The Commercial Depression Its Cause and Cure

Feilding Star, Volume IV, Issue 19, 21 July 1883, Page 2

The Commercial Depression Its Cause and Cure-

Mr Bathgate has tabled the following 1 notice of motion, which will come on for discussion in the House on the Ist pi ox.— " That the present commercial depression which prevails in the colony is a matter of grave concern as regards the public interest, and demands the early consideration of this House, with a view to provide a remedy; .that, it is alleged, it has arisen in part from undue pressure by the banks, caused by a large proportion of deposits, both Government any private, which should be u>ed by the banks in pro-noting the commerce of the colony, being used and invested out of the colony; that it is expedient that the note circulation should be protected by the deposits of colonial debentures in the Treasury, whereby a large amount of gold coin would be liberated in aid ot the commerce rf the colony; that all the Banks should be brought within the operation of ; ' The Joint Stock Companies Act, 1882;" that the present banking arrangements of the Treasury be considered, to determine whether or not it would be advisable to ronew the same on its expiry, or to receive offers from other Banks, singly or ass ciatcd, for the management of the banking business of the colony ; that it would facilitate the operations of the Banks if two cleai'ing* houses were established by law, one for each Island, and the necessity for keeping a supply of gold for exchange purposes at numerous seaport towns be obviated, and the risk of loss in time of war thereby diminished ; that the whole subject be remitted to a committee to consider and report." 3 Ihe subject of this motion is one of vital interest to the colony, and will doubtless receive a considerable amount of actention from mombers. Yet we venture to thiuk that Mr Bathgate is attempting too much. 31 he confined himself to the consideration of the financial depression which now obtains iv the colony, he would have a text upon which to discourse for many hours without importing other subj -ct matter into it. He displays an amount of ignorance of this subject that we did not exjuct from one of Ins experi er.ce. When-fth*' blames the bankp for undue pressure, he merely revives a fallacy or popular error which we thought had been forgo 'ten. lh< ii west tyro in- finance ought by tlritime to know that the positions are reversed, and that in time of neces- | s'ity it is the people who put the pressure on the Banks l,y the withdrawal of dopusits. 'i hat capital supplied by

depositors in the colony is used or employed by the banks outside of the colony may be true in seme isolated instance-, known to Mr Batiiuate. but the quarterly returns published iv the Government Gazette give the impression r.hat such is not the general rule, but that the colony is considerably indebted to orb' r parts ot the world for a supply of capital. The idea of note circulation being protected by " Colonial debentures^on the I reasnry, " whereby a large amount of jjo'd coin would be liberated in aid of the commerce of the (Jo'orcy. is utt^r uonsenc*, and simply ra^ans that so much more pape>* money would be represent! or protected by the gold supposed to be in the Colony. If Air Hathuatk had read Mr Itoschisn's speech, made not long airo, he would have leaniHci that we are just in about the same position now as the world of oumniiTce was before the discovery of yohl in California and Australia. Th») amount ot gold in circulation was small ii. comparison wi;h the work required trom it, and consfquoutly goods were cheap and gold d<-ur v" 1 ages, although apparently low, were able to purchase ail the requirements of Hie at proportionately low rates. As gold flowed iv from the mines its value lessened and "he price of goods went up. It is just as impi^sibie to make people rich b} r Act of Parliament as it is to make them mural by the same means, ami all the tinkering of hou, members will only make matters worse. Let the Government encourage all kinds of settlement that will promote agriculture and sti>ck-raisii.r. In these lie the real wealth of the Colony.