater portion of the losses would he been repaid. He did not anticipate then that there would be a loss of £14,000 on Nelson Bros.' shares.

You had a special advance against Nelson Bros.' shares apparently ?—That is so.

You received an advance on account of your paid-up shares ?—I paid everything I got the association, except what was sufficient my own use.

What income did you get as manager ?—I income was about £1000 from all sources. . .

Your income was £500 as managing director—I had £16,000 worth of shares in Nelson Bros', which previous to my having them I paid 10 per cent., but which paid me one year 4 per cent. Then I had my ordinary emendments from my official position, amounting £800 and £200.

His Honor : At what time ?

Mr Ward : At the time Mr Young is refering to. He proceeded to say that, rough speaking, his income was close on £5000 a year. What was left after paying his private expense went into the association.

What you say is that the association everything. The moneys you received you paid to the credit account in reduction of your liabilities to the association. Your income, then, would appear in the books of the association ?—Yes.

Mr Young: Did you have a banking association of your own ?

Mr Ward : I had the private account refer to.

Did you pay your income into that No; 1 did not pay my income into that the system of ingoings and outgoings was done through the association.

You took out what you wanted to live upon? That is so.

Did the association hold any security from you for your indebtedness to them for this page 15 £55,000 ?—The whole of the scrip that I had in the association remained with them. In fact, the indebtedness, so far as I was aware, was £55,000.

Did that £55,000 represent any losses taken over by the association from you ?—Previous to when ?

When the association took over your business. No; I don't think so.

Mr Young asked what an item of £20,000 represented.

Mr Ward replied it was a guarantee given to secure a joint account of the association.

On what date was that given ?—I cannot give the date.

On what occasion was it given ? Was there any particular stock for it ?—It was given for the purpose of an additional security of the account; and, speaking from memory, I think it was given two years ago It was an increased guarantee. I am under the impression that I give a guarantee of £5000. and I afterwards increased that. I think that is the position.

Was the guarantee against any particular business ?—No; it was for the purpose of securing the association.

Do you remember getting a letter from Mr Murray shortly before the bill passed the House?—I had a great many letters from Mr Murray.

There was a letter guaranteeing that the Bank of New Zealand would see you through ?—I should give that a most absolute and positive contradiction. If I had chosen to conceal my postion and to have covered up my private affairs then I could have done it. But I would not do that; and if I had done as is suggested by some people I could have prevented my affairs from being before the judge or anybody. Anything of that kind is absolutely unfounded.

I am speaking from instructions; and I am informed that that was so, and want to know whether there was such a letter or not ?—There was no such letter as that at anyrate.

No letter at any time?—No such letter to that effect.

Or a similar effect ?—Nor a similar effect so far as I know. Without trusting to my memory I can be sure of it, because I have the whole of my letters here.

Mr Young said he would ask his Honor to ask Mr Ward the question at another time.

His Honor: Mr Ward might be asked the question at another time when he has gone through the correspondence. Unless you have information from Mr Murray I don't see how any person can say what are in the letters.

Mr Young: I am not at liberty to say what is the source of my information, of course.

His Honor: I don't see how anybody but Mr Murray could tell what was in Mr Murray's letters.

Mr Young (to Mr Ward); Did the association hold any security for that £55,000 ?

Mr Ward : Only what I have told you.

His Honor: The shares ?

Mr Ward : The paid-up shares.

Mr Young: I suppose the members of the association are pretty substantial as a whole, are they not ?—Some of them are, of course.

It is a company of very respectable farmers, as a rule, who could pay 20 in the pound ?—I can only give you my impression.

Sundry creditors, £18,970; are a lot of them shareholders in the company ?—That is my impression.

Mr MacGregor : Can you tell us, Mr Ward, what is the amount you are personally indebted to the Colonial Bank for ?

Mr Ward : The statement is here.

Is it correct that you are liable in the first instance for a £55,000 bill?—Yes, I am liable for £55,000.

Then for the £20,000 guarantee ?—Yes.

And the £5000 guaranteed to the Hokonui Railway and Coal Company ?—I am liable with others for that.

And for the £16,000 draft dishonoured ? That makes altogether £96,150 ?—Yes; but the draft was not dishonoured. I don't know where you got that bit of information from. It was a draft in course of transit, and when the amalgamation took place the bank became responsible for it.

But you are personally responsible to the bank for the £96,000 on paper ?—Yes, that is so.

And against that you have property worth, in round numbers, £4000 ?—That is the value of the property.

So that at present you are hopelessly insolvent ?—That is so according to my books.

When did you become aware of your position ?—I first became aware of the responsibilities I had on my shoulders when I became aware of the loss of the Farmers' Association. I think it was in August.

When did you come back from England ?—In July.

When you saw the Colonial Bank, what person do you mean ?—The general manager.

Who was that at that time ?—There is only one general manager.

Mr Mackenzie ?—Yes. As soon as I found that the loss was £25,000 I asked that an investigation might be made. It was after my arrival from England.

Was this a communication to Mr Mackenzie ?—It was a verbal communication made in Wellington.

An investigation of your affairs was then made on behalf of the bank ?—Yes; and a loss disclosed of £55,150—that is so far as the association is concerned.

Now as regards the sale, I suppose you were fully aware of the terms of the sale—the projected sale to Messrs Lee Smith and Reid ?—Yes.

We are told that the purchase was written down to £67,000.—Yes; £62,000 and £5000.

The total amount of debts that they are to take over, if I make it out rightly, is £168,000. Can you tell me whether that is correct?—I should like to see the statement.

£92,000 is the association's indebtedness ?—Yes.

page 16

In addition to that there is the sum of £55,000 written off ?

His Honor : In addition to that ?—No.

Mr MacGregor : I take it to be so. It was obviously written off the association account. Is that correct ?

Mr Ward : Yes.

His Honor: You say that £55,000 is to be added to the £92,000.

Mr Woodhouse: It was a debt of Mr Ward's.

Mr MacGregor : The total amount Mr Ward got from the bank was £92,000 plus £55,000. Is that not so ?

Mr Ward : That is so.

Then there is £16,000 on this draft ?—Yes.

And £5000 on account of the Hokonui Railway Company ?—Yes.

That gives £168,000 altogether ?—Yes.

So that the Colonial Bank or the liquidators stand to lose £101,000 ?—That is so.

Mr MacGregor asked if Mr Ward had seen the statement of assets and liabilities of the J. G. Ward Association ?—Mr Ward replied in the affirmative.

Do you agree with that as being a correct statement of the association's finance ?—I have not been through it. I have never been with Mr Cook or anybody else and gone through the association's finance.

Do you say it gives the correct position of the affairs of the association ?—I accept their assurance that it is so.

It shows a debit balance in round figures of £50,000. Nine months previously you thought the company to be in a flourishing condition, solvent, and giving bonuses to shareholders and salaried officers ?—Yes.

Can you account for the enormous discrepancy?—I admit the discrepancy is enormous, that is the only word to use. He proceeded to say within a very short period—within three years—the whole of the losses of the association had been made.

The association had been only in existence three years and seven months ?—The earning power of the association was, beyond question, very good. My own business was a very valuable business in 1889, my net profit being £9000.

Mr MacGregor asked how these enormous losses came about.

Mr Ward replied that the manager attributed them to losses upon shipments, to losses in connection with freezing operations, and to depreciation in value.

What do you attribute it to ? Do you leave it to this gentleman alone ?—I attribute it to the same causes, but I did not know it at the time.

Now that the loss has been ascertained, can you give us any explanation for it ?—Not any other explanation than I have given. If I had known the position or anything like what it was, of course I should not have gone on at all.

You signed the balance sheet and appear as managing director and chairman. Do you act as chairman while you are in the Government ?—I did not give the business any large personal control, and could not, as a matter of fact, if I had been upon the spot and attending to the business. But matters were put before me, and I really depended on others who were responsible for me.

Mr Fisher, you say, has left you. Where is he?—He is in Invercargill.

Mr Anderson, is he still in Invercargill?—Yes.

Is he a reliable man ?—He is a very good man.

He says he has gone through the balance sheet, and he finds Mr Cook's balance sheet is correct. Can you account for that ?—I can scarcely be expected to explain Mr Cook action.

There are two separate accounts—Brook and Connell. Are those the two you refer to?—Yes.

What are the positions of those accounts at the time of the liquidation :—In what respect?

Were they on the debit or credit ?—There would be on debit.

To what extent?—The figures would be—the one £7000 and the other £16,000.

That is one of the liabilities that Reid and Smith proposed to take over ?—Yes, I assume that they take them over.

You say with reference to these private accounts that they are taking them over with your consent simply in terms of the statutory agreement ?—Yes.

Have you had any further advances since then ?—I have not drawn upon the account at all

Have you drawn upon any account ?—I have not drawn upon any account. The liability upon £16,000 has increased by £364, from interest.

Have you another bank account ?—I have another bank account.

Where ?—At the Bank of New South Wales.

You have filed an affidavit setting forth you position. You are quite sure you have include everything ?—Yes.

Is your life insured ?—Yes, and I told Mr Woodhouse to have an amended statement made with the surrender value of my life insurance policy included. That was worth £400.

So you have got life insurance policies amounting to £11,000 ?—That is so.

How long have these been taken up ?—On about 10 years or more; the other about three years.

How many payments have you made?—I should think about five or six half-yearly payments.

Those are all the policies you hold ?—Yes, have an accident policy.

What about the bank account at the Bank New South Wales ? Is it in credit ?—It cannot be more than £40 or £50.

Have you had any property during the last three years in the name of any person beside yourself ?—I have had an interest in a property during the last three years. That is included there.

In any others ?—No, no others. I have put page 17 in everything I know of, and in addition to that I have offered to give everything I have.

We have heard a great deal about a draft put through to reduce your overdraft. There was some suggestion of that sort; do you know anything about that ?

Mr Ward replied that the association held credits outside of the bank for considerable sums, and, as he understood it, transfers were made against the special account. No draft went forward at all.

What became of the draft ?—The transfer was made, and the dra't did not go forward. After my arrival in the colony, when I knew that that transaction had taken place, I declined to let the draft go forward.

You say that this took place while you were in England?—Yes; I was not here.

That was about the time of the balance in June 1895 ?—The last balance.

About this purchase. Do you know what is intended to be done with this business assuming is purchased ?—Mr Ward replied that so far as he knew it was to be reconstructed.

And the firm put into a new liability company?—So far as I know. It certainly could not be carried on as it was.

Was money going from the Bank of New England ?—There is no arrangement with the bank so far as I know.

Are you not to be retained in the new company ?

Mr Ward replied that he had to recognise the fact that he was worth nothing.

Mr MacGregor: Don't you think the new proprietors will take advantage of your experience in connection with running this new company ?

Mr Ward : One of the conditions is that Mr Smith and Mr Reid are to control the business themselves. If you mean is it any collateral advantage to me, it is not.

Mr Woodhouse: You know Messrs Lee smith and Reid pretty well, Mr Ward ?—I do.

You know their capabilities ?—Yes.

Mr Lee Smith, for instance, is a man who has had a great deal to do with organising companies ?—That is so.

And successfully ?—Yes, very successfully.

In fact, you may say it is a gift he has ?—I should say it is.

Mr Reid is a man of large business experience, and he has had to do with companies of a similar nature to this one ?—Yes.

They are men who if they conduct things personally will practically do better than anyone else ?—Yes.

You have nothing to do with any new arrangement they make, and get no benefit from it?—None whatever.

And you give up everything ?—Quite so.

With regard to the affairs of this association, do you know anything of the accounts—of the number of accounts, for instance; are there many of them ?—I understand there are 1750 different accounts owing to the association.

And I suppose you may say a large number of small accounts like that are not easily collected?—It would be difficult to collect them.

Have you formed any idea what the liquidation of a company of this sort would cost supposing it went into liquidation ?—Well, that would depend very much upon very many matters. I should say it would cost from £5000 to £10,000, but it is difficult to estimate.

His Honor : It must be apparent to everybody that liquidation would be a costly and troublesome matter.

Mr Woodhouse : The object of the agreement is to avoid that. As to this £55,000 which has been referred to as the amount written off between the two banks, I want to know if you had anything to do with that arrangement ?—I had not. I did not know of it until after the agreement was laid upon the table of the House. As the matter has been referred to I should like to state briefly the position so far as I am personally concerned. In connection with the banking legislation I did not in any way, so far as my personal affairs are concerned, ask for consideration either from the Colonial Bank or the Bank of New Zealand; neither did I ask that any account in which I was interested should be provided for or taken over. In addition to that I asked for no concession whatever from either the Colonial Bank or the Bank of New Zealand. I might be permitted, as this is a matter of importance to me, to read these three letters that I have; one signed by three directors of the Bank of New Zealand, one by the president of the Bank of New Zealand, and the other by the general manager of the Colonial Bank, now the general manager of the Bank of New Zealand. It has been insinuated that I was conoiving with the men upon both sides to look after my private interests in connection with this bank amalgamation. My troubles have been great enough, and I should like at once to say that the insinuation is absolutely unfounded. I have the letters here.

Mr Young: Of course it is competent for Mr Ward to make any explanation, but any correspondence of other people with hi u, I think, can scarcely be evidence in this matter.

His Honor : It is not strictly evidence, no doubt, but I think under the circumstances what Mr Ward is bringing forward now could hardly affect my decision upon the particular point in question one way or the other, could it ? But Mr Ward's character has been impeached to a certain extent, and though the matter is not strictly evidence I do not see why it should not be put forward in this matter.

Mr Young: The only thing is that we are unable to cross-examine the people who have written the letters on the value of the statements made by them, or by what means they were induced to make them. If your Honor thinks the letters should go in as evidence, I do not object.

His Honor: I do not think they should go in as evidence, but Mr Ward can read them as page 18 part of his statement. He rather wants them to go forth to the world than to influence my opinion.

Mr Young: We say that these letters are from the persons who were aware of the facts, and who are probably mixed up with any advances or irregularities in connection with the association.

Mr Ward: Mr Braund refers to this matter in his affidavit.

His Honor : I think it is fair that Mr Ward should be allowed to read them, though they are not strictly evidence.

Mr Ward : I wrote this letter on the 23rd of May 1896 to Mr Watson :—

You will, no doubt, fully appreciate the importance it is to me, and, I presume, to yourself also, that I should be in a position to fully and authoritatively answer what has been said; and therefore your replies as to these matters of fact will enable me to deal with the subject.—I am, &c.,

J. G. Ward.

That is addressed to the president of the Bank of New Zealand, and the same questions were put to the manager of the Bank of New Zealand and the directors. In reply I received the following reply :—