BRANCH BANKS

Hawke's Bay Herald, Volume XXI, Issue 5845, 3 December 1880, Page 2

BRANCH BANKS

Evbrt little township in New Zealand haa.at least one, and, oftgn two or three, bank, branches in it. This colony is the. most overbanked country in the world.

If we remember rightly, it is Anthony Trollope who thus describes the creation and progress of a New Zealand town-, ship :— First.a public-house is built, then . a store> next a forge, a newspaper office } a bank, and a gaol, and the whole, is dubbed a." city.*', This is a. little',- overdrawn, but it has a great deal of truth" at tlie bottom. Of late yoars there Has been & ireat err'ttptib'ri of Urarich Banks, the majority of which cannot possibly pay expenses: It may be urged, that this is only a concern of the shareholders, but that is only par* tialLvj true. The shareholders no doubt suffer to sonic extent, but so do the general public. Bank directors have to make the business pay as a wb,oje} and any loss in one directidri must lie made up but of profits in another. Thus the banks in the larger towns have, to be worked so as to cover the losses of village banks. This means that the clients of the bank have to - 1 pay a higher rate of interest for money, and so the whole community indirectly suffer from this excessive multiplication of non-paying branches! . In connection with this subject there is an excellent letter, from one who evidently under- ; stands what he talks about, in the last , number of the Australasian Insurance and Banking Jlecord. . The writer says : \ — " At a time like the present, when, ; owing to various causes money is ' so ! plentiful that its profitable investment in a legitimate channel is a matter of difficulty for the most long-headed bank ; manager, I desire to call the attention of : bank proprietors to an abuse, which has ; long cried for remedy. I allude to the ! absurd multiplication of branches ; these ' mushroom execrescences appear :oh the , infant township almost as soon as ' it springs into existence, and in no colony is this absurdity as glaring as it is in. "Victoria. It is not generally known that, we ; have* in addition to Very many money- \ lending institutions, no less than seventeen banking companies in Melbourne, ! whose branches in the country number 1 311, or ah average of one office to every: 2709 of our population — men, women, or ; children. If Mt Hayter is ' correct,; under the present system, bank managers'--1 and directors have a considerable amount, of patronage; and, being only mortal, they find occasionally a grim satisfaction: in checkmating a rival by being the first 1 to establish a branch in an infant township ; but I fail to see how the shareholders are. benefited by the present system, which is enormously costly, multiplies the chances of embezzlement and loss, and entails in-i cessant vigilance oh the part of inspec-: tors. There are difficulties, I admit, in remedying the . present abuses, but they can be overcome. Let a meeting of 1 managers, and one or two directors of each of the associated banks assemble.. Let them apportion among themselves the various townships or districts (one or two; branches if necessary) and agree that for, a term of five or seven years no additional branch should be established by any of them. There may seem to be objections to this course, and it may be urged that it would leave the field open to 'new selectors ;' but it would not be difficult to make the maintenance of a bank by an outsider a losing game ; and, if the asso-i ■ ciated banks would act generously and fairly towards each other, all difficulties would vanish. One thing is clear, ai present it is a game of cut-throat euchre] at which managers and directors play high. with, the money of other people, and the cost of the game is - becoming; s6 serious that I should think; the share[ holders cannot much longer; continue inf sensible to their own interestSi" ; . ;•• !