New Zealand Banking.

Auckland Star, Volume XXIV, Issue 208, 2 September 1893, Page 2

New Zealand Banking.

THE SAVINGS BANK RUN.

\ GOVERNMENT GUARANTEE IF

NECESSARY.

BANK NOTE ISSUE BILL.

A PRECAUTIONARY MEASURE,

(BT TELEORAPU. — PARLIAMENTARY

REPORTER.)

Wellington, this day. fhe Bank Note Issue Bill was introduced by the Colonial Treasurer yoatorday evening. Sifter he hod done ao, he gave members a few momontatouiake themselves acquainted fcith its provisions, and then moved Bhe second reading of the measure. He askod for a speedy passage of tho JJUI through all its stages, and Rave tho House reasons for his request. In tho Financial Statement, he said, members might retnombar thab tho possible necessity for tho Government introducing banking legislation had been referred to. Ab thab time It) had not been anticipated thab such legislation would be necessary. Even then, however, there were circumstances which rendered tho precaution of such a measure Eathe one boforo tho House desirable in case of any emergency arising. He hoped that now the measure wag boforo tho House they would' paes ib through all its ttages ab once. So far as Governmenb wore awaro, there was no immediate Dr possible necessity for tho Bill being made law, but it was as well to be prepared for anything that might arise. Members would bear in mind the financial crisia in Australia, jfew Zealand had fortunately been free from" such a disaster, bub during the last few days circumstances had arisen in the North which rominded them that a financial panic might como from very intuft'cienbcauHog. RUN ON THE AUCKLAND SAVINGS

BANK,

There had been a most extraordinary and nnaccountiable run on a vory powerful banking institution in Auckland. Thab institution was strong financially. Its investments were of the soundesb. Ib had been well managed, and it had large resorves to lall back on. Notwithstanding, it had been the victim of a panic, though a vory small one ho was glad to say. The institution had advanced £125,000 to the colony, which of course it could call up whenevor it required it. In view of bhab circumstance ib wa3 rnosb surprising to him that some of tho people of Auckland should havo lost their beads for no roal cause so far p.s he was iwaro, and tnado a run on the bank. The panic, he had overy reason to believe, would subside as quickly as it had arisen, out in any ease tho Government woro prepared, if necessary, to

GUARANTEE THE DEPOSITORS, 10 thoroughly were thoy assured of the absolutely sound financial position of the Institution. The disturbance which had arisen was purely Focal. Mr Ward further taid ib waa most unlikoly that any other

parb of the colony would bo affected, yet, seeing what had taken place in one part of the colony, tnombora would agree with him thatit was their dnty to pievont the possible reourronca of the samo thing in other parts. In passing the Bill tha country undertook lip financial responsibility or liability what-

ever. They did not undortnke to guarantee V nny debb or bank notes. They did nob oven V propose that this legislation should be available for any institution unlesa extraordinary \circumstanceß arose, and then the main provisions of the Bill conkl only bo pub in operation by the Governor in Council. Except in regard to one clause tho measure was of

A TEMPORARY NATURE,

In part 1, notes of all financial institutions trading in the colony wero mado a first charge upon their assets. That being so, if the assets of a bank wero in notes, and a time ever arose for tho colony under part 2 to find ib necessary to make these notes a legal tonder, the colony would undertake no financial liability, inasmuch as assets were a first charge against the bank. Should ib ever be necessary bo issue a proclamation in clause 5, then tho colony undertook no financial liability and responsibility, bebecause its security would be the whole of the assets of tho bank. After comparing the proposed legislation to thab passed in New South Wales sorao time ago, Mr Ward showed that New South Waleshad nob taken any steps till she was in tho throes of paniq, but that the offect of her action had been to allay the panic. Tart 2of tho Bill, Mr Ward pointed out, was of a temporary diameter, to expire in 12 month?, or within two months after tho nexb meeting of Parliament. By its provisions nothing ! could be done before the wholo circumstances wore laid before tho Roues, and members aakod to legislate afresh for reenactmenb of the measure.

BANK NOTES.

, Ib was not intended that a proclamation abould be issued to even ronder it possible for a bank's notes to be mario a legal tender unless the Governor in Council was satisfied that the assets of the bank and its creditors exceeded its liabilities, or at least the amount of its capital and reserves. A point on which Mr Ward laid -stress was that, even should it be necessary for notes to be mado a legal tender, it was not to be for a longer period than six months. The Bill was simply a precautionary measure. So far as the Government were aware, said Mr Ward, there was no financial institution in the colony that required the assistance the Bill provided, but, seeing tho disturbed condition of financial affairs throughout the colony, ib was obviously the Government's duty to introduce a measure which, while providing against emergencies, without undertaking heavy financial liability for tho colony in times of peace, ib was well to bo prepared for war. If they examined the Bill, members would, he was sure, come to the conclusion that tboro was nothing of an experimental nature in it. It was Ucwo'l on

A PRACTICAL BASIS

The* Premier had boon in close and active touch with thp Premiers of other colonies in order try assimilate, if possible, the necessity legislation on important Mutters,, peculated to have an important t,*6CC upon the progress of the country and of the othor colonies, for some months pasb. The Bill was of an eminently pacific character, and \l Now South Wales had pasEed n similar measure a few months x Boorier than she did her troubles would havo been averted. That was his belief, that the Government .would show their pf udonce by profiting by the experience of their neighbours, and place on the Statute Book a measure which, should occasion arise, would avert mishaps of a grave jmtuvo. The .Treasurer then expressed his Lope and belief that members on both sides of the House would be animated by 9 common deaire to do that which they believed to be for their country's good. The Government had given the Bill their most careful attention, and they, together with mombers on the other side—including the Leader of the Opposition, were anxious jhat any troubb should be averted from the Jolony. A WISE PROCEEDING. 'V The Hon. Mr Rolleston Paid the Colonial Treasurer had put his caae vory clearly to jho House. The Government had taken jipon ifcsolf a great responsibility, bub the t ;■■' accaaioti was one when the House would be \ «b the back of the Government in taking \ ihab responsibility. ("Hear, hear.") At \ »ny rate be thougbd tMb to fcake any otjhsr

course would involve on tho part of any private member of the House a responsibility which no member waa prepared to take. No one could take the responsibility which tho Treasurer had taken in this matter or thab the Government had taken with the knowledge that they have and must have superior to that of ordinary members of the House. This was not a question that was new bo any of them. It had occupied the thoughts of all thoughtful men in the House for weeks, aye for months, past. The position was briefly this. The Houbo could not properly separate for recess with a dissolution in view without making some provision against financial difficulties such as aroao in the other colonies. They know the case and it was only a question when thab action should be taken, and he thought the Government was doing right in bringing this question rlown in such a way, and at such a time as commended itself to the minds of honourable members.

NO REASON FOR PANIC.

Ho did nob think there was any reason for panic (" hoar, hear ") and he would say that ho was suro thab honourable mombers would have doomed it advisable, therefore, to put themselves upon uniform linoa with the Australian colonies and to adopt tho course they had adopted successfully in respect of the financial crisis there. In doing thab they wo-uld act the parb of wise men, and, for his own part, ho was prepared to cordially supporb the Government in tho course it had taken. He did nob discuss details. The Government) were able to sco what would have been bhe case, and whab he believed now to bo the caso, thab this temporary trouble that had arisen would solve itself. Ib would havo been bettor if they could have been suro thab nothing occurred afterwards and thab ib had been letb to solve itself, bub the position now was that the wisest men could nob tell what) mighb occur in tho months when Parliament could not sib, and ib vvaH responsible for details. He thought they would approach this question with an earne3b desire to do the besb for tho country, and that they would have the only verdict of the country and House in tho matter.

Tho only words of protest came from Mv Richardson. The House, he considered, waR nob doing a wise thing. There wasn't sufficient warrant tor calling the aid of the nation, THE BILL FINALLY PASSED. ' The Bill was then pub through all its Btagos in both Houses.