A NEW BANK.

Otago Witness, Issue 1170, 2 May 1874, Page 1

A NEW BANK.

That the necessities of a growing commerce imperatively require the establishment of a new Bank all must admit. At a time when the horizon of enterprise is continually being enlarged and extended, and new wants and new means of satisfying them are continually presenting themselves, new development of machinery is needed to ensure speed and render it certain that no reasonably productive undertaking should be hindered for want of capital.

Of the five Banks at present operating in our midst, no less than three are, to all intents and purposes, levying a tribute upon New Zealand, and are annually taking from our wealth large sums of moaey, to be spent by the proprietors of stock elsewhere. The other two are more or less owned in the Colony, and the comparatively lui*ge suocesa which has attended them shows J*gw warmly the freUag of patriotism

enters into such matters, and how instinctively the business world here has attached itself to those institutions which have a proprietary resident in. New Zealand.

Treating of "the Laws of Interchange among Nations," Mr Mill has pointed out the fact that " remittances to absentees are often very incorrectly likened in their general character to the payment of a tribute, from which they differ in this very material circumstance, that tribute if not paid to a foreign country (i.e., if sent from one part to another of the same country) is not paid at all. The two kinds of payment, however, have a perfect resemblance to each other in certain effects," <fee. To all intents and purposes the resemblance is complete between a tribute paid by a conquered territory to its conqueror, and the interest or profit upon Bank Loans remitted by New Zealand to Australia. Probably five-sixths of our readers will be " surprised to learn" how largely this Colony contributes to the prosperity of her sisters-in-law on the other side. An enormous sum surely was paid by this Colony to the proprietary of the three foreign Bunks, when, according to the Gazette returns up to 3lsb December, 18 I'd, they were enabled to pay dividends at the rate of 15, 13, and 10 per cent, per annum respectively. The amount over which the Union Bank of Australia has the control, but which belongs to this Colony, calculated upon the basis of its Notes and Bills in circulation and Deposits, interest-bearing or not, is just over one million, and to this extent they can tyrannize over our commerce. The Bank of New South Wales controls of our money something like £670,000. To the Bank of Australasia we entrust the manipulation of the smallest sum, bub its power over onr monetary transactionsamounts to a trifle of £234,000. The aggregate may fairly be stated at two millions — no less. What do we get for all this ? Is there any compensating advantage to be put in the other scale 1 Are we in such a condition that we must be officered from a, distance, and guided in our banking finance as a bavage nation, incapable of managing its own affairs, in order to carry on some of the most profitable undei takings of modern commerce Wo hope the time has at last arrived Tjlien we are enabled to leave off the swadling clothes provided by Sydney and Melbourne. The answer is indeed plain. We get nothing but a position of danger to our mercantile and industrial undertaking s ; a position the more critical — the more dangerous — that it is impossible to say when, or how, or why the blow may be struck, and every business in the Colony hampered or even ruined by causes beyond our control or calculation. To ob* tain such an object we are sends ing money home to England for in« vestment, and, with a charity that neither begins nor ends at home, ara subjecting ourselves to a Self-denying Ordinance) rivalling that of the Commonwealth. We made reference but lately to the danger under which we lie of having a pressure put upon our trade at any time through forces beyond our prescience or control. Every merchant knows the clanger of having an enormous overdraft at the Bank. So long as tilings go right, all may be well ; but directly a monetaiy pressure comes, no matter how good his securities may be, he finds his profits swallowed up and the stability of his business imperilled by a use in rates of interest and a curtailment of his legitimate supplies. New Zealand is exactly in the position of a merchant who has got in with thq Bank too deeply. This additional peril is hers. A Bank locally owned may tind it good policy not to " put on the screw " too tightly ; the wheels within wheels that we all wot of are apt to get clogged if this be done, What money could the Colony ejcpscl; if there were q

panic in the money market in Sydney, Melbourne, orevenonthe Murambidgee? None whatever. The interests of these foreign Banks are infinitely greater in New South Wales and Victoria than here. The New Zealand establishments are mere country branches to them. Directly a tightness is felt there, orders will come over to retrench here. Such things have happened, and will happen again. It is true when money is plentiful our funds may be left at our own disposal, and only a tribute required of us. So much the worse. It is heads I win, tails you lose. When we want money least, we are flooded with it. When our need is sorest, our money will all be called in and applied to the relief of their necessities — yea, even from Wagga Wagga to Darling Downs. No sane man can doubt the wisdom of gathering up all our resources within the Colony, and not risking our future \ipon the prosperity of the other Australian Colonies. A panic elsewhere on this side the globe — even a temporary depression would under present circtimstances be as serious a matter to most of us as the same event wifchin our own borders. To diminish the area of our risks is merely common prudence. A purely New Zealand Bank, of which all the shares should be allotted throughout the Colony in proportion to the population of the various Provinces, would be perhaps one of the most successful ventures that could be started. Never were the circumstances of any Colony more entirely favourable for such an enterprise. The present compact between the Banks concerning the rates of discount, interest, and exchange, may be very agreeable to^ the shareholders, though we conceive it to be very short sighted policy even for them. Such agreement would with less dignified surroundings be styled a " knock out." It is indeed painfully familiar when Israelites congregate in an auction mart at home, under that name. It could, no doubt, be easily upset as being a conspiracy to defraud, if the point were urged in a court of law. We have little hope of anyone doing this. The better and more effectual remedy to apply would be the establishment of a purely Colonial Bank, pledged not to trammel itself with such engagements, but undertaking a business profitable alike to itself and the public.