Colonial Banking.

Thames Star, Volume XIV, Issue 4484, 19 May 1883, Page 1 (Supplement)

Colonial Banking.

Sank balance time is generally a terrible one for many traders; ''the spider «nd the fly " business was never more clearly exemplified than is usual with many unfortunates who get within the meshes of the wily banker's net. The New Zealand correspondent of; the Australasian In-v surance and Banking record writes:— " Notwitbstandirig the anticipations of the beginning of last month, the money market has been of late very tight, and considerable pressure has been exercised by most of ; the local banks. ' The fact is that they ,have been overtrading, for though it is the custom to saddle the merchants with that,particular sin, there is no doubt as trade is carried on that the banks "'"are" fellow offenders. It is the banks at any rate who are in the main responsible for the extreme ebb and flow which mark the local market of this colony. In the desire to use all their funds they go very near low-water mark, and then be» 1 coming uneasy, severe pressure is applied to their customers. Complaints are loud and continued of this just now, and perhaps with more real justification than is; sometimes the case." These remarks will be unanimously coincided in by not only the merchants spoken of by; the correspondent, but by business men of all trades and callings. The Banks do not recklessly advance money to their customers, but they allow them to overtrade "and speculate as they will, while they see ['an asset available to cover the liability of the debtor to them—which *as a rule they have secured in one way or another— and so soon as "they deem it expedient from their point .of view,, quite irrespective of the result to those customers upon whom they really exist, they " put on the screw" and the unfortunates [ have in many instances to succumb, when a meeting of creditors reveals the fact that the assets are all swallowed up by the Bank, and the remaining creditors go lamenting. Certainly the tradesman can be accused of " outrunning the constable " in such a case, but the bank's eagerness to get its money out, and its action when called upon to replenish its coffers, lays it open .to the charge of over trading to quite the same extent as its customer cau be accused of. The way in which men com* mencing business are encouraged to follow tip sanguine ideas as to trade extension and speculation is extremely reprehensible, and banking institutions have a great deal to answer for in cases of the inability of their customers to meet their engagements when suddenly called upon to do so. Failures consequent on such practices as we refer to very considerably cripple legitimate commerce, both by allowing men of straw to operate amongst their sounder mercantile brethren —who eventually suffer—and in lessening the credit of colonial traders in Home and Foreign markets. It may be argued that the Banks should content themselves with watching their own interests—which they invariably do, but their duties do not end here. They are in possession of immense power, and very frequently occupy positions of important trust, and while admitting that the self-preservation idea is only human, it may be contended that any advantageous position they may secure should not be used to the detriment of those, from whose body they not only draw their means of existence, but who, in the majority of instances, repose a confidence in them which ought not. to be abused.