The Hastings Standard Published Daily. TUESDAY, NOV. 17, 1896. BANKING IN THE COLONIES.

Hastings Standard, Issue 173, 17 November 1896, Page 2

The Hastings Standard Published Daily.

TUESDAY, NOV. 17, 1896. BANKING IN THE COLONIES.

For the cause that lacks assistance. For the wrongs that need resistance, For the future in the distance, And the good that we can do.

New Zealand is not the only place that is suffering from the eifects of dilapidated banking institutions, for Queensland must now rank with us in this respect. Our banking trouble is of a more severe character than that now being experienced in the sister colony. We rushed pell xnell, on the unsupported testimony of a very crafty banking expert, and signed a bill for two millions sterling, to be followed in a short time by another bill for three and a quarter millions ; and although" we are assured officially that this colony will not be called upon to pay one single sixpence to prop up the Bank of New Zealand, we should not be surprised if there is another demand made next session for a further quarter of a million or thereabouts. However, we must leave the Bank of New Zealand to the officials who promise us such glorious results. The troubles of the Queensland National Bank, the institution that has just secured a terminable Government guarantee, began in the years prior to 1893. Its sorrows are those peculiar to all banking concerns in the colonies—locking up money in ponderous and not easily realisable securities. Lending money on fictitious values has been the curse of colonial banking, and it is doubtful whether the crisis of 1803 has taught these

institutions anything in the shape of a lesson. The history, of the Queenslaud National Bank is briefly as follows :—lt was registered in Brisbane lu 1872, under the Queensland Companies Act, 1871. On May 15, 1893, the Bank suspended payment, and a scheme of arrangement, or, as i.t is more popularly known, reconstruction, followed. The Bank resumed business in Brisbane August 2, 1893, and in London September 22, 1893. The subscribed capital prior to reconstruction was £1,600,000 in shares of £lO, of which £BOO,OOO, or £6 per share, was paid up ; the rearrangement of 1893 provided for the calling up of £3 per share —10s on November 1, 1893, 10s on May 1, 1894, and the balance by eight quarterly instalments of 5s each, commencing on November 1, 1891, while a sum of £2 per share was written off to provide for depreciation. The subscribed capital was thus £1,280,000 in £8 shares, with £9C>O,OOO, or £6 per share, called up. The authorised capital is £3,000,000, in shares of £B, and the shareholders are liable, in addition to the uncalled capital, for the notes in circulation. The note issue is under the direct control of the Queensland Government, so that the bank will have a small (if any) note circulation. Under the reconstruction, holders of drafts were paid off m cash. At the time of the suspension the bank was indebted to the Queensland Government to the extent of £3,163,650, of which £803,650 was paid before business was resumed, leaving the debt at £'2,360.000 ; while the total liability on current and deposit accounts, exclusive of the Government debt, was £7,800,000, of which about £2,871,000 was owing in Great Britain. The Government agreed to accept twelve, deposit receipts of the bank, each for onetwelfth of a sum of £2,000,000, payable at intervals of six months, commencing six years from July 31, 1893, and carrying interest at 1 1 per cent; and, as to the £360,000, the balance of such debt, the Government undertook not, during any one period of six months, to withdraw any sum exceeding £IOO,OOO, the balance of this £360,000 carrying interest at 41- per cent. The whole of this £360,000 has been repaid, and about £166,674 has been paid off the £2,000.000 portion of the Government debt. Other creditors on deposit and current account had the option of taking twelve deposit receipts of the bank, each representing one-twelfth of their claims, of the same character as the deposit receipts of the Government; or 41 per cent, negotiable deposit receipts, with cupons attached repayable in the same time and in the same manner as the other deposit receipts ; or 4J- per cent, inscribed deposit stock, repayable only at the option of the bank, on six months' notice after all the instalments of the substituted deposit receipts shall have been paid. For the nine half-years ending June, 1882, the dividend was 10 per cent, per annum ; for the three half-years to December, 188;-!, 12 per cent. ; for the seven half-years to June, 1887, 15 per cent; for the seven half-years to December, 18«J0, 12 per cent. ; for the four halfyears to December, 1892, 10 per cent. For June and December, 1893, nil; and for the three half-years to June, 1895, 3 per cent. Under the reconstruction scheme the reserve fund of £485,000 was absorbed. It is doubtful whether the temporary help to be given to the Bank by the Government will save it from ultimate destruction. The report of the Commission is admittedly an optimistic one, and unless business revives and land values improve the deficiency can never l)e made good. The main thing to be learned from this latest banking trouble is that Australasia has by no means weathered the financial storm of 1893. The day of reckoning is postponed, but it will come perhaps when we least expect it.