The Feilding Star. "MONDAY,JULY 10, 1893. Reconstruction

Feilding Star, Volume XV, Issue 8, 10 July 1893, Page 2

The Feilding Star. " MONDA Y,JULY 10, 1893. Reconstruction

In connection with the disasters in Australian colonies of the banking corporations which collapsed either with or without notice, we have all heard of the grand panacea for the evil, called reconstruction. Really very fewpeopleknew what this meaut, and accepted the word with the same thankfulness aB did the old lady who had so warm an admiration for that blessed word Mesopotamia. We find now from the London Times of May 19th the position of the stronger banks was made indefinitely harder by the reconstruction scheme, bo freely resorted to by tbe banks that came first to tho ground. These schemes — says the Times — taken a* a whole, are very unfair to the various classes of creditors. It may be said that they have been accepted by meetings of depositors and that, no doubt, is true. But the creditors are an unorganised body, with no means of effecting concerted action, who had accepted in sheer helplessness schemes which they either failed to understand or felt k» be uujust. Creditor, look for security in the event of disaster to the uncalled capital of the bank. In all theso reconstruction schemes tlie leading feature is the withdrawal of this security. In order to save the shareholders from Kyiug up the calls to which they are ble, the money of the creditors has been impounded and converted into capital, not repayable at all, or repayable only after several years. The opinion is expressed that there ie not business enough for all these reconstructed banks, which would never j have needed reconstruction had ade quate busiuess existed, and in this we concur. Wholesale reconstruction ia simply a shirking of difficulties whicb ought to have been faced, and wbich will yet have to be faced in some form. The perpetuation of bad busiuess which ought to have been liq._id_.ed ia in itself a serious evil ; but it ia an aggravation of the evil when, for want of courage and hohesty to place the burdoo 00 the right shoulders, the credit of coiouial backing is eudaugered. There ia plenty of I good business in the Australasia u j colonies, aud whatever blunders may have been committed they are just as substantial a going concern a. can be fouud ou the face of the globe. It is true that reconstruction schemes dis-

turb the natural evolution of affairs, but the banks whioh have survived the storm hare a splendid future , before them. In competition with them the reconstructed banks will have but a poor chance since their debts converted into capital are in the first place locked up, and in the second constitute a tremendous dead weight. Fiom an English stand point no doubt the view of the Times is correct enough*, but the great recuperative powers of these colonies are not taken into consideration at all. We believe that with ordinary careful management and an avoidance of the errors committed in the past, the reconstructed banks will be able to repay both shareholders and depositors within the time promised. With the natural increase of population, and the settlement of new country, which is now, as ever since the foundation of the Australasian colonies, going on at a satisfactory rate, bank business must increase in proportion. The only thing to avoid, or rather shun like a pestilence, ia the starting of new banking companies by needy adventurers, or by individuals who have a desire to injure an institution already in existence, as soon ns the tide of prosperity sets in again. I