OF BETWEEN THE U1 AND THE BANK OF NEW SOUTH WALES. The Treasury, New South Wales, Sydney, 16th January, 1885. The General Manageb, Bank of New South Wales. Sir, I have the honour, by direction of the Colonial Treasurer, to acknowledge receipt of your letter of the 7th instant, enclosing a statement of the indebtedness of the Government on their “ Local “ Account ” with your Bank, as at the close of business on the 7th instant, and requesting payment of the same forthwith. This statement of account will be placed in the hands of the proper officers of the Treasury for examination, and when this is accomplished, a communication will be addressed to you in reference to an adjustment thereof. Meanwhile I am desired to draw your early attention to an error which doubtless has been inadvertently made in your method of dealing with the “Colonial Treasurer, Master in Equity Account.” The credit balance of this account, which upon the 7th instant amounted to £224,323 6s. 7d., has been erroneously placed to the credit of the Government in the Statement referred to. These funds, as notified to you in Treasury letter of 27th July, 1883 (wherein you were instructed to hold them in an account “ separate ” from public funds), are the property of suitors in the Court of Equity, and are operated upon solely by the officers of the Court, under the provisions of the Buies of Court, dated 14th June, 1883, a copy of which was sent you in said letter of 27th July, 1883, and as “ Trust Funds ” of which you had due notice, they cannot lawfully be applied in reduction of the indebtedness of the Government to your Bank. I am accordingly to request that an amended Statement, ex¬ cluding this item, may be forwarded to the Treasury. I have the honour to be, Sir, Your obedient servant, G. EAGAR. 4 Bank of New South Wales, Sydney, 16th January, 1885. The Honourable The Colonial Treasurer, Sydney. Sir, I have the honour to acknowledge your letter of this date, and to express to you my Board’s surprise that up to the time of your writing no steps had been taken by you towards making the pay¬ ment requested in our letter of the 7 th instant. We have no desire whatever to embarrass the Government, but the amount involved is very large, and now that we have ceased to conduct the Government Banking business, it is, we submit to you, entirely unreasonable that any unnecessary delay should occur in your settling your indebtedness to us. We are naturally anxious to employ our funds (now locked up in your hands) in the interests and for the benefit of our various constituents, and we claim that in fairness to the borrowing public and ourselves you shall expedite the payment of our claims against you. My Board has given to-day its immediate and best attention to your representations respecting our method of dealing with the “ Colonial Treasurer, Master in Equity Account,” and it can come to no other conclusion (after referring to your letter to us of the 27th July, 1883, and after considering that this account was then distinctly opened, and has always since been treated, as one of the Public Accounts) than that it must be regarded as part of the Bank’s Account Current with the Treasury. We are most anxious to avoid any possible misunderstanding between the Master in Equity and ourselves in this matter. It may be that he has rights and interests independent of the equities between the Government and the Bank, but they ought to be adjusted by yourself, and you can avoid all difficulty by drawing upon your new local bankers to the credit with them of the “ Colonial Treasurer, Master in Equity Account,” for the amount involved. That course of procedure is the proper and natural one, and would necessitate no coin disturbance. If we were to alter our account as you suggest, the effect would be to practically increase your overdraft with us by nearly a further quarter of a million of money, and that, under present circumstances, you surely cannot seriously intend to ask us to do. If you reply to us that your arrangements with the Associated Banks are not complete, and you distinctly appeal to us in emergency to make the Government a special advance of a quarter of a million 5 for a specified time, at current interest rates, so as to prevent public inconvenience, my Board would no doubt meet your wishes, but your now approaching us for advances in any other way, or on any other grounds, we do not profess to understand. I have the honour to be, Sir, Your obedient servant, CHAS. M. PALMER, Manager. The Treasury, New South Wales, Sydney, 20th January, 1885. The General Manager, Bank of New South Wales. Sir, I have the honour, by direction of the Colonial Treasurer, to acknowledge the receipt of your letter of the 16th instant, in which you express the surprise of your Board that no steps have been taken towards making the payment requested in your letter of the 7th instant. As the first step towards the liquidation of the balance due to your Bank is the satisfactory adjustment of the items forming the account, and as you were informed in letter of the 16th instant, that the improper and indeed illegal credit by you of the Supreme Court Equity Funds to the public account of the Government would have to be revoked, and an amended account rendered, it is difficult to understand the surprise of your Board. Mr. Bibbs gathers from your letter that your Directors decline to recede from the position they have assumed in respect of these funds. I am directed to point out that although the use of the Court funds in reduction of the debit balance of the account would be a saving, as you are aware, in interest to the Government, it is —as you must see on reflection—an act to which the Government cannot, under any circumstances, give its sanction. Mr. Dibbs is prepared at once to settle the accounts of the Government with your Bank, and the delay of which you complain is, among other things, due to the impropriety of your procedure in the matter now referred to. But irrespective of this, the account rendered by you contains other items to which the Government takes exception, and to which I am directed to invite your earliest atten¬ tion. Interest on the account from a certain period has been charged at the rate of eight per cent, in lieu of five per cent. This overcharge, I am instructed to inform you, must be withdrawn. 6 The account fails to credit the Government with the sum of five hundred thousand pounds held by you at three per cent., and now due by reason of the termination of the agreement with the Govern¬ ment. Moreover, it does not provide for credit to us of Govern¬ ment funds held by your London office, nor for interest on the daily balance in London, and it should contain a sum representing the loss of interest in London by reason of the refusal of your office there to accept the sums tendered to it on behalf of the Govern¬ ment. And further, the Government requires to be credited with the sum of six thousand pounds (£6,000), being half per cent, for the one million two hundred thousand pounds which you were directed to transfer in Treasury letter of 16th October last, and with which request you failed to comply. Mr. Dibbs desires me to say that for the present he will leave it as an open question whether the Govern¬ ment should claim a credit of interest for that period during which the transfers should have been at the credit of the Government here. I am directed to say, in conclusion, with reference to that portion of your letter in which you express your “ natural anxiety to employ “ your funds for the benefit of your various constituents, and in fair- “ ness to the borrowing public,” that both these ends may be attained at once by your furnishing an amended account embodying the cor¬ rections herein required. On being furnished with an account in this form, the Treasurer will at once pay the balance shown to be due, in cash, less a sum to remain in the hands of the Government sufficient to cover the other items claimed in this letter. Concerning the last paragraph of your letter, in which, as you allege, in order to prevent public inconvenience, you make an offer on a hypothesis in which you are in no way warranted in indulging, and which, moreover, in no way concerns you—I am directed to inform you that no necessity whatever exists for entertaining your offer, as the arrangements to which you refer were completed within a few hours of the transfer of the Government business from your Bank. I have the honour to be, Sir, Your obedient servant, G. EAGAR. 7 Bank of New South Wales, Sydney, 23rd January, 1385. The Honourable The Colonial Treasurer, Sydney. Sir, I have the honour to acknowledge your letter of the 20th instant, and to repeat my Board’s surprise that after we had rendered you our claim by our letter of the 7th instant, you could calmly write to us on the 16th, not that it had been, say on the 8th or the 9th idem, placed in the hands of the proper officers of the Treasury for examination, but that it “ will be ” so placed. That leisurely way of injuring and inconveniencing, and keeping the Bank out of its money may be gratifying to yourself, but it is not creditable to the Government; it can really benefit no one, and, as the primary sufferers, we are persuaded that your conduct would justify our using much stronger language than the expression of our “ surprise.” But the tone and contents of your last letter leave us, we now fear, no escape from the conviction that you are not only trying to avoid a prompt and reasonable settlement of the indebtedness of the Government to the Bank, but that you are intentionally endeavour¬ ing to provoke us into a very objectionable style of correspondence. You impose it, as a condition antecedent to your repaying us any money at all, that we shall advance to you the balance (of about £220,000) standing at the credit of “ the Colonial Treasurer, “ Master in Equity Account,” or, in other words, you insist on being allowed to increase your present overdraft, which exceeds £1,860,000, to about £2,080,000, before you attempt to settle with us in any way. In our last we distinctly declined to comply with that demand. We admitted that as between you and the Master in Equity, very grave questions might exist, but we pointed out that they need only be made real difficulties if you insisted upon rendering them such, or persisted in trying to injure the Bank by a transparently hostile effort to mix it up with matters with which it has no connection. By a mere book entry with your new Bankers you can effect with them all that you are asking us to do at the expense to us of pro¬ viding for you about £220,000 in coin. We are advised that you have not even technical legal right to make such a demand. We know that it is entirely inequitable. We repeat that “ The Colonial Treasurer, Master in Equity Account” has always been treated, as its title implies, as part of the Bank’s account current with the Government, and by us must still be so regarded. It may quite be as you allege, that on reflection my Directors ought to see that although “ the use of the Court funds in reduction “ of the debit balance of the account * * * would be a saving “ of interest to the Government, it is * * * an act to which the “ Government cannot, under any circumstances, give its sanction but what my Directors cannot avoid seeing unmistakeably is, that what you say the Government cannot do, is the very thing you have been doing since 1883. Ever since then you have been saving interest at 5 per cent, per annum in virtue of “ The Colonial “ Treasurer, Master in Equity Account,” through its credit balance having been deducted from your aggregate overdrawn accounts. We suggest respectfully that you do not quite understand the position. But we go beyond that entirely, and suggest that if you really mean what you write, “ that although the use of the Court “ funds in reduction of the debit balance would be a saving in in- “ terest to the Government, it is an act to which the Government “ cannot under any circumstances give its sanction,”—then, and in that event, you must mean that all interest short charged by us in consequence of our having allowed you to use Court funds for in¬ terest-saving purposes shall be refunded to us, and we distinctly say that if you will propose that course of action to us, we will seriously and promptly consider the proposition ; for it may now pay us to ad¬ vance you £220,000 at current-rates, to recover, in addition thereto, the interest which you have really been receiving from us since 1883, in violation, as you now represent, of your strictly conscientious sense of legal and equitable right. Meanwhile, you must allow us to respectfully protest against your holding this “ Colonial Treasurer, Master in Equity Account ” matter as any true or justifiable reason for your deferring a general settlement with us. To the Government of the country it is a question of book-keeping importance and nothing more. To us and to our constituents, and to the borrowing public, you can temporarily make it a bitter and serious injury. And it seems to my Directors that you are wantonly trying to make it so. % Directors hope that neither the Parliament nor the public will believe or say that it is necessary or advisable that such a spirit of persecution should characterise a severance of a long and honour¬ able financial connection between the Colony and this Bank. When you write that “ Mr. Dibbs is prepared at once to settle ‘ the accounts of the Government with your Bank,” and you state the conditions upon which he is prepared to settle, my Directors are impressed that you are only desirous of promoting delay, for 1. You say we have charged you 8 per cent, per annum interest from a particular date, and you must have it written back to 5 per cent, per annum. And we reply that for months past we have been expressly declining to do any such thing. The charge is a legal, equitable, and in all respects a proper one, and we again decline. 2. You say that your fixed deposits with us, aggregating £500,000, are now clue by reason of your having removed your banking business to other Banks, and you claim that they shall be credited to you forthwith. And we reply that those fixed deposits are the subject of special contract, and mature as follows :— £300,000 . 30th March, 1885. £100,000 . 13th April, 1885. £100,000 . 5th May, 1885. and that until those dates you can have no right whatever to be credited with, or to touch them. As they mature they will be paid, unless we release them before by special arrangement. 3. The mass of the, as we respectfully think, shadowy so- called claims following your word “ moreover,” towards the foot of the fourth page of your letter, and the succeeding “moreovers” on the fifth page and onwards, we do not in detail notice. It is not desirable that this correspondence should be unneces¬ sarily prolonged, and we have replied to everything requiring reply in these matters over and over again. We notice that “ Mr. Dibbs ” desires to say that he will leave certain questions open. The Bank rendered you an account in its letter of the 7th instant, and you challenged some of the items in it. Will you render us at once your account ? We may then see to what extent we differ, and be able to settle, subject to future adjustment of the possible cash value of such differences, to be determined by speedy reference to law or arbitration. It cannot be for the benefit of the country or your Ministry, and it is certainly not in the interests of our Bank or its constituents, that any differences between you and the Bank should be magnified. We desire to complete our separation from you in the best way the circumstances admit of, and we urge you to make it complete as promptly as you possibly can. For the present, we beg you to allow us to pass, without the comment it deserves, the somewhat difficult to be understood last paragraph of your letter. I have the honour to be, Sir, Your obedient servant, CHAS. M. PALMER, Manageb. In the Statement of Account we sent you in our letter of the 7th instant, we made no reference to your London account, because it is a separate account, and must be settled in London. 10 The Treasury, New South Wales, Sydney, 29th January, 1885. The General Manager, Bank of New South Wales. Sir, I am directed by the Colonial Treasurer to acknowledge the receipt of your letter of 23rd instant, and to state that—for the purpose of closing a correspondence which, it appears to Mr. Dibbs, it is impossible, on your side, to conduct with a recognitioif of the most ordinary rules of courtesy, and without a repetition of offensive terms, which have already been deprecated—he is prepared and willing to adjust the account cf your Bank upon the following basis, which, so far as your letter can be understood, is really what you now desire, namely :— 1. —That a credit be made, forthwith, of the £500,000 held on de _ • posit under the late agreement, with interest thereon. 2. —That a transfer of £1,200,000 (one million two hundred thou¬ sand pounds) be made from London, forthwith. 3. —That it be a question for future adjustment whether your Bank is liable to add exchange, at per cent, thereto. 4-—That a cash payment be made from the Treasury for the approximate balance thus ascertained, less a sum of £50,000 to be retained as a margin for the adjustment of all matters in dispute. With regard to the Equity Court funds, Mr. Dibbs declines further to discuss this question. The matter is now in the hands of the Court. If this mode of speedy approximate liquidation of our indebted¬ ness meet with the approval of your Directors, a simple intimation of the fact, without comment on your part, will enable the Treasurer to make the necessary arrangements for closing, so far, the business relations of the Government with your Bank. I have the honour to be, Sir, Your obedient servant, G. EAGAR. 11 Bank of New South Wales, Sydney, 30th January, 1885. The Honourable The Colonial Treasurer, Sydney. Sir, I have the honour to acknowledge your letter of the 29th instant. 1. My Directors are unable to agree to credit you with the Fixed Deposits until they mature. 2. We cannot agree to make the transfer you suggest, but we are willing to accept from you, in London, £1,200,000, and to view it as a payment in reduction of your debt here as from the date that you make the payment in London ; the transaction to be at par, and involve no exchange. 3. We are prepared to receive any further payments in liquidation at once, but we cannot agree to your retaining any sum as margin for adjustment. 4. We are willing to refer all matters remaining in difference between us, by special case, for the decision of the Full Court, and shall be glad to instruct our solicitors to consult with any one you may name, with a view to bring these matters to a speedy settlement. I have the honour to be, Sir, Your obedient servant. CHAS. M. PALMER, Manager. The Treasury, New South Wales, Sydney, 2nd February, 1885. The General Manager, Bank of New South Wales. Sir, I have the honour, by direction of the Colonial Treasurer, to ac¬ knowledge receipt of your letter of the 30th ultimo. I am to inform yon, in reply, that the Government has already intimated its views and proposals as to the speediest method of adjusting the account with your Bank—from which it sees no reason to. depart, and refers you to the conditions of settlement contained in Treasury letter, No. S, 59, of the 29th ultimo. For the present, there does not appear to be any necessity for submitting a special case for the decision of the Full Court. I have the honour to be, Sir, Your obedient Servant, G. EAGAR. i2 Bank of New South Wales, Sydney, 3rd February, 1885. The Honourable The Colonial Treasurer, Sydney. Sir, I have the honour to acknowledge your letter of the 2nd instant, and to inform you that my Directors are unable to view it in any other light than as evidence of your determination to compel the Bank to have recourse to ordinary legal proceedings to recover the amount of your indebtedness to it. We had hoped that you would have agreed to a special case, as involving saving of expense and time. By declining that course you leave us no alternative but to place the matter in the hands of our solicitors for recovery, which we shall reluctantly do unless a satisfactory settlement be arrived at before Friday next, the 6th instant. I have the honour to be, Sir, Your obedient servant, CHAS. M. PALMER, Manager. The Treasury, Hew South Wales, Sydney, 5th February, 1885. The General Manager, Bank of Hew South Wales. Sir, I have the honour, by direction of the Colonial Treasurer, to acknowledge receipt of your letter of the 3rd instant, in which you say “ that your Directors are unable to view it in any other light “ than an evidence of your determination to compel the Bank to “ h ave recourse to ordinary legal proceedings to recover the amount “ of your indebtedness,” and in which you intimate your intention “ to place the matter in the hands of your solicitors for recovery, “&c., &c.” In reply, I am instructed again to point out that the course your Directors propose is, for the mere purposes of a business settle¬ ment, unnecessary and uncalled for. There has been no disinclination to make a prompt settlement of the indebtedness of the Government to your Bank, but, on the contrary, the Government has shown in previous correspondence a simple method by which the bulk of the indebtedness could be met, leaving issues for adjustment by a recourse to the Supreme Court, as you intimate, if, on further reflection on your part, a more reasonable course be not adopted. The latest cablegram in the possession of the Government from the Agent-General, dated 3rd instant, shows that your Bank in London holds funds of this colony to the extent of £800,000. To this we propose to add £400,000, making £1,200,000 for transfer to our credit at this end, leaving, as one of the issues for future adjustment, your liability, or otherwise, for the payment of per cent, exchange thereon to the Government. You have £500,000 of the funds of this colony also in your possession on Special Deposit, which can be credited, leaving a further issue whether or not the credit be made as upon termination of the Agreement, or when due, as you allege. The balance then remaining, less a margin of £50,000, for adjustment of the remaining issues, will be paid in cash. With this clear and distinct tender of funds (the bulk of which is in your own possession and control at this moment) as a settle¬ ment of your claim, if your Directors prefer to appeal to the Supreme Court upon the whole amount of alleged indebtedness in Sydney, the responsibility of resorting to such extremities must remain with you. I have the honour to be, Sir, Your obedient servant, G. EAGAR. Bank of New South Wales, Sydney, 10th February, 1885. The Honourable The Colonial Treasurer, Sydney. Sir, I have the honour to acknowledge your letter of the 5th instant, and for the purpose of record to affirm that my Directors are only interested in the prolongation of this correspondence to the extent that it may conduce to some business-like settlement of the existing differences between the Government and the Bank. There are so many points on which we disagree. We, each of us, appear so fully, and so oppositely persuaded that we possess the equities, and yet it is so clear that our respective claims must pivot upon a correct and authoritative interpretation of the law, as it is applicable to our disputes, that my Directors cannot do otherwise 14 than regret that you should refuse to agree to refer the whole matter on Special case to the Full Court for speedy and prompt determin¬ ation. It is to them all the more difficult to understand such present refusal, as you evidently contemplate a reference to the court for final settlement, and they do not see what can be fairly gained by your declining an immediate reference on the whole of the matters, on the plea that recourse can be had to the court for settlement of remnants. We submit that it is better for both parties to refer the whole of the questions between the Government and the Bank at once for settlement by the Supreme Court, or if you have any other, what you believe to be, better form of arbitration, we invite you to suggest it. The method upon which you claim to adjust your indebtedness to us, and which you represent as so simple, and which on the surface reads as reasonable, is really, as it appears to us, the very reverse. The London Accounts and the Sydney Accounts are and have ever been treated by you and ourselves as independent and separate Accounts. If we owe you money in London, we are ready to pay it there. You owe us money in Sydney, and you should pay us that money here. You notified us on the 5th January that you had arranged for the conduct of your Banking business, here and in London, through other channels, and you can have no right, we think, to claim transfers for your benefit, and to our disadvantage, from one side of the world to the other. That, we contend, must be the privilege of your present Bankers. But so far as your proposition relating to the transfer of money from London to Sydney is concerned, we are willing, although we cannot do it in exactly the way you propose, to accept payment in London of £1,200,000 of your indebtedness to us in Sydney, credit¬ ing you in Sydney as on the day you make payment in. London at par. That can be considered a transaction as arranged now, and apart from our late contract, and it need not prejudice any claims you may make against us for alleged failure to transfer under that contract. These claims can be hereafter adjudicated upon on their legal merits, so far as any claim for premium is concerned. To that extent, and in that way, we are willing to meet your wishes. We are willing also to leave £500,000 of your indebtedness here to be gradually liquidated as your Fixed Deposits with us mature, your Fixed Deposits and your Overdraft bearing the respective rates of interest which by the court, or any other arranged method of settlement which you may propose and we agree to, shall be determined as legally right ; but you ought not to expect us to agree to leave any sum outstanding for adjustment of your claims, 15 We decline to do that, but you have the matter in your own hands. You have it in your power to withhold payment from us, and leave it for determination by, as we hope, the Full Court, on Special case or by any other process that we may agree upon, what you shall pay us in final settlement. We have no desire whatever to proceed to what you consider ex¬ tremes, but it is tolerably clear that some authority outside our¬ selves must decide our differences, and we have proposed a Special case before the Full Court as probably the most satisfactory for both sides, and we again urge it for your acceptance, whether you pay us a sum on account in London in the way we have signified, or whether you decline that action. I have the honour to be, Sir, Your obedient servant, CHAS. M. PALMER, Manager. The Treasury, New South Wales, Sydney, 19th February, 1885. The General Manager Bank of New South Wales. Sib, I have the honour, by direction of the Colonial Treasurer, to acknowledge receipt of your letter of the 10th instant, and I am to inform you, in reply, that he declines to recede from or vary the settlement proposed in Treasury letter, No. S40, of the 5th instant. I have the honour to be, Sir, Your obedient Servant, G. EAGAR.