HOW BANKING IS DONE IN MELBOURNE. EXTRAORDINARY REVELATIONS.

Evening Post, Volume LI, Issue 64, 16 March 1896, Page 2

HOW BANKING IS DONE IN MELBOURNE. EXTRAORDINARY REVELATIONS.

iprxsa association.! Mklboubne, This Dat. In the investigation of the affaira of the City of Melbourne 'Bank before Judge Molesworth, some interesting details have been revealed as to how numbers of companies were financed in the financial riot of a few years ago. Mr. Loader, Chairman of the Bank, was the ohief witness during last week. His evidence was a tale of huge advances to various institutions on securities that afterwards became comparatively valueless. Indeed, that is the snbstanoe of the whole story of the great boom which brought ruin to many a home. The manner in whioh some overdrafts were negotiated and allowed to increase ia a sonroo of wonderment to the uninitiated. For instance, C. H. Jamea started with an overdraft of X 133,000 in 1890, and by the time tho bank closed bad managed to increase it to ovor .£216,000. The Real Estate Bank was accommodated to tho extent 'of over J390,000 on very poor soourities. Mr. Loader stated that this bank was on the down grade when the City of Melbourne Bank made the advanoe. The latter, however, was assured by the directors that the advanoe would save the bank, and thonght it held good aeourity. M. W. Ferguason, of Fergusson &, Mitchell, Btartod with a liability of £215,000 in 1891, and finished in 1895 with an indebtedness of .£291,000. The revelations as to tho firm David Munro and Co.'s dealings with the bank were full of interest, and the way numerous accounts got intermixed with accounts conneoted with John Blyth baffled even connsol's understanding. Clearly the Munro Company could not get bigger advances than .£210,000 in 18S8, but this order was completely ignored, and it managod to run up tho amount to about £400,000 at tho close of the bank. John Blyth owed tho bank £G 1,000, but according to the minuto of tho directors he sucoeedod in shifting this liability in a novel and easy way — namely, by withdrawing his opposition to the appointment of liquidators in a certain company. The witness declared that the general manager (the late Mr. Longmuir) ruined himself nnd all oonnected with him to save the bank, and left a debit of .£75,000 to the bank. The Munro Company owed the bank between £100,000 and £500,000 at the time the bank olosed. When he (Loader) came baok from England the aooount stood at a debit of a quarter of a million, or nearly half the paid-up oapital of the bank. Mr. J. Collier, one of the bank's directors, was requested to join the Board of the Munro Company in order to proteot the bank's interests. In September, 1889, the aooount got up to £341,000, and in Maroh, JIB9O, tho diroot advances went up to £370,000. Counsel alleged that the Munro Company, in order to make its overdraft look smaller tor balancing purposes, gave the bank orders on the Treasury. There was no money owing by the Treasury to the company, so the orders came back dishonoured. The overdraft was not decreased at all, thongh tho balance-sheet would apparently show a deorease of the debit, as the orders were not returned till after balancing. The witness remembered Mr. Roberts, another direotor, tolling him something about Mr. Longmuir'B speculation shortly before the latter's death. The security olerk found his position advertised aa vaoant, and ho said to Mr. Koberts, " Look here, if I am going to lose my situation as security olerk, I am going to expose the nature of Longmuir's accounts." It was stated that Mr. Longmuir, when questioned, promised a settlement. Counsel told the witness that the directors could have turned Lonirmuir out, neok and crop, when they found he had left the bank with a deficit of £75,000. Mr. Loader Btated that his indebtedness to tho Bank whon it closed amounted to a little over £26,000 for tho five accounts whioh stood in his name in tbo books. He had 1511 shares in the bank. Tho book valuos of the shares when lodged as security for the debt was £33,000, but the present market value was £7300. He remembered Mr. Henderson, a olerk in the bank, telling him there ought to bo a debit instead of a credit on the profit and loas aooount, but the General Manager told witness heJiad no right to look at the figures till they wore passed on to him. It was a serious thing, remarked tho witness, to go behind the General Manager. Mr. Loador conducted his evidenoo with a statement that, after all the evidenoe whioh had oome out, his opinions as to the ohief offioers of tho bank had boon shaken.