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Patea Mail, Volume V, Issue 458, 13 September 1879, Page 2

There is at the present time a very general ontcry against the Banks, to the effect that they push for the complete payment of over-drafts and refuse to make advances on good security. Of course it is a very common thing to scold the Banks in hard times, as though commercial depression did not affect them, in common with other commercial institutions. We do not wish to join in such a cry, or to charge the Banks with more than they are responsible for; sti'l there can be no doubt that crises in financial matters are often hastened by the action—the selfiish action—ot the Banks. Here again we must disclaim any wish to demand an exhibition of superhuman virtue on the part of the Banks. They, like all other commercial institutions, try, by all means, to feather their nest, and they will continue to do so as long as shareholders and directors are ready to applaud the balance sheet that announces a good dividend. It is useless to complain of the Banks using their opportunities of making a good haul; that only proves that they are human institutions. The real question is: How can the public be placed beyond the power of the Banks, and how can the temptations that now stand in their way be removed ? It has been suggested, in this town, that a third Bank would be of service in increasing the opposition which is the life of trade. No doubt a third Bank would be liberal far a time, in order to secure a business, but that opposition in Carlyle would in any way alter the policy of these vast concerns that extend all over the world is very improbable. If the methods by which the Banks at present rule and disturb the financial conditions of the country be considered, the remedy may not seem so far to seek.

la the first place, then, the Bank of New Zealand takes, over from the Government, when a loan has been raised, immense deposits, upon which of course they pay a trifling interest. In order

to make, a good tiling out of these deposits while they remain, every effortis made to lend the money to other Banks, and to the public. We have known the manager of a country branch to make a tour of the whole' district in which he was placed, offering “ accommodation ”to the farmers. This is of course bnsinessy and what the Bank has a perfect right to do; but what is the result of it? . The result is’ that hundreds of people, sanguine people, and people of little experience, are tempted to borrow. , The farmer buys more land, and hopes for a fabulous crop to clear him; the storekeeper enlarges his “premises, and hopes to attract all, or move than all, the trade of the place. But the crop and the trade are both wanting when Government draws out the money, and the Banks say—Pay up the “ accommodtion.” Even if the storekeeper’s business increased greatly, he finds that he cannot get the overdraft that is necessary to carry it on. In the second place, the Banks often speculate in real estate. Huge amounts of overdraft and accommodation are called in to enable them to make vast purchases of land, or at least to enable them to enable others to do so, which is about the same thing. Thus the public are at the mercy of the natural selfishness of the Banks, and are only “ accommodated ” when the Banks can’t accommodate themselves better in another way. Now, the people of New Zealand derive great benefits from the loans that come into the country, and are content to boar n little inconvenience that may accidentally attach to them. But, then, they have also to bear part of the troubles of other colonies. The Bank of New South Wales, for instance, is very popular in New Zealand, and some of its dealings with the Government of the colony from which it takes its name have caused no small trouble in New Zealand, As to the remedies for these inconvcniencics, wo cannot pretend to speak like on oracle ; nevertheless we have our opinion. In the fi-st place, let loans bo raised in smaller amounts, and, il need be, more frequently. In the second phn;c, lot every well-established Bank in the colony have a fair share of the Government deposits. In the third place, let the Banks he honest and considerate enough not to take larger deposits than they can profitably use without pushing it off, and without letting overdrafts grow far larger than they can he allowed to continue. And lastly, if all these courses fail, and if Banks cannot be restrained from speculation in iand, anil the like, let the Government establish a Slate Bank, and enact such laws for its protection and guidance as shall be found expedient.