The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo. FRIDAY, DECEMBER 11, 1896.

Auckland Star, Volume XXVII, Issue 294, 11 December 1896, Page 2

The Evening Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, and Echo.

FRIDAY, DECEMBER 11, 1896.

For tils causa that lacks assistance, In tho Tfrons that needs reaistecoc, For thu fjitiira in the distsneo. Ana txio cood tII.IV wu cau aa.

BANK TROUBLES AND GOVERNMENT BORROWING IN QUEENSLAND.

It may not be regarded as any extenuation of the conduct of past directors and chief officers of the Bank of New Zealand to say that parallels to their gross mismanagement may easily be found in the records of banking disasters in ihe adjacent colonies j nevertheless the disclosures that have been made in the course of recent investigations in Australia possess a greater interest for us because of the; public attention which has been concentrated upon banking affairs here. ■ The proceedings in connection with' the winding up of the Mercantile, Federal, and City of Melbourne Banks were of a specially sensational character; vis not necessary to refer to them again on the present occasion. A parliamentary inquiry has, however, lately closed, into the affairs ot the National Bank of Queensland, Limited, which has brought to light many facts indicating that, in the main, the policy which brought the Bauk of New Zealand to grief has landed the chief bunking institution of the Nwrtnero coiony of Australia in tne quagmire ol insolvency.

The Queensland National Bank was one o! tne institutions winch closed its doois curing the great banking crisis, i and it closed them, among other liabilities, upon £2,000,000 worth ot Government deposits. A reconstruction ' 100k piace, the Government, although I possessing a preicrentinl claim upon the asset!) oi the Bank, agreeing to allow its deposits to tank with others as deferred. The Bank has since continued operation-, but there were abundant indications that no proper cleanmg-up had ever taken place, and the enure fabric oi its business was resting on an unsound basis. Opinions to this effect lound free expression in Parliament ana led the Colonial Treasurer (Sir Hugh Neisun) 10 move for an inquiry under tiie provisions of the Queensland National Bank Agreement Act, 1893. '-^'ie Commission ihus setup has now reported, and its finding contains the unpleasant intelligence to shareholders that not only the whole oi their capital (,£899,552), but akso the amounts to ciedii 01 profit and loss, contingency, and interest accounts (amounting with share capital to £l t 182,613), are gone, and there remains a deficit over and above this total amounting to £1,252,810. Besides these losses, since the reconstruction in rBo3, the bauk has written off 872The losses disclosed, therefore, exceed three million pounds sterling, and the liabilities exceed the

assets by .£2,435,423. The "Australasian Insurance and Banking [ Record" summarises the position thus : Total amount of debts and securities examined ... £7,791,693 Amount of unproductive advances nob returning interest ab present 3,000,000 Of which ib is estimated ia bad 2.435,423 Deducting shareholders' funds (£1,182,613) from the estimated losses the deficit is ... 1,252,810 The deficits were accumulated in a manner only too familiar to those who have followed the evidence in the New Zealand banking inquiries. The Queensland Committee report that interest was credited to profit which should have been credited to a suspense account or not charged at all, and dividends were paid bothbeforeand after the reconstruction which ought never to have been paid. The dividends distributed since the formation of the bank amount to a sum equivalent to £10 15s 4d per share of £& paid. The present position of the Bauk is this, that all the shareholders' capital is goneand if the Government insists upon its preferential rights to its deposits, , the assets remaining are only equivalent to 13s io^d in the £ on the private deposits. If the Government ranks \ equally with other creditors the assets would amount to 15s iod in the £~ What the Committee propose is this: That the shareholders shall relinquish all their interest in the bank and be liberated from the call of £>2 {£,Z2O>OOO\ f°r wn'ch they are liable. That the interest-bearing depositors, representing shall take over the bank in the capacity of shareholders, and shall carry it on. As about of these deposits are held in London and only ;£i,200,000 in the colony, time is required to.develop this scheme, and there was an obvious risk that the bank would in the meanwhile be obliged to close its doors. To avert that, the Government put through an emergency Bill guaranteeing ail current accounts (^800,000) for twelve months. Before bringing in this legislation the Treasurer followed the example of the New Zealand Government and took the Opposition into his confidence ; the result was that the Bill passed through unopposed, the Labour members voting for it.

In Queensland, therefore, the Government has become involved in the late of its national bank to the extent of three and a half millions sterling now on deposit, plus a contingent liability of ,£BOO,OOO guarantee o( current accounts. Its position, therefore, in this connection, is not much better than that of our own Government. It has, however, done what might well have been done here—exacted some sacrifice from depositors for the help which is being extended to them.

With these large funds locked up in the National Bank the Government has announced a loan of ,-£2.324,480, to be thus applied : Railways, ; harbour works, defence, loans to local authorities, 000 • telpgraphs, ; wire netting, sugar works debentures under Guarantee Act l<^soo,ooo. As the present public debt ol Queensland figures out at ihe pretty total of ;£6o 6s 7d per head, outstripping even New Zealand's substantial ; £6o 2s 4d, while the population of Queensland to bear its.thirty-two and a-half miiiions sterling is only 470,000, one may sately inter that the Treasurer of that colony has unbounded faith, not only in its people but its resources, and evidently believes that his own confidence will extend to the minds and he pockets of English investors.