THE OTHER VIEW.

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

THE OTHER VIEW.

TO THE EDITOK. | Sir, — Will you kindly permit the insertion of the following remarks in response to Mr. Hobart's letter in your issue of the sth inst. It is to be regretted that any excuse should be offered by that gentleman for replying to my latest letter. Why not be candid? The fact of Mr. Hobart being enabled to abandon his former oneideal, unimpressive and sadly unconvincing style of correspondence proves that my letters have been of the utmost service to him and to his cause. For in liis letter under reply appears the only matter approaching tangibility yet observable. He now gives us figures which are the finger-posts most needed by those whom he desires to enlist in support of his scheme of banking reform, in which, I may here state, my j interest is indefinite. The purpose of my remarks from time to time has been to tone down, if possible, what appeared to me an overwhelming and flatulent method adopted by Mr. Hobart, whose longing to know who "Gratis" is cannot at present be satisfied, nor would knowledge as to my identity affect in any way the valuable matter placed before him in the two or three letters written by me to date. This I do not begrudge, and merely state that the experience which enabled me to do this was acquired in a very wide I field of operation, and more practical, perhaps, than that allotted to Mr. Hobart. One point in Mr. Hobart's letter I J would like to dwell upon, and that is his references to my remarks anent securities being "sound" to-day and j "rotten" to-morrow. Mr. Hobart declares that he never knew a "sound" bank security to become "rotten." Does he confine himself to his own individual experience as a bank manager? Or does the declaration refer to banking generally? In either case it is beyond comprehension that any banker could be able to so regulate his advances as to have always a margin of safety in his securities. Why, the most harassing experience of a 'banker is in the constant care (often futile) ' that has to be exercised so as not to be stranded by an ebbing tide of prosperity. As a' proof of the illusiveness of security values, I have known a banker of wide experience — Home and Colonial — to leave a branch which he had been ordered to "clean up" several thousand pounds worse than he found , it, and this within a very limited period. Does Mr. Hobart declare, then, that the advances made by the Bank of New Zealand, subsequently transferred to, the Assets Realisation Board, were made without due and mature consideration by tha bank's directory, And thati the margin of safety when the advances wero made was not ample? Have all these transferred securities realised the amount of even the principal sum? In my own experience I cannot ret-ollect that there was ever an instance where a bank foreclosing realised by sale the amount of the debt. The cause of this is, that banks hesitate to be identified with such cases, knowing that it is a bad advertisement for securing deposits ; and thus the client through the bank's endeavour to "carry him on" gets • deeper and deeper into the books until "too far" is reached. At the very best a bank manager can only point to his current j account, ledgers, etc., and say, "Here are our attempts," exclaiming as turns to his irrecoverable debts register, "Alas! here also are our failures." If I considered that the local banks were acting as dogs-in-the-manger, or showed a disposition to ignore and disregard the legitimate financial needs of the Dominion, 1 should at once declare for -the opening of a way for competition. I do not think, however, that such is the case, and am still under the impression that there is plenty of capital in our banks' coffers. The financial tide is, however, too unfavourable to sco it adrift. If we assume for the nonce that the local banks have not sufficient capital, will it not be apparent to their respective directorates that they are losing money through lack of it? And will they not sacrifice all reputation for business acumen by not providing what is necessary? How much easier, too, for a bank . already strongly established to procure addi-

tional capital as compared with the difficulties attending the establishing of a new financial institution. To open new banks at present would mean the accepting of the same unliquid securities as our present banks are trading in, which course calls for the strongest terms of disapproval. Again, no bank will go into a district unless there has been such development as will create expectations of deposits being secured principally, and also accommodation accounts envisaged with a warranty of safety ; and I quail to consider what position a bank established for the carrying on of any particular industry would occupy without such envisagement in every feature of its advances. That there is no room for an institution to deal solely with any one particular product of the Dominion I am thoroughly convinced. Wool should be legitimate trade and a source of profit to any bank as a medium of exchange, advances being made at rate per bale in the form of a 60 days sight draft on London, the net surplus proceeds to be credited to the shipper's account after realisation. Mr. Hobart expresses a doubt as to the friendliness of "Gratis." Let him be assured that if by my letters I have served in the capacity of even a mere bellows-blower to keep his forge fires alight so that he might fashion his bolts, lam satisfied. The man who makes a good fight, even against a single adversary, is a person to be commended, but let us remember that there can be no fight where there is no antagonist. — I am, etc., GRATIS. 7th May. [We have given considerable space at regular intervals to the above correspondents, but. as the controversy has now become a reiteration of previous contentions, the correspondence, so far as it relates to differences of opinion between the two writers, must now cease.]