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To the Editors of the Otago Witness

Sins, — I trust you will permit me to make a few remarks in your paper upon a subject which deeply affects the welfare of our infant colony — 1 mean that of Banking.

It is not my intention to trouble your readers ■with any abstract dissertation on banking ; my object being to ascertain through your columns the general opinion of my fellow-colonists upon the subject, with a view, should it coincide with my own, to taking some practical steps in the matter.

As to the propriety of establishing a bank here, and the general benefits which could not fail to be derived from it, I think there cannot be two opinions.

The settlement of Otago has been got up by Scotchmen. It is regarded at home as being peculiarly a Scotch colony ; and, as such, it is very naturally expected to exhibit a community possessing all the social and economical characteristics for which Scotland is so pre-eminently distinguished. Now it is well known that the thing which, above all others, — in conjunction with the thorougly protestant character of the Reformation, — has made Scotland what it is, is its admirable system of banking. In no country are the principles of banking so well understood ; in no country have the*y been practised with so much benefit to the people.

It is a remarkable fact, that although naturally a poor country, Scotland has accumulated wealth more rapidly, has made more progress in agriculture and manufactures within the last fifty years, than any country in Europe ; and all this is to be attributed, not to. any support or encouragement from Government, or to the influence of legislation (indeed itwould be nodifncult matter to shew that these have had an opposite tendency), but to the indomitable industry and perseverance of the peg|fe drawn out and encouraged by a system drcfanking, which, while it has enriched the community and changed the whole aspect of the country) has, at the same time, afforded a safe and remutive investment for capital.

It is impossible to point to any country where so few losses have been entailed upon the community by banking,and so many benefits conferred. I believe there are only two, or at most three, instances of failures in the whole history of joint-stock banking in Scotland; and even in these cases there was no ultimate loss to the depositors. During the severe monetary crisis in 1793 and 1825, when so many banks in England were swept away, not one bank in Scotland stopped payment.

So vital, in my opinion, has been the influence of banking upon the present condition of the old country, that it would be unfair to look for the same degree of prosperity in the new, unless it possesses the same system, or its equivalent. Unfortunately for Otago, however, we are prevented by the law respecting banking, which exists in New Zealand from establishing a bank on the Scotch system, let the paid up capital be what it may. In legislating on banking, the Government at home have always endeavoured to assimilate the laws of England and Scotland; and although the people of Scotland have over and over again used the most clear and convincing arguments in favor of their own system, yet the issue of notes by the banks is still looked upon in England with jealousy, if not with envy. The legislative vision seems completely blind to the stability of the note circulation in Scotland, as contrasted with the irregularity and insecurity of the currency in England. It is impossible for any one who carefully studies the subject not to perceive that the systems of banking in England and Scotland are totally different; and that the difference between the results of banking in the one country and the other must be attributed to this distinction. The colonial ordinance to which I have alluded is all very well in as far as it may tend to protect the colony ajasinst the bubble schemes of mere private adventurers ; but when it operates as a barrier to the establishment of a bank, such as the peculiar circumstances and origin of the Otago settlers require, then it entails a positive injury upon the community. \ Suppose for a moment a bank on the Scotch

system. In a colony like Otago its shareholders Avould probably comprise c veryresident landowner in the settlement. Its directors, elected by the shareholders, would be the men of highest standing in respect of position, character, and integrity in the colony ; they themselves necessarily holding a large stake in the concern. The amount of notes which it would be entitled to issue would, if deemed necessary, be under the constant inspection of the Government; said amount bearing a definite proportion to its paid up capital, or the bullion in its coffers. And further, there would be a • compulsory clause in the deed of settlement, providing that, in the event of the bank sustaining losses to the extent of one-fourth its paid up capital, it should be immediately wound up. It is plain that in a bank so constituted there can not by possibility be any loss to the depositors; while that of the shareholders would be limited. \ And now, sirs, in the event of such a bank being established here, I am sure it cannot be necessary for me to descant at any length as to the effect which would be produced by the circulation of £5,000 or £10,000, judiciously distributed among the honest and industrious tradesmen and agriculturists of this colony. It would be to industry and labor what fuel is to the steam engine, — setting all its wheels and parts in motion : it would convert the timber so plentifully scattered along the sides of our beautiful and picturesque harbour into ships, — ■ it would establish fisheries along our coast, — would bring our land into cultivation, and cover our plains with flocks. It may, perhaps, be said that this is all very fine, but that it is beyond the reach of attainment in the present circumstances of the colony. I maintain that it is no such thing ; and that if the settlement were excluded from the colonial ordinance anent banking, the thing could be carried out at once. And here it may be proper to state, that it accords with my knowledge, that parties have recently arrived in the colony who are prepared to take shares in a company constituted as I have described, to. the extent of onehalf or three-fouths of the paid up capital; which it would be safe to commence with as a minimum ; and. I am quite satisfied that the colonists are competent to provide the rest.

• I fear that I have trespassed too much already upon your space, otherwise I might go on to shew that it is manifestly the duty of every friie who wishes well to the colony to make this a personal matter, and to unite in a general movement towards obviating the obstruction which stands in the way of establishing a bank upon the Scotch system ; which is, in reality, neither more nor less than a system of mutual aid and assistance. The man who has any stake in the colony must be blind to his own interest, and the welfare of those who may follow him, if he does not see the force of what I have stated. I trust that none of your English readers will take offence at anything I have said in adverting to the Scotch system -of banking, as compared with that existing in England. Many of them are, no doubt, aware that the views which I have expressed are very prevalent in England; and that the Scotch system is gradually being introduced there ; aud but for the exclusive privilege and powerful influence of the bank of England (itself founded by Paterson, a Scotchman, by the way), there^an be no doubt but that system would, long ere now, have been in active operation in London itself> tij!& ?& ~-+tj y- r

To the Editors of the Otago Witness.

Gentlemen, — If most of your readers were gluttons at horne — devourers of newspaper by the bushel — you will admit that your tiny sheet, and its coming but once a fortnight, is but a sorry allowance. We therefore hailed the promised quality of it, — the ' multum in parvo,' — ■ the selection that should at least keep alive our knowledge of current events, by a variety of choicest morsels. Nor were these expectations disappointed. Your first numbers had already given an encreasing interest in the publishing day ; when, lo and behold, out comes No. 5 ! reversing all, and discharging upon us the contents of a fusty pamphlet; and that, too, with the horrid notion to those who glanced in dismay from its first sentence to its many-, columned, close — 'to be continued!' Surely there must be something in a Number 5 • that's no canny ;' or perhaps it goes for the first of April in these latitudes. It really seems to deprive men of their wits ; and I protest that if No, sof the ' Witness ' be less mischievous, it is every whit as suited (in the matter referred to) to light a man's pipe with, as was No. 5 of the 1 News.' Do, gentlemen, let the parties wishing it have a reading of your copy of the pamphlet : they could meet and go through ;itjn an hour. But deprive us not of our rightful , food ; including, perhaps, such useful and brief' extracts as the readers of the pamphlet -might crave from you. ' - • i '** - ' " *-'}• A Subscribed.

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OEIGINAL CORRESPONDENCE., Otago Witness, Issue 6, 19 April 1851

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OEIGINAL CORRESPONDENCE. Otago Witness, Issue 6, 19 April 1851

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