THE NEW ZEALAND BANK.

Wellington Independent, Volume XVI, Issue 1615, 6 September 1861, Page 2

THE NEW ZEALAND BANK.

[From tho Independent, 20th August.] The deputation from Auckland, whose necessarily hurried interview with some of the merchants and others on. Wednesday last, was noticed in our Friday's issue, may be expected to increase the •favor with which the New Zealand Bank is already regarded in this City ; and on the return of the deputation from the South, we hope to find that the object of its visit has been successful in creating, a support in Canterbury and Otago, sufficient to warrant the commencement of banking operations there at the earliest possible date. One of the advantages of the longer stay which the deputation will probably be able to make here, on its return trip, will be the pramulgatioirof sttch/facta \ /

and figures as are at all times necessary to cldar' away the doubts which generally suggest themselves to prudent men, when , a new field for the investment, of capital is brought under their notice. The absence of any definite statements of this nature* was much to be regretted, when the desultory discussion on the advantages of having a Colonial Bank was originated by Mr. Tame in the Chamber of Commerce last month. This probably arose from want of notice, as a subject of such grave importance cannot be properly discussed on the spur of the moment, and, when introduced in a formal manner, opportunity is given for supporting or opposing by an appeal to figures, in which merchants are vere correctly supposed to delight. As the importance of the subject cannot by properly estimated without figures, we now submit such as are within our reach . They are taken from the New Zealand (xazeUe of 6th August (inst), and to make them more compact and avoid distracting the attention by placing an unnecessary number of them before the public, we have put together the returns made by the Union and Oriental Banks, — returns, we may remark, which the public are very far from being satisfied with, as they do not give the information in detail as respects the several

provinces. The. Notes, Bills and Deposits of the two Banks are stated in the returns to B.oth June last, to be £970,248 2 0 This amount, less the

value of the bullion in the Banks coffers 226,564 19 1

or , £743,683 2 11 is the contribution made by the Colony, at the least, towards the Banking operations of the Union and Oriental Banlfs of London. Now let us see how much capital these London Banks loan to New Zealand. We find that the debts due to and securities held by the Union and Oriental Banks, amount to £832,618 5 4 Deduct from this the amount provided by the Colony as above 743,683 2 11

and we have £88,935 2 5 as the Capital lent to New Zealand by the London Banks, i.e., if we interpret their returns correctly, which may not be the case, we admit, for they are purposely* not given in the best possible form to enable us to do so. We have charged the Colony with the whole of the securities held by, and debts due to the Union and Oriental Banks; but it may be that the Colony is no t liable for the whole amount. Should this be the case, whatever is the amount not due by the colony has to be deducted from the £88,935 2s. sd. which we have stated as the capital lent us by these Banks. Then there is another item through which the Colony's indebtedness may prudently be reduced, and that comes nnder the head bullion. Thus the Union Bank transacts business to the extent of £805,270 15s, lOd. with a bullion reserve of 156,024 15s. Id., and the Oriental does business to the extent of £164,977 6s. 2d. with a bullion reserve of £64,971 15s. 4d. The Union conducts its business with a little less than one fifth in cash against all its liabilities, while the Oriental keeps almost half as much cash as it has liabilities to meet. Either, therefore, the Union has too little or the Oriental has far to much cash in hand. If the Union has sufficient, and its long experience must have enabled so judicious and so intelligently managed an establishment to settle this point, then the Oriental has a disproportionate amount of cash. In proportion with the Union it should have only about £32,000 in hand, instead of £65,000. This deduction alone would dimmish our liability for the assistance in banking Capital to £55,935 2s. sd. but we may also be entitled to a further deduction, under the head of securities held by and debts due to the Union and Oriental Banks, the amount of which the Banks alone can furnish us with. We would remark that we greatly doubt if the Union Bank was transacting the whole of the banking business of the Colony, as it did at one time, whether we might not take credit for the whole of the bullion held by the Oriental Bank, in which case our indebtedness for London Banking capital would be small indeed, some 20 thousand pounds ; for which they would have in return the profit arising from dealing with the cash and credit of New Zealand. We think with the aid of these figures the members of the Chamber of Commerce and the public of New Zealand, in general will.be better able to

estimate the value ' and the probable success of a New Zealand Bank.

Two if not three of the gentlemen of the Chamber of Commerce, suggested^ that the time had not jet arrived, to establish a Bank ; that we wanted capital, and not the absorption of.it, in the form of Banking. We think they will gather from the foregoing figures, that we get very little capital from abroad by aid of our present banking institutions. With reference to absorption, a few minutes thought will show them, that capital raised in a community for banking business to be conducted within the community, is not attended with absorption, in the sense evidently meant to be implied t>y the use of the term. A Bank in such case only becomes the agent for distributing, in a particular manner, a portion of the existing capital of the community. The way in which absorption takes place in connection with banking is by raising capital in one community to be applied to the business transactions of another community. With reference to the | proper time, that we may say is the old procrastination argument, under which communities remain in a very dosy state, if not fast asleep. We confess when, we hear it used, we always feel inclined to stretch ourselves and say it is time and more than time that the New Zealand people woke up, and set about a great many things quite within their reach, and which have been performed over and over again by communities much smaller and younger than the population of New Zealand has long been. Perhaps those who are in favor of procrastination, will tell us how the shareholders of the Bank of New South Wales found it was the proper time to establish a bank in Australia, or how any of the shareholders, in the numerous banks which have been established, for years and years in, the numerous Colonies of Great Britain, found out that the right time had ar-? rived to commeuce their several undertakings. When we get this information we shall possibly be in a positive condition to judge, but, as we are not likely to be furnished with this useful knowledge, we must do as they who have done before us, and as they who follow us will have to do — act up. to the best of the knowledge and belief of the day. There are two ways of augmenting capital-rthe one by the introduction of economising institutions — the other hy an increased production and the re-application of its results. Both, are desirable, especially at the present moment, but just now- the former is more within our power than the latter, and it is .well we should avail ourselves of the oppprr tunity. Banks, and Insurance GomIpanies are some of .the many means yet to be applied here, by which we may economise and so augment the power of of our capital, the concentration of ' the people with the education and colonisation of the community. It has been said | that the deposits are only temporary, but it is a notorious fact that nearly all, if not all, the banking business of this fcolony has been conducted throughout upon such deposits, and these are reasons why we should always have large deposits [ awaiting opportunity for investment. We suggested in our article upon insurance that thousands would be saved by a Company of our own, and a Bank would lead to the saving of many more thousands now sent annually out of the Colony. Let economy and union of the Colony be the watch words here, and progress will soon be added to it.