MR TORNQUIST ON BANKING (From the Buenos Alres Herald, Friday, March 23.)

North Otago Times, Volume XXXVII, Issue 8002, 15 June 1894, Page 4

MR TORNQUIST ON BANKING (From the Buenos Alres Herald, Friday, March 23.)

la answer (o a letber from the Minliter of Finanoe, Mr Tornqulat wrote as follows : "I am nob in favor of a mixed bank for the very time reasons that you adduce, ba< I am still leei in favoi o( a State Bank auch as you propoar or of reviving the old Provincial Bank (1) because the experience of every country it against it. Our own Provincial Bank waa already robten in 1882. That was inevitable. It mast happen, no matter what laws and regulab om you make. (2) Beoau&e the couat-y to-day is not in the same conditions as it waa io 1852 when the Bank waa founded — a bank I managed during G or 7 years, and which I know wall, and it ib were possible I should be the first to wish ita restoration. But the dead cannot be requsoitated. Daring the ten or bwenty years of thf Bank's prosperity, we had a country essentially criullo, There was no bank, I may say, but the Provincial Bank, and every body was compelled to oarry his savings to it. C: >. ■' nee existed, not only in the Bank buD m everything, At that time, to show you the confidence that exiibed, importers sold goods payable in six months and were quite satisfied with a simple re ceipt, We lived patriarchally then, and modern elvilisat'on and its Inherent cotruption were scarcely known. To-day everything has changed com. pletely. We have the advantages o civiliied European countries and wibb them other dootrinea, and especially dlstruit and scepb oism developed on the highest seale — to say nothing ol corruption and unbridled desire for gain, lawful or unlawful. We mu«b not look baok bat go forward. The State Bank is an ana chroaism. You may make it ex at and even do some service, bob bhe day will sorely arrive with other men who do not share your ideas, and than the Bank will share bhe fabe of its predeoessor. •• Why should we not learn from obber oonnbries 1 Are we a privileged racel I do nob wish to adopb the banking system of Europe in an ablolute manner, because ours is * young country and we are not in the same conditions as England, France or Germany. Thoie countries have accumulated capital which ia not employed in industry or commerce, wtrcb we have not. But I aecepb bhe opinions and principles in banking matters which are followed in Europe and the United States us the only true ones, and I desire to base on them the National banking institution whioh we require, with due regard to the differences between the said countries and our own. We want a National bank something like that o' England, Germany or France. Those three banks differ muoh in their internal organisations, but they are ali 'private banks'; that is to say, the capital belooßi bo tbe public and nob to the Government. You say bhat you wish to found a Bank of bhe country, for the country and controlled by the country ; that it to say, by its organic law. Upon tbif we are agreed. Ido not wish for » mixed bank, I bhink that all the capital ought to belong bj private in-* dividual, but you musb admit that immense privileges oanoot be given te a private company for ite own advantage exclusively. For this reaann I wish for the interference of the Statr oot only to examine its operations but as an integral part in the management. How far oagbb this interference to go 1 The Government baa to see that all the conditions of bhe Baok charter are observed. I propose bhat bhe Bank should bo obliged to use the 50,000,000 10 l lent by tbe Conversion Office exclusively in loinß at long iaten and nob in commercial d'acouots. It ia clear that the interests of the shareholders, whu only seek for good dividends, are oppoaed to loans at Ions; dates and ia the interior of the country. Consequently, the Sate has to interfere to enforce tbil condition. Bub there is another aide to the question. I( tbe State interferes in the Bank, the depositor will not have confidence. Therefore, the interference of the State should be limited so that the balance of influence may be on bhe side of the shareholders. DlteC'cra are appointed by the Go vernment, even though it does not hold a single skare, and the shareholders oan only examine the opera* biom. In the Bank of Franco it ia more or leaa the same thing, In England bhe Board is more independent) bub tbe Chancellor of the Exohequer nevertheless, baa great influence in all its decisions. This is the moat im poibtnt point in the whole queabioo. "Ith nk (hat— on bhe hypothesis of the 25 millions being subscribed by the public — b would be well for the Board to omprise 12 members, 4 to bsnumed by tbe Government whioh would have bhe right to appoint the president. Tbe State should nob be k ■haiehol #r, U ib might receive from 5 bo 10 per cent of bbc profits with which to redeem the currency. I pro pose that the 50 millions, bhe preßen oapibil of the Bank of bhe Nation, ■hould be converted into a loan withoub inbereitj The ssue already exists and has produced its evil efforts. Let ua therefore make bho most of it by devoting ib* entirely to the encouragement of production by loans at long dates. Dividing bhe 50,000,000d0l among bhe 14 provincos (the capital will have bhe commercial discounts ab shorb datos), bhe principal producing provinces taking five or six millions each and bhe others a million or bwo millions —you cannob do more than this bill the Mortgage Bank has been reorganised. The shareholders would have a magnificenb gifb iv the loan of 50,0000,000d0l wibhout interesb and cannot complain of conditions reitriotJog the use of bhe money. Bub ib is necessary to prevent the •hares being the subject of speculation on bhe Bolsa and also to prevenb thorn from going oub of bhe country. How Can fahii be done 1 Xbo fi*ok of England doei not issue

shares ; its capibal consists of stock, und tho proprietors of it aro oreditod u bbo Bank books with their respective proportion, and they in the same manner »a partners. The proprietor! can transfer their " stock " in a commercial house, but [ beliove, though I am npb sure, that the transfer must be approved by the Directors. [Noto by Ed. B. A. H,— This is nob ao ; Bank Stock is bought nnd sold on the 8 ock Exobango, and in any amount (pound, shillings, and pence) required by tho buyer. The ■seller bus to attend at the Bank or to ugn a power of Attorney (or tho trans fVr of the Stock, and the operatiou is "Aeofnrl withoub even notice to tho directors. The only right possessed by the holder of Bank Stock, beyond leceiving his dividends, is to attend the meeting to hear tho directors' report and to elect the Governor and 'lirectors, votcß reckoning; in proportion to the amount of stock hold.] Perhaps it would bo sullicient for the shares to be in tho name of the holdor and not to bearer aud that the directors should have a right to voto a transfer without; giving ret a ins. Tim would make speculation difficult, and it would he more so if the conseub of the National lixcutivo were necessary to o transfor. Tho capital of 25,000,000d0l might be offered during three years to the public, in sums of not 10-i than 100,000 dols ho th it ib might) bo distributed in the country. I think that tho gift of bho interest on 50,000,000d0l would, whon politics have calmed down, induce people to subscribe for the shares, nnd in the meantime the Government might take them provisionally, as you sug<esb. My object has been to demonstrate to you that what is the most convenient for this country is a i^ ational Bank formed with private capital, because the public will place a hundred times noro contidonco in it than in a Stato Bank pure and simple, as was tho Bauk of the Province of Buenos Aires.