THE COLONIST PUBLISHED TUESDAY THURSDAY AND SATURDAYS. NELSON TUESDAY OCTOBER 19,1875 THE BANKING ARRANGEMENTS OF THE COLONY.

Colonist, Volume XVII, Issue 1981, 19 October 1875, Page 2

THE COLONIST PUBLISHED TUESDAY THURSDAY AND SATURDAYS. NELSON TUESDAY OCTOBER 19,1875 THE BANKING ARRANGEMENTS OF THE COLONY.

Shoetlt after the commencement of the present session of Parliament, a Select Committee was appointed, on the motion of Mr .Kolleston,-.?' to. enquire into and report upon the conditions uuder which the banking business of the Government is conducted by the Bank of New Zealand, and.whether tbeae conditions imperatively required that ■■so large a sum as between three aud foilt millions should be deposited with one institution ; and further, to report whether it is not in the interest of the Colony at large ; that other arrangements should be made for the future." The Committee have taken a 1 very large amount of evidence on the subject, and thia. has been-printed and laid on tlie ' table of the House.; ;• , When Mr Kolleston made his motion be evidently labored under a misapprehension as to the amount ofmoney that the Government had entrusted to the custody of the ' Bank of New Zealand, because Mr Murdoch, * the Inspector of that Bank, distinctly stated ) in evidence that the largest amount of public - money the Bank had ever held at any one ; time was £2,600,000, and that they only s held that for " a short period." However, it matters not how long that enormous sum ] wai in the possession of the Bank, the I question clearly is whether it is advisable ! that any one institution should have charge 5 of bo mul public money. It must be understood that this £2,600,000 was deposited 9 with the London branch of the Bank, and : knowing as we all do of the terrible panics j which are liable to burst over the Loudo" : money market at any moment, sweeping " scores and perhaps even hundreds of well-to-r do .firms into the vortex of bankruptcy, »« 1 cannot help thinking (much aa we desire to s foster the growth of a purely local Bans; . that it is the very reverse of advisable to ; l continue the practice, of allowing any ow i institution to have charge of so much puDHJ I, money. It is quite true (as Mr JosepQ jshephard elicited from Mr Murdoch) that, >J if the Bank of New Zealand suspended p»f , r ment, the Colony would be a prefereflW n creditor, but at the same vimeit WJ^'J* t. well that no risk should be run. - "We ,J 0 not intend our remarks to apply specially t J the Bank of New Zealand, but'to any Ban* r whica may ha?e the boW charge of »»6B

j ar ge sums. In such a case the Colony does undoubtedly incur a certain amount of risk, because, as we have already said, panics come very suddenly. But there is another point about the "agreement" between the Government and the Bank which we think j s worthy of comment. It appears that w bile the Bank of JNew Zealand is so favored as to have so much money placed at its disposal, thereby materially strengthening jts position in Lombard-street", and making it quite a powerful institution there, it allows the Colony much leas for the use of the money than could be obtained elsewhere, and, moreover, that while it requires six months notice before the account can be removed it is under no obligation to advance even a shilling to the Government by way of overdraft. Why the Government persist in cllpwiup.the Bank to get the better of them in this respect we cannot conceive, and why they should agree to give six months notice and to receive practically no advautage in return is altogether beyond our comprehension. Surely it is " in. the interest of the Colony at large" that the public should get the highest possible interest for their money. Then why employ the Bank of New Zealand if another Bank or other Banks, will deal more favorably? "Why let all the advantage be on one side —on the side of the Bank ? The question is a moßt difficult one to answer. Four Bank Managers were examined by the Select Committee, and three of them' asserted that better terms could have been obtained. Therefore it is clear that there is something- rotten in the banking arrangements of the Colony. It would be very much better if.the Government account were divided amongst an association of Banks, as is the case in Victoria and other Colonies, because better terms could be obtained, and the risk would not be near so great. Mr Bridges, the Manager of the National Bank, stated on oath before the Committee, that on one or two occasions '' the Bank of New Zealand had put pressure on the' Government to the disadvantage of the Colony." After being sworn he said that one of these cases had reference to the purchase of the Port Chalmers railway, and thai; the Bank of New Zealand had put pressure on the Yogel Government and thereby compelled them to purchase the railway at a much higher price than they should otherwise have given. He also stated, in effect, that the Bank of New Zealand were the owuers of the railway primarily, and that they obtained hy pressure more money from the Government than it; was worth, in order that they themselves might profit largely by the transaction. Mr Bridges further stated that he would not give any evidence on this subject because he would implicate some third party, thereby leading the Committee, and everybody else who reads his evidence, to infer that some public man had used his ratuence to make the Government pay an utterly exorbitant price for the railway. It ras of the utmost importance that the truth or otherwise of this statement should be ascertained, and the New Zealand Parliament has done all in its power to shield the witness and bring out the truth; but Mr Bridges now appears desirous of withdrawing the statement entirely, and thus leading the public to believe that at an important Parliamentary enquiry he detailed idle and unreliable gossip; or that his statement was made, as was averred by one member of the House, through malice. Mr Bridges at present stands in no enviable position.