BANKING IN JAPAN.

New Zealand Herald, Volume LXIV, Issue 19831, 29 December 1927, Page 7

BANKING IN JAPAN.

RECOVERY- AFTER CRISIS.

MERGER ARRANGEMENTS. HEAVY DEPRESSION PERSISTS. A severe banking crisis occurred in Japan about seven months ago. The progress toward recovery was recently reviewed by the Tokio correspondent of the Times. The principal task to be undertaken was the settlement of the affairs of those banks which had been forced to close their doors during the crisis. The deposits held by them amounted to about £80,000,000, and until arrangements can be made whereby they are either reopened to business or are finally dissolved this amount of credit is lying idle, and the general business of the country is suffering accordingly. It is upon this task that the governor of the Bank of Japan has concentrated his energies. Though is not yet in sight, the foundations have been laid, and the superstructure should progress more rapidly.

Of the banks in question the semiofficial Bank of Taiwan (Formosa) stands in a different category from the ordinary banks. The special legislation passed at the extrxordinay session of the Diet provided the necessary funds, and it was reopened before the expiry of the moratorium, meeting its obligations in full. In the case of the ordinary banks, however, the special credit facilities which the Bank of Japan was authorised by emergency legislation -to grant were expressly designed to protect depositors and thereby restore public confidence. These facilities are extended to banks which have suspended payment only when the latter can show a definite prospect of reopening to business permanently. A bank which had suspended payment for some months could only reopen to business with impaired credit. To meet this difficulty the governor of the Bank of Japan evolved the idea of founding the Stiowa Bank, which is now in course of promotion by the leading bankers and capitalists in the country. This concern is not an ordinary profit-making enterprise, but is designed to serve as an organ for absorbing the closed banks when they have completed the readjustment of their affairs. The bulk of its shares have been taken up by the promoters, so that it will start its career with first-class backing, and, as only such banks as have succeeded in obtaining the approval of the Bank of Japan to their schemes of readjustment will be taken over, the risk incurred is not heavy. A feature of the programmes of readjustment prepared by the banks is the surrender of a proportion—4o to SO per cent. —of their claims by depositors, sums of 100 yen (about £10) or less being repaid in full. In most cases a deposit may be recovered in full, either by instalments or in a lump sum, provided that it be left unredeemed and free of interest for a term of years. Apart from the system centering in the Showa Bank, merger arrangements are widespread throughout the banking world. Following the close of the period of moratorium there began a steady transfer of deposits from the smaller banks to the larger ones, to the trust companies, and to the post office savings department. The amount of money thus concentrated in a few safe places of deposit is estimated at £85,000,000, of which £50,000,000 was deposited with the five strongest banks. As a result of reductions in interest rates for fixed deposits, t-he cost of money has been brought down to the lowest figure since 1919. The-note issue regained normal figures some weeks ago, although advances by and deposits in the Bank of Japan are still much higher than before the crisis. But the general situation of trade and industry presents no features which foreshadow any , rapid recovery from the heavy depression of recent years.

BIG SYDNEY PROPERTY SALE, ABOUT £200,000 PAID. The Farmers and Graziers' Co-operative Grain, Insurance and Agency Company, Limited, signed a contract in Sydney last week for the purchase from Motor Parking, Limited, of Goldsbrough, Mort and Company, Limited's old premises on Circular Quay. The purchase price was about £200,000. The building is an old landmark of the Quay. AUSTRALIAN BROWN COAL. "DEVELOPMENT; OF NEW ERA." LONDON, Dec. 23. In a letter to the Times, General J. G. Maxwell, applauds the Victorian Government's decision to develop the Morwell coal deposits. He s»ys war-time research proved that Australia's coal, black and brown, was safe and reliable. Coal distillation appears to be the solution of Australia's failure to discover oil, says General Maxwell. Such utilisation of fuel is one of the big developments of the new era. He says lie is competently informed that the fuel bill of Australian ships would be reduced to one-fifth the cost. The writer adds that research into this problem wpuld be a chance for the Migration and Development Commission to render a service to Empire development and defence.

GOLDSBROUGH. MORT AND CO

INTERIM DIVIDEND DECLARED. In the course v of ii speech at. a. meeting of Goldsbrough, Niort and Company, Limited, in Sydney last week, Mr J. M Niall said that, the pastoral situation since June had been one of anxiety and diiiiculty. The drought conditions then affecting Queensland had continued and had occurred to some extent in all States except Western Australia. The position had new improved to a partial extent in Queensland and considerably in New South Wales. During tho previous week good rain had fallen on most of the company's properties, and all present danger or further losses of untoward expenses had ended. It was decided that an interim dividend nt tho rate ol 10 per cent, per annum for tho six months ended September 30, 1927, on 1.750,000 shares, being part of the. capital of the company (excluding 250,000 new issue shares), bo paid 1 . The chairman explained that the 250,000 new shares did not participate in the dividend, interest having been allowed under tho terms of issue to September 30 on all pay merits made before that .date. Mr. Niall, speaking of the company's own properties, said that they were now in a state to carry on for some months Tho position was not quite so satisfactory with some of the company's clients, par t.icularly those in Queensland. Even there they had had some relief, and if later on further rainfalls occurred, the position ■ wojild be rendered much more mobile by allowing the opportunity to obtain country for agistment-purposes. The situation showod distinct improvement on that exist ing a little while ago. Generally, added Mr. Niall, he regarded it as having so filtered that if during the next two or three months further rainfalls were recorded owners miaht be able to carry on well into the middle of next winter. Mr. Niall said that the higher prices for wool would, to some extent, compensate for the losses made by the industry because of the mortality among sheep due to the dry season, but the full effects of the drought will not be manifest until next season.