The Globe. FRIDAY, NOVEMBER 22, 1878.

Globe, Volume XX, Issue 1488, 22 November 1878, Page 2

The Globe. FRIDAY, NOVEMBER 22, 1878.

There seems to bo some kind of feeling floating about that everything is not as it might bo in ouv financial world. To use a common-place expression, some people say that money is tight, and others, Cassandra-like, go so far as to predict the approach of a sort of commercial panic. Wo cannot, see that there is the slightest foundation for the feeling which, to a very largo extent, only exists in the minds of persons scarcely competent to hold sound opinions on the matter. The warning feather which is 'I to bo skipping about and will soon indicate the direction of fine wind, is urged on by the breath of those who evidently base their prophetic suppositions upon slender and ill-considered premises, fewgo weeks ago one of the most gigantic com mere,nil failures of the ago took place in Great Britain, and distance, which lends many things to the view besides enchantment, magnified to a very extraordinary degree the effects which the calamity might have upon colonial interests. TV e refer, of course, to the failure of the City of Glasgow Back, the full details of which only

reached us some days ago. This monetary institution, it may bo remarked, held for years past a good standing in commercial circles. All of a sudden, and without any preliminary warning, the whole structure fell to pieces, disclosing a state of immorality and corruption on the part of the management amounting to nothing short of rank swindling. Not very long before, dividends on a high scale had boon declared, when a most nourishing statement of affairs was placed before the annual meeting of shareholders. The first official inquiries instituted after the crash, however, brought to light the stupendous fact, that accounts had been falsified, list of securities manufactured and invented, and fictitious names had been placed on the debit register, while bad debts had boon entered as sound assets, and the currency supposed to cover an enormous note-issue was nowhere to bo found, or its whereabouts even to be traced. False returns had boon also manipulated so as to deceive the Government, and “cooked” balance-sheets had been thrown at various intervals into the shareholders’ eyes as so much blinding dust. The total amount for which the Bank failed —exclusive of capital and reserve fund—was no less a sum than £6,191,000, for which some twelve hundred shareholders will now be liable as partners in an unlimited liability concern. When the Bank suspended payment, it was found that out of assets totting up £11,800,000, there was something like £8,000,000 worth of bills of exchange and advance-notes upon securities. We now come to that portion of this lamentable story which probably gave rise to much uneasiness in certain circles, and made some people fear complications likely to involve colonial interests. Among the advance-notes included in those assets, wore several representing about £2,000,000 lent some years ago to the Australian and Now Zealand Land Company, who, it is wellknown, possess several valuable estates in this island as well as in Australia. It was first rumored that it was in a great measure owing to these two millions having been locked into the company’s lands, that the Glasgow Bank had finally become compelled to stop operations. From a commercial point of view it may fairly bo argued that when Banks invest their customers’ deposits in such semipermanent manner, they travel greatly out of the path which prudence, lot alone recognised commercial rules, dictate shall only be theirs. And it is not of uufrequent occurrence to find this practice followed by Banks during days of financial stagnation when deposits pour in, and capital is kept aside from risks of speculation. In the case of the City of Glasgow Bank it is not improbable that the fact of its having advanced so largo a sum as two millions might have precipitated the crisis had not the whole concern been already so terribly rotten, that such a sum was but as a drop in the cup-full. The Australian and New Zealand Laud Company are about to place their estates in the market, and to realise, as much as possible from the sale, they intend cutting them up into blocks of moderate sizes. But it is not primarily through the failure of the Glasgow Bank that this stop will bo taken. Consequent upon the catastrophe, the largest shareholder of the company, Mr James Morton, who in fact held some two-thirds of the shares, became dragged down by the fall of the Bank. The company’s estates it is said are to be placed in the market, but they are of very great value. They comprise some of the very finest laud in the colony. They have been highly improved and the Oamaru and Southland properties alone are worth nearly four millions sterling. Not many days ago it was stated in public prints that a certain Dunedin Bank had called in its advances, or, to use commercial slang, had put the screw upon its customers. Coming as it did upon the heels of the Scotch failures, this closing up of Bank favors gave rise to some unfavorable comment, many people not understanding the true reason for the tightening of the tether. But we do not see that anything much out of the common run of things can bo made out from steps such as are taken at regular intervals by banking institutions from prudential motives purely. At this time of the year especially, that is to say before harvest time, it is not unusual to find money-lending firms exhibit less elasticity in their monetary transactions. There has been besides, during the last few mouths, an extraordinary amount of over speculation in laud. People in all parts of the colony seem to have been seized with a kind of laud craze amounting almost to a mania. Landed properties wore quickly run up to highest prices, and while an immense deal of “papermoney ” was utilised in the process, speculators did not always roly upon cash when financing their purchases. That the Bauks should have ceased to give unusual latitude to their customers under the circumstances, can scarcely bo wondered at. The financial panic bubble never really acquired dimensions such as would even enable it to bo pricked; and wo feel confident that the shadow of that which had no real substance, has unnecessarily frightened some people not quite initiated in the mystic lore of finance.