BY THE END of 1894 the same Ward who had been so sanguine was beginning to worry about his position. So far only Fisher knew about the real state of his personal finances. As Treasurer it was essential that confidentiality be maintained. Fisher, however, was under enormous strain. Handling Ward’s personal affairs as well as those of the association meant that he was unable to control the ‘gradual swelling’ of the association’s indebtedness, a point that had been noted by the Colonial Bank’s inspector in April 1894.1 When the bank’s directors decided in September 1894 to enter into preliminary discussions with the newly guaranteed Bank of New Zealand about a possible merger, it was necessary for them to become more businesslike in their dealings with the Ward Farmers’ Association. This led on to the decision to refuse payment on some of the association’s cheques. And that move, in turn, made it likely that bad publicity for Ward would ensue. The downturn in the economy was Ward’s greatest concern. Not only did it flatten business; it was beginning to depress the value of securities held by the Colonial Bank against the association’s overdraft.
On his northern trip with Seddon at the end of 1894 Ward kept trying to talk up the economy. On 10 December he told a cheering Auckland audience that the government’s policy was to ‘infuse life, hope, spirit and buoyancy’ into the country. The life-blood of the country lay in the success of producers. Railways policy was to stimulate the countryside to make towns prosperous. ‘Chicken-hearted, pessimistic men were not wanted at the helm of state. Courage, vigour, and determination were never more essential than now.’ In a peroration that Vogel would have been proud of, he concluded by saying ‘cheap money, cheap freights, cheap land, development of commerce, vigorous land settlement’ would all, ‘so surely as the stars of heaven shone’, enable the colony to rise ‘until prosperity pushed every trace or semblance of depressed times aside’.2 Both the economy and J. G. Ward needed a state active on behalf of its citizens.
It seems likely that during their days together on the northern tour Ward got an opportunity to tell Seddon a little of his troubles. Whether Ward had already decided to go to London in search of finance to prop up his association, and took the opportunity to secure agreement from the Premier, or whether the trip emerged as a sensible move in the context of their discussions, will never be known. Early in the New Year the possibility that Ward would go to London after the forthcoming Postal Conference in Hobart was first mentioned in the Times.3 Immediately there was speculation as to the purpose of the trip. This was only heightened when Ward handed out a press statement on 15 January and then refused to answer questions. The statement read simply: ‘The Hon J. G. Ward, Colonial Treasurer, proceeds to England with the unanimous approval of his colleagues, who have deputed him to attend to matters of an important character affecting the welfare of the colony ….’ Nothing was said by way of elaboration, but the statement did indicate that he would be back by the middle of May.4
Ward quickly went south to collect Theresa. A large farewell banquet was organised by the Mayor in Invercargill. The Times lavished praise on Ward on the morning of the function: ‘His career has been one that has marked him off in a striking degree from his local contemporaries. A very young man, he has raised himself in a few years to a leading position in the mercantile world, and has attained one of the highest offices in the State.’ Ward had been ‘a watchful, energetic, and successful advocate’ of Southland’s interests.5 Speakers at the banquet sang the same tune; one commented that Mr Ward’s constituents ‘depended’ on him to ‘safeguard their interests’. Ward took full advantage of the evening’s mood. Having told the audience that a political speech was inappropriate, he lectured them on the Ministry’s merits as well as the deficiencies of the Opposition. He massaged his audience with rotund phrases and flowery compliments. A little nationalism was injected for good measure. The reporter quoted him as saying that they should all remember that they were engaged in building up what would be one of the greatest nations south of the line, and that everyone who put a spoke in the wheel the wrong way was not only an enemy of the Government but an enemy of the people of New Zealand. The evening ended with songs, Ward singing what had become his signature tune, ‘When other lips’.6
Next day there was a frantic round of activity in Bluff. Hannah Ward Barron had undertaken to look after the children while her son and daughter-in-law were overseas. Domestic rearrangements and packing had to be fitted around further fond farewells. Once more there was a surfeit of ceremony as the Wards boarded the Monowai for Hobart. An illuminated address along with a valuable diamond ring were presented to the Colonial Treasurer by the mayor and citizens of Bluff. Ward’s old school mates who were still in Bluff gave him a massive gold albert chain and Theresa received a carriage clock. A large party, including Hannah, followed the ship to the heads in the Harbour Board’s tug. Bunting on both vessels was then clipped, whistles blown, and farewells waved. A piper ‘discoursed some stirring music’. As the Bluff mountaintop receded into the distance and Ward’s constituents made their way back to shore, possibly only the Colonial Treasurer had any inkling of the shoals and reefs that lay ahead of his political career. News that he was in financial trouble was soon leaking out, however. A. A. Christophers, the manager of the local branch of the Bank of New South Wales, reported to his superiors that Ward, ‘this erratic financial genius’, had gone to England ‘ostensibly on public business but in reality to endeavour to raise the wind for some of his needy bantlings’.7
The time and venue of the Postal Conference had been altered to suit Ward’s convenience, but he left Hobart before it ended. After brief talks with the South Australian Premier, C. C. Kingston, Ward also met the Attorney-General. A tariff agreement was signed, although kept secret until Ward’s return to New Zealand. The Wards were quickly en route to London where they arrived on 14 March 1895. It was the first overseas trip they had taken together in more than eleven years of marriage. Indeed, Theresa had been unable to accompany him anywhere outside of Southland until the Postal Conference tour early in 1894 when they had spent a pleasant six weeks in Wellington and Auckland while Hannah looked after the children. The two of them developed a taste for travel that stretched over the next thirty years.
London was new to both of them. The earlier radical Liberalism of Gladstone had subsided, and his successor, Rosebery, presided over an inert government, soon to pass into history. Ward wandered into a clubby, arty world agog with imperialist talk, speculation about the ambitions of the Uitlanders in Johannesburg, and titillated by speculation, later confirmed by revelation, about Oscar Wilde’s sex life. Ward plunged into a round of speeches and meetings with ministers. ‘Your Treasurer … is making a most favourable impression on all with whom business brings him in contact,’ a correspondent to Dunedin’s Evening Star reported home. ‘His shrewdness, perspicacity, grasp of finance and quiet, unpretentious, yet assured manner lead to much approving comment.’ Another London commentator wrote: ‘Your Treasurer’s animal prototype is the high class fox terrier, plucky, watchful and alert. Look at him when someone—metaphorically speaking—cries “rats” and you’ll see him cock his ears in a minute.’8 On 30 April Ward delivered a long speech about New Zealand to the Royal Colonial Institute before an audience which included a frail Sir George Grey. Ward gave a glowing account of New Zealand’s economy, outlined the Liberals’ legislative achievements, praised the introduction of women’s suffrage, and made a plea for more immigrants.9
The press soon discovered a purpose to Ward’s trip. He seemed to be in London to boost New Zealand while the £1.5 million loan to fund the Advances to Settlers scheme was being subscribed.The campaign to ‘sell’ New Zealand worked well. On 4 May it was revealed that the New Zealand loan of £1.5 million at 3 per cent had been oversubscribed, a total of £5.9 million being offered. Everywhere there was incredulity. The London Financial Times congratulated New Zealand on this testament to the soundness of its finances. Ward cabled home to Seddon that he had enjoyed ‘splendid success’.10 The Auckland Star wrote a glowing editorial: ‘The old country was at last beginning to give us the attention we deserved … The brilliant success of the Treasurer’s mission has been blazoned all over the Empire.’11 Such was the national euphoria that even the government’s customary critics, the Christchurch Press and the Otago Daily Times, showered praise on Ward.12
Theresa Ward aged twenty-nine, in court dress for her presentation to Queen Victoria, London 1895.
The Wards enjoyed London to the full. On 8 May Theresa was presented at Buckingham Palace in a rose-pink satin underdress, square-cut bodice ‘nearly hidden in clouds of pink chiffon, amongst which glimmer roses and trails of rose buds’, with a forget-me-not blue satin court train behind her.13 Later the same day the Wards went to the National Liberal Club on the Embankment where they chatted with the Prime Minister, Lord Rosebery, and the Chancellor, Sir William Harcourt, before dining with a former Governor of New Zealand, Lord Onslow. They attended the Imperial Institute, heard the Strauss orchestra, met Henry Irving, and went to a football final at the Crystal Palace. They saw Charley’s Aunt at the Globe. Nor did the Tower, the Guildhall, or, appropriately, the Mint, escape attention. They then went briefly to Scotland and Ireland.
Before Ward sailed for Nova Scotia on 30 May he had private business to deal with, business that was really the main purpose of his visit to London. Prior to departure from New Zealand Ward had been obliged to take urgent measures to prop up the Ward Farmers’ Association. On 1 December 1894 the association resolved to issue 500 debentures at £100 each with a currency of ten years at 6 per cent. These were an early example of what, today, would be called ‘junk bonds’. During the next few weeks Ward gave £10,000 worth to the Colonial Bank and on 7 January sold another £20,000 worth to the bank at par.14 On 29 January he sold the remaining 200 debentures to the Bank of New Zealand for £20,000, less a £200 commission. This produced a sum of £39,800 in total, which was then placed in the association’s account with the bank. These rearrangements were sufficient to encourage the Colonial Bank to resume honouring the association’s cheques.15
Ward knew, however, that he desperately needed an infusion of money. If it could be obtained cheaply in London for New Zealand he would get some for himself as well. In London he met Montague Nelson of Nelson Brothers, to whom he no doubt conveyed the news that he was anxious to sell the shares that he still held in Nelson Brothers as a result of the sale of Ocean Beach. Nelsons had had a reasonably good year in 1894 but poor meat prices at Smithfield were causing them to retrench in 1895, and Ward was probably advised to hang on to the shares on the grounds that they could only improve in value.16 He then saw Cooper and Nephews Ltd, John Connell and Company, and Brooks and Company, all firms he knew through his grain exporting and sheep-dip trading. In January they had been sent details about stock held in Invercargill by the Ward Farmers’ Association, including 80,000 sacks of oats. Ward managed to convince them to advance a total of £30,000 to him against these securities.17 Ward remitted the money home in the hope of further pacifying the Colonial Bank, which since the Bank of New Zealand scare of 1894 had been experiencing several large withdrawals by nervous clients.
The Wards travelled across Canada on the return trip, stopping in Ottawa to meet the Governor-General, the Earl of Aberdeen, the Minister of Trade, Mackenzie Bowell, and the Minister of Finance, G. E. Foster. A further secret tariff agreement was signed, the preliminary drafts having been negotiated in 1894 by Ward’s political friend and supporter, Lee Smith. There were discussions, too, over a possible ‘all red’ mail route from Australia through New Zealand to Canada and on to London. From Ottawa they went by train to Vancouver and then sailed to Auckland. They arrived on 6 July, the whole trip having taken at least two months longer than originally planned.
The Liberal Party had been preparing for the Wards’ return and caught conservative critics of the government’s borrowing off guard. ‘Is [Ward] to be taken as the Prodigal son coming back after having spent his (our) substance in riotous living? Or is he to be received like a Roman general, who comes to be accorded a triumph, bringing with him the wealth of an Asiatic empire?’ asked the Herald on the morning of his return.18 There was no doubting that the popular mood inclined more to the latter. A large crowd was waiting for the Warrimoo when it docked. Noting that the ship appeared to have a list to one side, one wag ventured the opinion that the Colonial Treasurer must be standing on that side with the 1.5 million gold sovereigns in his pocket. Telegrams and illuminated addresses were heaped on a none-too-modest Ward who told the audience that his success in London had been ‘very exceptional’. When they arrived in Wellington they were greeted by an example of the Liberal Ministry’s self-dramatisation at its most grand. A large crowd including many politicians gave three cheers for the Treasurer when he stepped ashore. The ornithologist, Sir Walter Buller, read an address praising Ward to which he then replied. A procession set off for Parliament Buildings. Three carriages of dignitaries formed the vanguard, then a lorry decorated with ferns and flowers. Next came an open landau containing the Premier and Mrs Seddon, plus the Wards, all waving to crowds lining the streets. When the procession reached Thorndon Esplanade it paused. Since it was Arbour Day, the Wards and Seddon planted three trees in honour of the 3 per cent loan, a ritual that was repeated in Parliament Grounds. At the main steps Ward was piped into the House to the tune ‘Hard times come again no more’.19 That evening Seddon told a banquet audience that Ward was still young and had ‘a great future before him’.20
However, nothing went right for Ward from the time he got back to his desk. Seddon had been able in Ward’s absence to announce a surplus for the preceding year of £180,000, but little work had been done to prepare a budget. Ward was somewhat relieved when his secretary joined the Warrimoo in Suva. Preliminary work on the budget began on the final leg of the journey. By 30 July it was ready. In a speech of nearly two hours that ranged widely over the economy, noting that grain exports were down, then listing the latest Advances to Settlers and Land for Settlement statistics, and reporting in general on his trip, Ward revealed details of his tariff discussions in South Australia and Canada. In return for South Australia taking barley, oats, and hops free of duty, New Zealand would allow in wine, olive oil, dried and fresh fruit and salt. With Canada a free market would exist in woollen goods, livestock, meat, fish, timber, hides, barley and oats. Revenue would be foregone in the interests of more trade (some of it in produce handled by the Ward Farmers’ Association). Some other duties would be raised.21
Ward’s lengthy absence meant that his antennae were not sufficiently attuned to the discontent that had been building around the subject of tariff reform. A Tariff Commission had been moving around the country listening to opinion, and stirring anxiety as well as ambition. Bootmakers, shirtmakers, jewellers all now descended on Ward. The Herald ran articles under banner headlines such as ‘Death to Local Industries’,22 while the Auckland Star, always a supporter of tariffs, denounced the reciprocity treaties with Canada and Australia, describing them as ‘the great blunders of Mr Ward’s remarkably successful and brilliant public career’.23 Under severe pressure from Liberal MHRs Ward at last wavered and promised to review his budget announcement. This only further encouraged the Ministry’s opponents. Stout, who had become a more effective one-man opposition to the Ministry than anything the conservatives could produce, then delivered Ward a further blow, alleging that there had been pre-budget leaks which had enabled speculative clearance of goods from the waterfront on the day before the budget, saving merchants £14,500 in duty. When Ward denied any leaks Stout delivered a telling blow at the Treasurer. Innocently he asked whether Ward had read the Canadian tariff. Ward promptly assured him he had. Why, then, asked Stout, had Ward been referring throughout to Canada’s 1890 tariffs which had been superseded in 1894. The Herald described the scene in Parliament: ‘The effect of this revelation … was most pronounced. Laughter and jeers from the Opposition and independent ranks greeted the announcement, while a painful silence reigned among the Government supporters. The latter were apparently dumb with amazement, for not even an interjection of protest, explanation or denial was forthcoming even from the Treasurer, who is seldom at a loss for a ready and clever answer.’24 Ward later said an official had passed him the wrong document, but it was clear the Ministry was bleeding. Cabinet sat throughout Saturday 10 August to reconsider the tariff and the reciprocity treaties. A diversion was sought. The House moved to deal with banking legislation while the tariff was sorted out.
For Ward, debate on banking matters had all the appeal of the frying pan after the fire. While the tariff slipped out of view for a time, the House turned to considering the Bank of New Zealand’s shonky Estates Company, replete with its portfolio of rash land investments from the 1880s which had weighed down the bank, and been a principal cause of its near insolvency the previous year. Eventually the Bank was relieved of the Estates Company, but not before speculation had begun in the lobbies that Ward’s own affairs and those of the Colonial Bank were in a weak state. Ward deemed it prudent to adopt a low profile at the select committee that dealt with the Estates Company. At the end of the month Seddon gave an assurance that the Bank of New Zealand would not take over any other bank without first seeking ratification from Parliament.
By this time Ward was desperate for time to sort out his own affairs. Merger negotiations between the Bank of New Zealand and the Colonial Bank had begun in earnest in May. The two banks’ officers were combing through the Colonial Bank’s accounts and checking the state of its securities. Fisher had already been up to Wellington to inform Ward that many of the association’s securities had been reduced in value by as much as £25,000 due to the economic climate. Worse still, one of them was virtually non-existent. Fisher had discovered that 70,000 of the 80,000 bags of oats against which Ward had secured his London money had, at an earlier date, been promised to the Colonial Bank as one of their securities.25 By the end of August the intricate nature of Ward’s personal financial relationship with the association was slowly being unravelled in the due diligence process, and some at the Bank of New Zealand were concluding that the J. G. Ward Farmers’ Association was the heaviest of several albatrosses around the neck of the smaller bank. Realising this fact, and it could scarcely be disputed, George McLean and the Colonial Bank directors sought, and obtained, a promissory note from Ward for the sum of £55,150, hoping thereby to placate the Bank of New Zealand. The trouble was that with the current state of the economy it was doubtful whether Ward’s personal assets and securities would yield this much money. The estimated value of the securities held by the Colonial Bank now amounted to only a little over £42,000, which was why the promissory note had been sought. Ward now took the precaution of seeking backing from his mother. He was her favourite, and there was nothing she would not do for her boy; but her net worth was only about £5000. She willingly gave him a promissory note on 4 September for this amount. Was it enough to keep the hounds at bay? Ward was not sure, so he set about raising money on all his unencumbered properties. On 19 October 1895 he gave the bank control of everything he owned, including his life insurance policies.26
The oats warranty, 1895.
What made this situation all the more difficult was that the association’s annual accounts had once more been constructed by Fisher for wafting past the indulgent noses of the shareholders. These concealed the true state of affairs even more carefully than in previous years, Fisher using a device which the official liquidators of the association later said was ‘open to very grave objection’. In previous years bills discounted and bills receivable were stated in full on the debit and credit side. This time only the balance was stated, and liabilities contingent on bills discounted, amounting to £47,439, were wholly omitted. Ward’s account with the association was not closed down on this occasion. Instead, by some very fancy footwork the books showed a credit in Ward’s account with the association of £6. Ward had no hand in constructing the accounts, but must have known that his account with the association was represented in a false light. So serious was his situation that a few days later he was forced to instruct an agent in London to dispose of the Nelson Brothers’ shares at the best possible price.27
Ward’s time out on personal matters only delayed a resolution of the tariff issue. In fact his mind had been on everything except affairs of state. On 10 September the Secretary of Customs had to travel south to meet his minister. As they returned to Wellington they went over detail of the new legislation. Ward told the House a few days later that he proposed to forego some revenue and to lower the tariff on tea, and leave it only on imported boots. Instead he would introduce a tariff on fruit from the Pacific Islands. Then, when this announcement brought howls of rage he backed off again, and another bill had to be introduced. ‘There is something laughable about the frantic efforts of the Treasurer,’ gloated the Herald. ‘Every plunge he takes only [makes] matters worse than before.’28 The following week saw the Government steamroll its final offer through the House. By the 23rd tempers had frayed; Ward was irritable. One MHR described the House as a ‘screaming farce’. By the time the legislation passed its third reading the Treasurer was fast asleep in his chair and missed his right of reply. The government was regretting the day it had ever touched the tariff. George Fowlds, a Liberal official in Auckland, and later one of Ward’s colleagues, passed the comment to a friend that Ward had ‘entirely dissipated the fame he won in London by his tariff tinkering’.29
In politics troubles seldom come singly. Ward had no sooner disposed of the tariff than it became necessary to push legislation through the House ratifying the merger so painstakingly worked out between the Colonial Bank and the Bank of New Zealand. This bill eventually led to personal and political disasters for Joseph George Ward. It was very nearly the end of his political career.
During the negotiations between the two banks the Colonial Bank’s hand had slowly weakened as more and more came to be known by the Bank of New Zealand about the true state of the accounts of the Ward Farmers’ Association. Both parties maintained the strictest confidence about details because of their political sensitivity, and because to do anything else risked a run on the Colonial Bank.30 Ward was spared the public revelation of his own personal finances while he was under pressure over the tariff issue. Agreement was finally reached on 18 October 1895. The Colonial Bank’s accounts were divided four ways. The ‘A’ list consisted of good accounts automatically taken over by the Bank of New Zealand. The ‘B’ list were doubtful accounts which were to be managed, realised or adjusted in consultation with the Colonial Bank over a two-year period. Accounts in the ‘C’ list, consisting mainly of the J. G. Ward Farmers’ Association, were to be the subject of special scrutiny, the Bank of New Zealand having three months to decide whether to take any of them over. As a safety precaution it took a cover of £92,000 from the Colonial Bank to cover losses in case it assumed the ‘C’ list. The ‘D’ list were deemed to be hopeless accounts and were not to be taken over.31
The report did not identify which accounts fitted which categories; these were listed in confidential schedules and kept close to officials. The report was tabled in Parliament on 18 October but the Colonial Treasurer’s parlous position was still screened from gaze. The conduct of the Opposition in Parliament suggested, however, that they were certain that the banks’ directors, as well as the government, were protecting people in high places. In the first week of October accusations were hurled at Ward for running up a large bill for telegrams, and evidence was presented to Parliament suggesting that for more than two years the Post Office had been giving telegrams between its Minister and the J. G. Ward Farmers’ Association in Southland priority treatment.32 A Wellington MHR with a close association with the Evening Press claimed a few days later than Ward had been down to the waterfront to meet a Bank of New Zealand official, John Murray, when his ship docked, in order to influence negotiations between the banks.33 Ward was losing his cool, and began libel proceedings which resulted in a handsome apology from the Evening Post which had carried details of John Duthie’s allegation. The Post also paid costs.34
Despite Seddon’s earlier guarantee that Parliament’s sanction would be sought for any merger, the Premier stalled for a few days after the merger agreement was tabled. The thought of a bill so late in the session ‘gave him a chill’.35 The Opposition was not to be fobbed off; they wanted to avail themselves of parliamentary privilege for a full-scale debate on the merger, using what titbits had been leaked to them, plus their free licence for speculation. A motion demanding legislation was tabled by Francis Dillon Bell, an able Wellington barrister, and during the debate George Hutchinson, MHR for Patea, who was to pursue Ward relentlessly and sometimes recklessly in the years ahead, asserted that there had been political interference during the process of finalising the ‘A’, ‘B’, and ‘C lists, with the Bank of New Zealand under pressure to assume all of the accounts. Obviously the rumour mills were working overtime. Ward denied any interference; by now he and Seddon were struggling to keep up with events, and in no position to dictate them.
Dillon Bell’s motion was only narrowly defeated. There were growing signs that some Government members had also caught a whiff of scandal and wanted it all out in the open. The election, after all, was only twelve months away. The Government gave in after Seddon had taken the unusual move of seeking advice from Stout. The Bank of New Zealand and Banking Act 1895 Amendment Bill was introduced on 27 October. Besides providing for the merger, the Bill contained a provision in Clause 5 to the effect that lists of accounts need not be produced in any court proceedings that might follow on the merger: certificates from the bank were deemed to be sufficient evidence. The Government, it seemed, still hoped it could shield Ward. Possibly as a piece of bravado, Ward, himself, moved the second reading. The Bill passed surprisingly quickly: members had already exhausted what ammunition they possessed, and it was clear they were going to get nothing more out of the Ministry. But Government supporters were edgy. Next day they punished Ward by summarily rejecting his Reciprocal Treaties Bill as well as Seddon’s Ministerial Salaries and Allowances Bill, which sought to fund a ninth member of the Cabinet. The Herald’s reporter noted that the Premier and his colleagues ‘have practically lost all control of their solid followers’.36
With the House rising on 2 November the battle for more details about the lists of accounts was taken up by some hostile Colonial Bank shareholders. However, they were blocked by Clause 7 of the newly passed legislation which enabled directors of both banks to keep the lists confidential. At a Dunedin shareholders meeting on 8 November, the directors of the Colonial Bank won ratification for the merger by 134,551 votes to 6115. The Bank of New Zealand’s shareholders also quickly confirmed the merger, but the precise nature of the ‘C list still remained a mystery. The two banks duly merged on 18 November with Henry Mackenzie shifting over from the Colonial Bank to become the new general manager.
Ward’s role in the merger was the subject of much speculation at the time, and will probably remain so, because only limited documentation exists about the part he played. Political opponents painted a picture of a reckless speculator who used his political positions and perks to persuade the ailing Colonial Bank to continue lending long past the point of prudence; and then, having terminally weakened the small bank, masterminding a merger with a larger institution to which he had given government backing. Ward’s aim, it was said, was to transfer his account to this more substantial institution. The trouble with this plot theory is that it overestimates Ward’s power, and the seemingly limited role he played in the merger. He was almost entirely dependent on the young, well-meaning, but hopelessly over-committed Fisher, who was in day-to-day contact with Birch, the Colonial Bank’s Invercargill manager. Some of the detail as to the state of his securities, particularly the details about the oats, seems to have been as much a shock to Ward as it was to the banks themselves during the due diligence process. No doubt, as Henry Mackenzie later conceded, Ward hoped that the association’s account would be placed in the ‘A’ list.37 But he was in no position to dictate such a matter. The bank officers seem to have based their recommendations entirely on the quality of the securities held. And Ward’s seemed, in the depressed state of the economy, and with the current declining value of the Nelson Brothers shares, to be about £13,000 short. The revelations about the shortage in the oats account only added to the unlikelihood that the Bank of New Zealand would put the association on the ‘A’ list. There might have been ministerial pressure, but nothing more than innuendo was ever produced during the several inquiries into the merger in 1896–7 to substantiate popular belief. Indeed, every director or officer asked the question about ministerial interference by the Banking Committee emphatically denied it.
The bank merger of 1895 was not a lifeline designed to rescue Ward. Indeed he came to regret it most bitterly. Many others’ interests pushed the directors of the Colonial Bank along, not least their own. While Ward had contributed to their parlous state, the bank was collapsing around their ears by the later part of 1895. There was no option but to find a partner of substance. The silence on details about accounts which some saw as so politically advantageous to Ward, was more to protect themselves and others who were given an opportunity to trade their way out of any difficulties, and for whom the full glare of publicity could well have been fatal. Ward was no more than the unintended, and as it turned out, only temporary beneficiary of this commercial concealment.
Having said all this, it is also clear that Ward and his senior colleagues believed in trying to nudge events, wherever possible, to help the Colonial Treasurer. His skin was also partly theirs. From the time of the banking difficulties in 1894 both Ward and the banks’ directors had found it prudent to involve Seddon in many briefings on banking matters. The decision to appoint William Watson the chairman of the directors of the Bank of New Zealand after the state guarantee in 1894 can scarcely be seen as an accident. Watson had always been kindly disposed towards the Ward Farmers’ Association in his days with the Colonial Bank, and Ward certainly found it comfortable to have a friend in such a position. Neither was it coincidence that Henry Mackenzie, who had been general manager of the Colonial Bank during Ward’s years of profligacy, was appointed general manager of the merged bank in November 1895. Mackenzie was also implicated to a degree in the association’s ballooning account and might feel an inclination to come to Ward’s rescue in time of need. And by November 1895 Ward’s hour of need had certainly arrived.
However, with all the adverse publicity Ward’s influence in such matters was now declining and his future lay more and more in the hands of his Premier. And there was a line beyond which Seddon felt it imprudent to step. Ward tried hard to reach further into the internal workings of the merged bank by getting Birch made the Invercargill manager. He sent coded telegrams to Seddon on the subject:
It is most desirable in our interests that a discreet and certain friend should occupy this position. I would urge you to use all the influence you can with McCarthy and Kennedy and Johnston [directors of the Bank of New Zealand] to have Birch appointed. The matter is in every way more important than I can tell you by wire …. Kindly lose no time in taking discreet and active steps—see Watson and Mackenzie—and impress upon them also the grave importance that is attached to this matter …. My political opponents have been circulating every imaginable rumour for the last week or so …. Surely after all I have gone through in the way of damaging criticism through the BNZ I am not going to be sacrificed to gratify the spleen and malice of the political opponents of the Government ….38
Seddon hesitated. Birch was not appointed. Ward was being swept along on a tide which both men were not able fully to control.
By this time Ward was sorely stretched. On 19 November an action by Southland Frozen Meats alleging breach of contract against Nelson Brothers over their involvement with Ocean Beach had commenced in the Dunedin Supreme Court. Sir Robert Stout, who seems always to have seen Ward as a form of political bodyguard without whom Seddon would be more vulnerable, was leading counsel for SFM. Despite Stout’s assertion that the plaintiffs ‘had no quarrel with Mr Ward, only with Nelson Brothers’, Stout tabled a number of letters that had been discovered by the plaintiffs. Ward appeared from this selection as a commercial speculator who cared little if, in his own interests, he ruined SFM. An appeal through Nelsons’ solicitor, who, ironically was another Opposition MHR, Francis Dillon Bell, for a chance for Ward to take the stand was granted. But Stout refused to ask any questions, only compounding the impression that the Colonial Treasurer was in the hands of people intent on humiliating him.39
The judge, Mr Justice Williams, told the jury that in his opinion Nelson Brothers’ action in dealing with Ward over Ocean Beach had contravened the earlier agreement they had made with SFM, and on 23 November the jury awarded damages of £7000 against Nelson Brothers. Bell promptly gave notice of intention to appeal to the Court of Appeal on the grounds of the judge’s misdirection of the jury, a case which Nelson Brothers were eventually to win.40 In the meantime verbatim evidence had been printed in most newspapers around the country, and much had been said that was damaging to Ward’s reputation without him being able to reply. This was only the first of many days that Ward was to spend in courtrooms presided over by Mr Joshua Strange Williams.
The court case, plus the news that Birch might well not be appointed to the Invercargill job, brought Ward to breaking point. When he got back to Invercargill on 23 November he posted a letter to the Premier on the Colonial Treasurer’s letterhead, resigning his portfolio. Seddon was to send it on to the Governor if he chose. Instead the Premier tucked the letter away securely in case he should ever need it. From now on the ablest commercial brain in his Cabinet was completely in his hands.41 By the end of November 1895 Ward was cornered. For a time after the bank merger he seems, himself, not to have known on which of the lists the J. G. Ward Farmers’ Association appeared, nor what the newly merged bank intended to do with the association’s account.42 It was now becoming clear, however, that the Bank of New Zealand did not intend to avail itself of the generous sum of £92,000 to cover possible shortfalls in the accounts on the ‘C’ list, on which Ward now knew the account to be. That left the association bearing his name in the enfeebled clutches of a dying bank whose directors were intent on liquidating it quickly. That in turn meant that if the J. G. Ward Farmers’ Association were to survive, it would need to rearrange its securities and start again with a new banker. That was where Birch could have helped him. Birch, however, was soon on his way to a position in Timaru. Ward was left casting about among his friends for assistance. The smug Sir John Hall, who still knew only some of the story, was able to gloat to a friend: ‘The most remarkable tumble has been in the case of Mr Ward. He commenced the session with the reputation of the financier of the Southern Hemisphere. Now his untrustworthiness and incapacity are in everyone’s mouth.’43
So sudden had been the change in Ward’s fortunes that many in Southland were not prepared to accept it, and began to suspect dirty work. In recent years the Times had always attacked the government through Seddon. It now began carrying articles and letters critical of Ward.44 London and Australian comments about the treasurer appeared in its columns. Shareholders and farmers doing business with the Ward Farmers’ Association knew things were not going well; although no formal announcement had been made, the association seemed to be reducing its activities and people began fearing the worst. Over the summer Ward began to receive pledges of support from those who had seen him as a staunch friend in better times. Ward realised that if he was prepared to fight back he was guaranteed an army of people who, without him, might themselves be in the firing line. An enthusiastic Hokonui supporter penned him some lines of Christmas doggerel in Hiawatha mode:
Honoured Sir and gallant member
Awarua’s M.H.K
’Mongst the throng of legislators
Thou art aye a shining star
Advocating needful measures
For Zealandia’s future good
Well thy sound financial statement
Critics’ darts so well withstood
Coming from the House with honour
Crowned with laurels nobly won
Well may fertile Awarua
Boast of such a gallant son ….45
Theresa stuck the poem in the family clipping book, no doubt with the warm endorsement of Hannah. With the South Island’s bank now a thing of the past, its control in the hands of northerners, more than one plot theory was gaining credence. Outside forces were challenging Southland’s hand on the Treasury and probably had an eye on the region’s other assets as well. Many feared that Ward’s problems might become theirs, and there was more than a little self-interest in the promises of support that began flowing in to Ward.
Meantime, Ward had been bracing himself for the appointment of official liquidators of the Colonial Bank. This was announced on 22 January 1896. The association’s accounts must soon be dismantled unless he and some associates could mount a rescue bid. Such a move was soon under way and involved two friends of Ward’s. Alfred Lee Smith was a Dunedin businessman, chairman of Donaghy’s Rope & Twine Co., as well as a reform-minded city councillor. He was a Catholic, and Ward would sometimes stop off at his home in Green Island when in Dunedin. On 10 November 1895 after mass Ward had met the Irish revolutionary, Michael Davitt, at Smith’s home.47 J. B. Reid came of Elderslie farming stock. He was managing director of the Mutual Agency as well as being Dunedin representative of both Nelson Brothers and the Tyser Line. He was the agent with whom Ward had dealt at the time he erected Ocean Beach. During the days spent in Dunedin before the court case initiated by Southland Frozen Meats in November 1895 Ward almost certainly discussed his business affairs on a confidential basis with Smith and Reid, and a scheme to rescue the Ward Farmers’ Association began to germinate. Ward was in Dunedin before Christmas, and again in the first week of February 1896. On 10 February it was announced that John Fisher was retiring from the position of general manager of the J. G. Ward Farmers’ Association and that R. A. Anderson was taking his place. The loyal Fisher had already offered to take much of the responsibility for the state of the association’s accounts, and for the shortage of oats.48 Ward was now anxious to demonstrate that a new broom was sweeping at the association’s headquarters. The association began selling off parts of its business, the auctioneering section going to Wright Stephenson and Company. On 14 March it was announced that Lee Smith and J. B. Reid were to join the board of the association. No meeting of shareholders took place; Ward simply appointed them, as an anonymous Times correspondent complained a few days later.49
Ward’s difficulties were not the only problems for the Premier. Sir Patrick Buckley left the Ministry just before Christmas 1895 for a seat on the Supreme Court. Then on 10 January 1896 Reeves resigned to take up the position of Agent-General in London. No by-election was necessary after Buckley’s resignation: he had been in the Legislative Council. But a bitter contest was soon under way in Christchurch to fill Reeves’s seat. Seddon, Ward and Jock McKenzie campaigned vigorously but it was to no avail. On 13 February the Government’s candidate was beaten into third place. The Government looked to be vulnerable in election year. Later in the month the Times revealed that Ward had spent most of the time since the last session out of Wellington. The cost of official telegrams was said to have risen by £4000. Ward was back to his practice of running his departments from Invercargill, but few can have believed that his mind was on public business. Rumours were now circulating about the debts of the still-secret accounts on the ‘C list. News of Ward’s promissory note for £55,150 leaked out as well, and another rumour had it that Ward’s account had been wiped clean using the Colonial Bank’s shareholder funds set aside for dubious accounts as part of the merger. An article alleging that the Colonial Treasurer had, in effect, received from the Colonial Bank’s shareholders more than £55,000 first appeared in the Evening Post early in March, and was reprinted in the Times.50 Dame Rumour was on overtime.
There was no way Ward could answer such charges without disclosing details about the ‘C’ list, and much about his business besides. He decided to organise a series of public meetings in Southland in order to get a general rebuttal across. The first was at Winton on 23 March. A special train from Invercargill was laid on. No effort was spared to drum up an audience which was described as ‘one of the biggest’ ever assembled in Winton.51 The meeting went on until midnight. But it was not the cocky, confident Ward of old. Instead there was a bitter tirade from the stage, full of self-justification. Efforts were being made by the Government’s and his own commercial enemies, to discredit him. The ‘Tory Press’, Sir Robert Stout, and a number of ‘dastardly cowards’ were after him. He defied any man from Auckland to Bluff to say that he had done any public act of which he should be ashamed. There was not a man who would undertake to disclose every detail of his business in public, and the columns of the press were certainly not an appropriate place to do so. He tried out on his audience a line that he refined over time: an attack on his private business was an attack on the settlers of the region; what hurt him was also dangerous for them. He ended with strings of statistics about what the Liberal Government had done for the area. Each assertion was greeted with loud ‘hear hears’.52
The Times, though not mentioned, sensed it was under attack at the meeting and sought to make light of Ward’s comments. ‘The only ridiculous aspect of the case perceptible to us is the absurdity of a gentleman of Mr Ward’s position taking up the time of a large audience with such paltry small talk when he should have been expounding to them on weighty matters of state.’53 In fact Ward had discovered a thick vein of regional paranoia that he would mine for many a month. The following night he addressed a large and receptive audience in Bluff, winning from them a unanimous motion of endorsement. As if his efforts on his own behalf were not enough, a few weeks later he persuaded Seddon to come to Invercargill on a well-publicised visit. A large crowd greeted the Premier, who told them he had come at the invitation of ‘my friend Ward’. The press was criticised, the Colonial Treasurer praised. A few days later Seddon told a Wellington audience that the Treasurer was being subjected to ‘a most deliberate, dastardly and unmanly’ effort to ruin him.54 All the ministers were now attempting to portray the attacks on Ward as an effort to turn the clock back to the 1880s. In election year Ward’s enemies were to be portrayed as a bunch of well-heeled Opposition supporters putting the achievements of the Liberal Government on the line.
In the long run the events of June played into the Government’s hands, although the short-term effect on Ward seemed ruinous. On 1 June it was revealed that Lee Smith and Reid had reached agreement with the liquidators of the Colonial Bank for the purchase of the assets and debts of the J. G. Ward Farmers’ Association. Ward seems to have been optimistic that at last he had secured a lifebelt for his drowning association. On 5 June an application was made before Mr Justice Williams for approval of this arrangement between the parties. But the Colonial Treasurer could have done without all the accompanying publicity. For the first time the exact state of the association was revealed in the affadavits that were filed. And a sorry tale it made.
The Colonial Treasurer was revealed to have three general areas of liability. In the first place he had given two personal guarantees, one for £20,000 to the Colonial Bank against the overdraft of the J. G. Ward Farmers’ Association, the other the promissory note for £55,150 just before the merger. Secondly he owed the Colonial Bank £6000 for a London draft that was in transit at the time of the merger. The only security for it was the 1600 Nelson Brothers shares, once said to have been worth £10 each, but now deemed by the liquidators to be ‘practically unsaleable’. The third area of liability was a debt of £4900 which the Hokonui Railway and Coal Company, another of Ward’s properties, owed to the Colonial Bank. This amount was guaranteed by Ward and three others, one of them dead. The other two were an impecunious Christchurch dentist by the name of Frederick William Thompson and a mine manager called John Hayes, whose liabilities exceeded his assets by £30. The whole of this debt, therefore, devolved back on to the hapless Ward. It added up to £97,079. In addition, the association owed a further £72,000 to the Colonial Bank, bringing the total indebtedness, as of 31 March 1896, to £168,000.
Under the proposed terms of sale, Smith and Reid would purchase these debts plus the assets of the association for a total of £62,750 in cash, with a further guarantee of £5000 for the shipment of oats owing to Brooks and Company in London. The liquidators of the Colonial Bank stood to lose approximately £101,000. But, as they told the court, the sum of £67,750 ‘is more than we can by any other means realise for the same, and we believe it will be beneficial for the said bank that the offer of the said A. Lee Smith and J. B. Reid be accepted and the said agreement given effect to and carried out’.55
The effect of this proposed arrangement was that Smith and Reid would acquire the association, now under Anderson’s management, plus the Hokonui Railway and Coal company. Both were in running order and, with proper management, had considerable trading potential. Ward would have his personal debts taken up by his friends, with whom he had used his ‘best efforts’ and all his influence, and who, no doubt, would be less demanding creditors than he was currently eyeballing. In this way the companies would survive, and so might he. The loss of £101,000 would be borne by the shareholders of the Colonial Bank. Smith and Reid would get the association for about £1750 more than it would realise were it to be subjected to a long and painful liquidation process, plus the right to recover £97,000 from Ward if and when they could. It was not a bad business proposition for the liquidators, or for Smith and Reid. It would certainly provide a breathing space for Ward who would be spared the agony of going bankrupt. The solicitor for the liquidators had this to say: ‘The matter had been laid before the court in all its nakedness. For a debt of £92,179 the Colonial Bank held as securities shares in Nelson Bros worth nothing, Mr Ward’s guarantee for £20,000 worth nothing, or nearly so, Mr Ward’s promissory note for £55,150 worth about as much as his guarantee, and the equity in certain freeholds which would probably realise £2,000.’56
Press and public alike were agog with the news. The Colonial Treasurer had admitted in court that he was ‘absolutely insolvent’. Worse, it was revealed that an association which in reality was in the same state, had produced a balance sheet for its shareholders only a few months earlier claiming a profit that justified a dividend. For the first time there was talk of prosecuting Fisher for fraud. Ward’s only recompense for two harrowing days in court was that he was able to table letters he had received from Watson and Mackenzie dated 25 May 1896 flatly denying that Ward had consulted them over details of the merger and stating that the Treasurer had been given no details about his account at the time the legislation facilitating the merger passed through the House. But clearing himself against allegations on those points had come at a terrible cost: the Treasurer’s affairs were now revealed to be in a terminal state.
The judge reserved his decision on the application, but the public could not be silenced. No one seems to have had any inkling of just how bad a state Ward’s affairs had got into. Even the wily Christophers at the Invercargill branch of the Bank of New South Wales, who always had his ear to the ground, described the magnitude of Ward’s losses as ‘a revelation’. Both the Evening Post and the Herald felt the Ministry should step aside and let Stout take over.58 By the time the session opened nothing else was being talked about in the lobbies than whether Ward could hang on to office, no matter what the judge’s decision. A caucus of Government supporters was set down for 15 June; several members were saying that they could no longer support the Ministry unless Ward left office. When the caucus took place Ward said little, but one reporter claimed that Seddon was ‘now overwhelmed by the numbers and will have to abandon [Ward]’. There was mention for the first time of a select committee being established to review the circumstances surrounding the banks’ merger.59
Ward must have had some premonition that the end was near. After the Dunedin court case he went back to Bluff to bring Theresa to Wellington. The home scene had been unpleasant of late. Vincent recalled in later years that valuers had been to the family home in Bluff where they ‘walked about our house, appraising the value of the pictures, furniture and other effects …. We all felt most unhappy.’60 All the grit and determination of the Wards rose to the surface however; both Hannah and Theresa, as well as many friends, through Ward had been unfairly treated and were ready to fight.
Nothing previously in their lives can have prepared the Wards for the full blast of Judge Williams’s findings that began coming through the wire services from Dunedin a little after midday on 16 June 1896. In a lengthy judgment that was to be read carefully by Ward’s friends and foes alike, the judge declined to sanction the sale of the association to Smith and Reid. Instead he took the opportunity to chastise Ward and the association. He labelled the association’s practice of discounting bills ‘illegitimate’ and ‘dishonest’; Fisher’s actions over the oats constituted ‘fraud’; and the 1895 balance sheet of the association was ‘utterly false’. The affairs of the association had been ‘managed with reckless disregard of ordinary business principles’. Of Ward he said: ‘Mr Ward is hopelessly insolvent. A few pence in the pound is the utmost his estate can be expected to realise. What, under ordinary circumstances, would happen would be that the Association would go into liquidation and that Mr Ward would become bankrupt. That the career of the Association should be brought to an end and its proceedings investigated, and that those who were responsible for its management should not longer be permitted to roam at large through the business world, is a result so obviously desirable in the interests of commercial morality that it ought, if possible, to be obtained.’ Williams went on to call the Smith-Reid proposal ‘an offer to buy off from bankruptcy and its consequences a man who ought not to escape them. This is in effect an offer of hush money.’61
The judgment was a political thunderbolt. The Governor, Lord Glasgow, reported to the Colonial Office that it had ‘caused a profound sensation throughout the colony’.62 Any hopes that Ward might remain in the Ministry were instantly extinguished. By the time the House met at 2.30 pm Ward had resigned all his portfolios, the Premier himself assuming most of them. Seddon announced that a special select committee with strict terms of reference would inquire into the banking legislation. The Ministry was going to fight back: an election was only a few months away. Many thought Williams had gone too far this time.
