BANKING REFORM.

Evening Post, Volume LXXVII, Issue 111, 12 May 1909, Page 10

BANKING REFORM.

TO THE EBITOE. Sir, — To my letter appearing in your issue of sth May you have put a footnote, embodying the statement of a leading local banker, wherein he quotes the paid-up capital of the five banks, and from such a statement it appears •that he, or you, wish the public to assume that these funds are entirely employed in the New Zealand business of banking. There is also a statement that the law compels a large proportion of metal to be held by the banks as a protection for bank depositors. I quoted from the only text-book New Zealand has — "Dominion Banking : What it Is and What it Does" — the amount of capi tal used by those banks here, viz., £2,000,000, and I. adhere to that statement, even though it is somewhat exaggerated in favour of the banks. The National Bank has 34 branches, the Bank of New Zealand 102 braricEeo, while the three Australian banks have 98 branches at work in the Dominion — a total of 234 branches for all five banks in New Zealand. - But the three Australian banks have, in addition, 441 branches spread over Australasia and Fiji. It will be noticed that of 675 branches of all the banks, New Zealand's proportion is about one-third. The other two-thirds carry a much heavier proportion of banking business than the amount dealt with in New Zealand ; therefore, the amount of paid-up capital will be allocated to suit the situation. The following remarks, from page 36, "Dominion Banking," explain the position : "The five banks doing business in New Zealand, under laws making the most extraordinary provisions for the up-keep of private enterprise, are shown to have»a paid-up capital of £6,475,000, which, if sunk in the business they are doing in this country, would make the position very strong indeed, as it would provide an assurance fund for the £23,000,000 of depositors and bank-note holders of 25 per centum. The three Australian banks' capital is included, and as they are doing business in the other colonies and London, it can be readily understood that capital in this country is of. a very trifling amount. ... It is difficult to arrive at the pro portion of capital — apart from reserves — invested by the five banks in New Zealand, but a liberal estimate seems to be £2,000,000"." In view of the foregoing, a strong metal reserve is, I contend, needed in f New Zealand, but the five banks only hold, say, £4,750,000. I have been working for bank and currency reform for over two years. So far, the banks have failed to disprove any of my statements. I want the public to avail themselves of my knowledge, so that we may be as one in an honest desire to found a banking and currency system suitable for New Zealand. I am certain such can be accomplished, the fruits of such being the widespread enrich ment of our people, through , wiselystimulated wealth, producing efforts, backed up by hundreds of bank?. Let us have more banks. — I am, etc., J. B. HOBART. 7th May.