The Evening Star. THURSDAY, MARCH 30, 1876.

Evening Star, Issue 4085, 30 March 1876, Page 2

The Evening Star. THURSDAY, MARCH 30, 1876.

Mb Ranken, whose first letter on New Zealand created such a stir, has been, again favoring the * Sydney Morning Herald ’ with his views of the condition and prospects of the Colony. We see no reason to alter the opinion we have already expressed concerning the value of his communications. With a few years' further study of political economy, aud half-a-dozen years’ experience in a first-class mercantile house, he most probably would become a trustworthy expositor ; but in. his present state of knowledge, he, as well as our morning contemporary the ‘ Daily Times,’ would do wisely to say nothing on the subject. It is rather amus injg to find Mr Bankbk and the ‘Daily Tiaflss ’ disputing about the time? when our banks began to put & ob' the

screw. Two such authorities may, however, be fairly l©ft_ to settle between themselves the degree of influence eaeh has had in inducing the banking interest to • check what they are pleased to term “overtrading.” For our own parts, wo regard the action'Of both as mischievous, so far as their meddling is concerned; for the tendency of all ignorant discussions of the sort is to create groundless alarm, to unsettle trade, and to render everyone suspicious of everybody else. The ‘Daily Times ’ lauds the banks for giving a check to trade, as if it were judicious on the .part of banking establishments ’to encourage commercial men to enter into engagements on the faith of the continuance of a certain amount of credit, and then to withdraw it at the very time when support is most required. In the very nature of commerce ‘ there must be change, and because of change there will be occasional periods of commercial depression. There will, therefore, inevitably be some weak traders who must “go to the wall.” If they could go by themselves without injuring their neighbors, it would be well. Trade would be weeded of those whose only capital was their good name. Very worthy men they might be, but obliged to do a cer-

tain amount of business to keep their footing. This means forcing trade, and in flat times, necessarily losing money. Unfortunately, when a number of this, class are spread over the country, their stoppage oftentimes involves that of those who have supported them, and certain loss throughout the whole mercantile class. It might be supposed that with the knowledge that this must be the result, bankers would be very cautious not to risk bringing about a condition of affairs which must not only create stagnation of trade, but end in great losses to themselves. As a rule, we have no doubt they endeavor to avoid this; but, nnfortu-

nately, they are human, and as liable to be panic-stricken as other people. No doubt they have their own affairs to regulate, and very often have to act through motives that cannot be explained to others, and which it would not be wise to tell under any circumstances. As a whole, commercial affairs are not and cannot be regulated by anything like foresight on the part of banks. They trade in money, and their transactions, like those of merchants, are dependent on their stock. The large banking establishments by which the requirements of the Colonies are supplied sometones find it profitable to employ it in one place, sometimes in another ; sometimes they have more than they can employ, sometimes they cannot meet the demand. It is not wonderful that accommodation has been somewhat restricted latterly, for the accumulations of wealth during the last few years have not found

their way into the banka in the shape of deEosits, but have taken the form of streets of ouses and shops, of warehouses and milla and factories. The notion of “overtrading” may he given up until warehouses are filled with goods for which there is no demand, shops are without customers, and houses without tenants; audit is precisely to this condition that the doctrines held by Mr Ran ken and the ‘Daily Times’ tend to bring the country. We are quite ready to admit that the action of the banks has been beneficial in checking a tendency to speculation in enterprises of questionable prospects. With the single exception of gold, mineral production may

be overdone, especially of those classes for 'which demand is local or restricted; and unfortunately the management of joint stock enterprises, involving mechanical or chemical appliances, very rarely falls into competent hands. The consequence is that failure often results, where, with good management, success might be certain. But if one scheme happens to prosper, a hundred others are projected on the mere chance of fleecing the credulous by the projectors. Where money is likely to be wasted in wild goose schemes of this class, bank restriction is of great value ; but we have had little fever of that sort among us. The investments of the last two or three years have mainly been in reproductive works, and they will speedily recoup their cost and furnish capital for further extension. it is by no means a bad sign when money is not too plentiful in a country because of demand for its use. When Mr Rankest and the * Daily Times ’ maunder about the millions advanced by the banks, compared with a few years ago, they seem to imagine it has gone, as if wasted in powder and shot. They pass by streets of houses and warehouses not in the least, apparently, comprehending the value of the securities on which those millions have been advanced. They

are gulled by farmers who complain of good harvests and threaten to turn wheat fields into grass land to save labor; and they advocate measures which, if adopted, will produce exactly the stagnation they profess to ' fear. It would be unfair to attribute like motives to both, and we acquit Mr Rankkn of political design. That he is not well up on the subject he treats upon, those really acquainted with it need not be told ; but we acquit him of the motive so transparent in his commentator of acting the alarmist for no other purpose than to damage the Ministry.