The Temuka Leader THURSDAY, MAY 2, 1889. BANK OF NEW ZEALAND.

Temuka Leader, Issue 1886, 2 May 1889, Page 2

The Temuka Leader THURSDAY, MAY 2, 1889. BANK OF NEW ZEALAND.

It is only now when the full facts j of the case haTe been laid bare that we can realise what a narrow escape the Bank of New Zealand had, and' oDly for good engineering it would hare gone through without a doubt. The first report the new directors brought forward told us that £300,000 had been withdrawn by depositors from the bank ; now they tell us that £600,000 more has been withdrawn, making up in all nearly one million sterling. That may be regarded as a mild rush, and when we ar« told that nearly all the money wa» withdrawn in London, we can only say that the bank owes a great deal to the forebearance of its Colonial depositors. This is the second rush the bank has experienced. In 1879, the failure of the Glasgow Bank frightened the * English depositors, and they immediately rushed the Bank of New Zealand in London. The bank had to find the money at once, and the only way it had of getting it was to squeeze it out of those to whom it had lent money in New Zealand. The "Colardo beetle" went round; he commenced to operate right and left to get money, and the consequence was that many were ruined. We cannot say now whether the withdrawals in 1879 were larger or smaller than those of the past year, but this we know, that the withdrawal of £900,000 in about six months is a Yery serious matter. It amounts to withdrawing from tne bank about one of every three pounds it had on deposit, and the fact that this colony never felt that this was going on, speaks well for the way in which the business of the bank was managed during this crisis. There were, however, two circumstances which came to the bank's assistance, and without them it would never have pulled through. These were, first, the large increase it made in its capital, and second the two million pounds the Government borrowed. Well indeed might Sir Frederick Whitaker alarmingly ; exclaim* as he did, that they should be bankrupt if they did not get this loan. It was said when he made this extraordinary statement that he had the Bank of New Zealaud, of which he 1 was then a director, in his mind's eye; it was freely alleged that the money ; was borrowed chiefly to help that institution, and really now, when we ! look back at the position the bank | was in, we believe that it influenced the Government considerably. Wecan- ! not say that we regret it. The failure of the bank would have brought fearful desolation upon the country, and even if the money was borrowed to help it we must say that it was better than to let it sink. At any rate the money was borrowed, and it bad this effect: it enabled the bank to meet the demands of the depositors without rushing its clients in the way it did in 1879. That alone was something to be thankful for. Things were bad enough last year without the banks making matters worse, and we believe we owe it to the £2,000,000 borrowed by the Government that they were so easy with the people. But what saved it chiefly was the readiness with which the new shares were taken up, and the cash paid at once for them. Only for that nothing would have saved it. The fact that the shares were taken up so readily infused confidence into the people, and they refrained from withdrawing from it. It has, however, passed the crisis now; it is on a firmer footing than it has been for years, and if properly managed there is not the slightest danger of it. Previously to the crisis we frequently called attention to the dangerous position of the Bank of New Zealand, and as frequently wiseacres laughed at such a possibility as its failure. What have these wiseacres to say now ? The Government might become bankrupt, the wiseacres used say, but the Bank of New Zealand, never! Well, the bank has not yet, hut it was only saved by the assistance of the Government and good management. It would be impossible for a State Bank to get into such a position as the Bank of New Zealand did, aud, without doubt, when the people get more enlightened State banks will take the place of private ones. People will not remain always shivering and trembling for the safety of their banks; they will eventually see that safer systems can be adopted, and then will come State banks. i