BANKING COMMISSION IN VICTORIA.

Auckland Star, Volume XXVI, Issue 161, 8 July 1895, Page 3

BANKING COMMISSION IN VICTORIA.

THE ITALIAN CREDIT FOMJIER.

The following evidence of general interest was given before the Victorian Banking Commission, which is now sitting in Melborirne:— .. • ' . . , -'

Franeesio Loprieno, who bad been formerly connected with the Bank of Naples', stated that) that) bank had * a Credit) Fonder department). .% Ho read a paper descriptive of the manner in which the Credit) Foncier system is carried out in Italy, and he explained why adyaneea were made in bonds instead of in money. One advantage was that the borrower secured better terms than he could get if he borrowed from a private capitalist. He also gave a comparative statement of the Credit-Foncier syterns of France and Italy, and concluded with an expression of sympathy for cheap money for liquid securities, but not otherwise. The bonds in Italy were always. saleable through brokers. If the usual market rate were 4 per cent., and the bonds were issued ab 4 per cent., the bonds would be sold.ab par, but if the market rate were 4 per cent, and the bonds were issued at 3 per cent., the bonds would be sold at a discount. Bonds were issued by different societies on different terms. The highest advance given on property waß to the extent of 50 per cent., but it varied downwards to perhaps a third or a quarter. The account of the borrower, however, was charged on" the face value of tho bond. The Bmalleat amount advanced was £200 aad the largest was £4,000, the average being £1,600. At first 1J per cent, would pay: the working expenses of a Credit) Foncier in Victoria, bub 1 per cent, might be sufficient. There was no Government Credib Foncier institution in Italy, bub the Government required that the bonds in circulation should never exceed the total redeeming value of the property. The Government also assigned zones for the operations of each institution; bat there was one—the Italian Institution of the Credib Foncier —which carried on -business all over Italy, the reason, being thab it was nob wise to give full freedom in their particular zones to every society. The Government got a proportion of the profits for the granting of the privilege to the favoured institution. The Credit Foncier had in Italy done a great-deal towards reducing legal expenses to the borrowers.

F. C. Seymour, for many years manager of the Bank of Bengal, stated that that bank was a proprietary one of » semi-Go-vernment character. For managing Government business it received a consideration averaging about £28,000 per annum and the use of the Government) money. Ib was the same in all the presidencies. The Government work consisted of managing, receipts, payments, currency and savings bank business. There was no note issue except by the savings bank department. In this arrangement there was a recognition of, the principle thab the Government should be the only authority having power to issue paper money. The head offices of the Indian banks were all in London. The charter of the Bank of Bengal hedged round the business ib could do with many restrictions. In 1876 the Government parted with the right to appoint three directors to a board of nine, and since then had had no voice on the board, but the Government still possessed the right to inspect the books of the bank nb anytime. ;The £28,000 allowed for the managing of the .Government business in India was.paid ib the presidency banks at Bengal, Madras and Bombay ; and the note issue of India 'isijarri&l'outf'by tfie^Paper enrrericyvDe-' partmenb, the presidency banks being appointed agents for the management in the same.