THE Temuka Leader. THURSDAY, AUGUST 10, 1893. BANK FAILURES.

Temuka Leader, Issue 2540, 10 August 1893, Page 2

THE Temuka Leader. THURSDAY, AUGUST 10, 1893 . BANK FAILURES.

An ex-bank-mauagor writes to us from Australia as follows :—" Your ideas of a iNat-ional Dank iiavo been taken up very strongly in Sydney by able financiers since our financial troubles have occurred, and I quite believe that before long ;» National Bank will be started on the lines you have beeu advocating in New Zealand." Our correspondent makes some further remarks which it would not be advisable to publish. He is not. satisfied that the bottom of the financial troubles of Australia has been reached yat, and he expresses a hope that the panic will not reach New Zealand. We hope so too, but it would be as well to prepare for suc'i a contingency. If the p<mic spread to New Zealand we should be in as bad a plight as Australia is, and that is not at all desir ble. With regard to our advocacy of a State Bank wc may say that we have done very little in that direction for maify years. We saw that the people did not want it, and as they did not there was no use in advocating it. The average run of people, so far as these questions are concerned, may be likened to children. The child thinks the live a beautiful thing until it touches it, and then it discovers what it is. It is so with tho average elector. He never understands these questions until he goes through the fire of experience, and then the full truth dawns upon him. Australia has gone through this fire, and when she found herself in the very thick of it she threw herself into the arms of the various Governments. The Governments at the time were apparently on the verge of bankruptcy ; the deficits in the budgets of both Victoria and New South Wales amounted to about £1,000,000, each the English money-lenders had stopped their credit, they appeared to be on their last legs, and yet it was these almost apparently bankrupt Governments that saved the few banks which stood it out from following in tho wake of others. Only

for the Governments of Australia the panic would undoubtedly have reached New Zealand, for we have soma Australian Banks doing business in this colony. The Governments took the matter in hand and reinstated confidence. Victoria made some arrangements under which locked-up moneys were released; New South Wales made the notes a legal tender, and Queensland issued reul State Bank notes. To all intents and purposes there is a State Bank in Quee(island, although it is not such an institution as we h».ve been advocating. All that has so far been done is simply tinkering with the matter, and until the • question is taken in hand honestly, and with a determination to secure success, no permanent good can result. Our own Government promised in the Governor's speech some legislation with regard to banking, but we have not seen their Bill yet, and we do not know what it is to be. We do not, however, anticipate that it will be. anything like what we have been advocating. It will be only another patch pul on, which will last only until some pressure is felt, and then it will burst. Now with regard to private banking institutions, we have before us the experience of centuries, and the lesßon which it teaches i 8 that the wealthiest of them ultimately come to the ground. The Bank of England had narrow escapes more than once, until it was made safe by the Government of England becoming in fact a sleeping partner in it. There were banks in ancient Greoce and Home, and they failed. The failure of the banks of the Bardi and the Peruzzi of Florence in 1345 spread woo and misery throughout the country, and bank failures have ever since been the c: >.use of periodical disasters. The history of the last 600 years is, at any rate, plain so far, without going back to Greece and Rome at all. And yet after 600 years' experience there are men who talk about " a printing-press and a bale of paper " when a State Bank is spoken of! Let us look at America. There we are informed that 120,000 have been thrown out of employment on [account of bank failures, that many employers are ruined, and that great distress prevails throughout that great Continent. For our own safety, therefore, we ought to establish a State Bauk in this colony. The colony is prosperous now; our finances are in a highly satisfactory state; we are in a position to do what we like, and it woald be better to start now than wait until, like Australia, we are overtaken by disaster. But there is still another reason why we ought to establish the Bank. In the discussion on the subject in 1885 Sir Robert Stout said that if the Government were to issue notes it would be equal to a loan of £1,000,000 a year. What great things could be done with £1,000,000 a year, and yet we let this vast sum slip through our fingers! Could anything be more idiotic ? First, we run a great risk of bringing finauclal disaster on ourselves through the private banks, and throw away £1,000,000 at the same time. Further comment is needless.