The Fielding Star. TUESDAY, APRIL 22,1884. Banking Business

Feilding Star, Volume V, Issue 47, 22 April 1884, Page 2

The Fielding Star. TUESDAY, APRIL 22,1884. Banking Business

At the last meeting of the Dunedin Chamber of Commerce, Mr Bathgate [ moved that the Committee enquire into and report on the present monetary system of the Colony, more especially as to protecting note issues by a deposit of Government debentures, and thereby relieving banks of the obligation to keep a large reserve in gold unproductive, also as to the expediency of establishing a general clearing house, so that our banking power may be economised, with the result of greater facilities being afforded | to commerce and to the promotion of j legitimate enterprise, with consequent increase of employment of the industrial classes. Mr Bathgate has had sonic few years' experience in finance as connected with banking, and during that time he gamed that little knowledge which becomes, in the hands of a man ol a recognised position, a dangerous thing. He speaks of protecting the bank note issue by a deposit of Government debentures, and we may assume he means that these debentures are to be deposited with the Government. It is to be assumed also that the said debentures could only be obtained by purchase from the Government., and the gold which now lies in the coffers of the various banks would be, in great part, transferred to those of the Government, and from the Government to the bank that did the business of the Government. Hit is the intention of Mr Bathgate to secure a monopoly to one institution, this would be about the most powerful means which could be adopted to that end. The favored bank would, in a very few years, crush out all opposition, and the wholesome competition which now obtains and preserves a certain balance of trade, would be a thing of the past, because the additional trade capital supplied would be the cause of the rival banksprovi ding an already powerful opponent with the means of their destruction. It is an axiom seldom disputed, unless by wild advocates of only a paper circulation, that note circulation, payable on demand, should be protected by a proportionate equivalent lying in the hands of the person or company which issues the note. If that power, which in this case is represented by gold or buUion, were taken away or transferred the note issue would to all practical intents and purposes become valueless. That company alone which held the security would obtain circulation for its note issues. It is becoming patent that centralisation is not the success its authors hoped it would he, and if Mr Bathgate's scheme were carried out it would be centralisation gone mad. As to the establishment of a clearing house for the whole Colony, that is a matter entirely for the banks themselves to settle. As it now is, there are clearing houses in all the large towns at which the clearances of each town branch bank and its country agencies are made. The general publio is not interested in that question and it should not be interfered with by outsiders. The less banking business is touched by legislation the better. As a rule members of Parliament collectively are remarkably ignorant on all subjects where technical knowledge is repuired, and banking finance is too delicate a subject for clumsy hands to touch. We hope therefore that when the Committee reports on Mr Bathgate's motion, while valuable information may be contained in such report that no recommendation will be made in it which will lead to any attempt to interfere with the gold deposits in the banks.