THE Temuka Leader. TUESDAY, FEBRUARY 13, 1894. AUSTRALIAN BANK FAILURES.

Temuka Leader, Issue 2620, 13 February 1894, Page 2

THE Temuka Leader. TUESDAY, FEBRUARY 13, 1894. AUSTRALIAN BANK FAILURES.

In th ® re( l uest of tlie British Parliament » State paper containing a report on the f. a 3 llir ® 9 of Australia has been published. Air _ ee b an expert, has been employed to draw up the report, but it does not appear to us that ho has grasped the exact cause of the crisis. Mr Feel says that there wore 25 banks doing business in Australia before the crash came in 1893, and in the short space of a few weeks 14 of these suspended payment, and 1000 offices were closed, Mr Peel says the cause of the panic wap tkxt the credit of Australia had broken down. Wc dp not believe it. What caused the panic was ibis •: li°g lls companies and banks were started by dishonest speculators, and these could not possi'oiy exist. Previously large numbirs of these fell one after the other, and this led to a distrust of the legitimate, honest banks. No bank can live, except so long as the public repose confidence in it, and, of course, the moment doubt is lluvi/i; on its stability, it must go. The fai are of the bogus institutions destroyed confidence in too other bank-, and hir.'.co tho panic. j'dr Peed reo'guises this i < > a certain extent. He says that tho credit of numerous financial bodies began to be doubted at first, then the distrust fastened on the finances of the Government, and finally extended to the banks. Wo do not believe that anyone over doubted the ability of the Governments of Australia to pay their way. Their finances were certainly disorganised, owing 1o the niifores'cn colls p/e of tho land-boom, and tiro failure of file lingua companies, but no one doubted their ability to adjust thorn, an they have since done. Air I eel, however, gives very valuable information regarding the manner in which fire Australian banks conducted their business.

He says “ of every £3OO advanced by an Australian bank £4O goes in mercantile discounts, £6O in loans on land and house property, and the remaining £2OO in loans ou pastoral securities.” Now this is not legitimate banking, but the very opposite of it. Legimate banking confines its operations to mercantile discounts chiefly, and leaves money-lending on landed securities to mortgage companies. In Australia, however, the banks combined the business of mortgagees with that of banking, and the result was that when the demand was made on them to meet their liabilities their money was locked up in securities on which they could not realise. However, it was not easy to foresee that the people would become suddenly panic-atrikeu, as they did last year, and consequently the bank managers may be pardoned if they were not prepared for such an unusual occurrence. No doubt such securities as land, offers a great temptation to bankers who have money to lend, more especially in a community where the volume of trade is not sufficient to absorb the money he has on hand. It cannot be expected that bankers can resist investing their money iu such securities, and they would have been quite safe in doing so under ordinary circumstances. The whole trouble of the banks arose out of landboomiug dishonesty, and it will be some time before the country is restored to its former . degree of prosperity. Still Mr Peel gives us room to hope. He has great faith iu the future of the colonies, and says the day will come when Australia will be lending money to England, instead of as at present, but wo feel inclined to think that many swindles will be , worked, and many rascals will die before then.

JABEZ BALFOUR. We learn by cable that the Argentine press oppose the extradition of Jabez Balfour. We sincerely trust that the authorities will not be influenced by the Press and that Balfonr will be given over to the British authorities so that he may be punished according to his deserts. Balfour is one of the greatest scoundrels unhung. Some fourteen or fifteen years ago he started in London without much prestige or capital, and succeeded in swindling the British public to the tune of £7,000,000. This he did by starting bogus companies. He commenced with the “ Liberator ” building society, around which sprung up seven or eight other companies, including a bank. Ho made religion the mainspring of all his villainies, and he found it an easy matter to do so, for the goody-goodies were always ready to serve his purposes so long as the “ Mammon of unrighteousness ” was plentiful. Balfour used to get parsons, church dignitaries, and religious people on the boards of directors, and by this means he gulled the religious public into a belief in the stability of the concerns he managed. In this way the savings of widows and orphans and other poor people were raked in till the annual receipts rose to over half a million a year. Balfour in the meantime rose to be one of the most prominent men in London. He was a member of parliament and one of the leading financial lights of the city. He was lavish in his expenditure, lived in magnificent style, and lead a pious, moral, church-going life. He was a good man until he was found out, and then he was proved to be one of the greatest villains in social life. When the crash came about eighteen months ago Balfour left London and left no address, but it is known that he took with him an immense sum of money. He was, however, traced to the Argentine Republic, and arrested there, but apparently there is much difficulty in obtaining his extradition to England. He has money, he can bribe officials, and as the morality of the country is not very high it is possible he may succeed in buying himself off. We do hope, however, that he will not, and that the scoundrel will yet be punished.