BANKING IN THE COLONIES. TO THE EDITOR OF THE "WEST COAST TIMES."

West Coast Times, Issue 237, 26 June 1866, Page 2

BANKING IN THE COLONIES. TO THE EDITOR OF THE " WEST COAST TIMES."

Sir, — Banking, in my mind, has always been connected with something of mutual advantage to all parties connected with the transactions of the system on both sides. The banker, as a natural consequence, expects to reap considerable advantage, and the depositor also hopes to derive benefit from the arrangement. From the earliest days of banking, this has been the case : and so it is understood in England and other countries. Mercantile transactions of every description, and in all parts of the globe, are conducted entirely through the medium of the Bank, and are of immense advantage to the merchant. On the other hand, it must be borne in mind that without the support of the mercantile community, Banks, as an institutipn, with a few rare exceptions (and these would be mere money lenders), would cease to exist. The relations of banker and merchant, or trader, differ widely in the colonies, from their mutual position towards each other in the mother country. There the banker's interest is to advance and foster the business of every deserving trader or merchant, by kindly dealingfrankness and openness being the mutual sesame that places both banker and client on a confidential footing ; and many an otherwise embarassed man is tided over his difficulties and raised to competence, if not to opulence. In the colonies, more especially the gold-producing ones, the interests of the commercial class assume only a second place in the estimation of the Banks. I speak more particularly of the gold districts, where the bankers are mere gold-buyers, purchasing from the miner his gold at a certain rate, and giving him in return a deposit receipt (often lost by the unfortunate digger in his bush tramping, and for which he may have to wait many weary months the Banks will acknowledge him as the original depositor), or their " promise to pay," that is, the bank's own notes. With this gold the banks trade at an advantageous rate, ns merchants on a large settle, and by judicious investments reap large profits on the strength of their paver This would be a matter of minor importance if, whilst advancing their own views, the interests of the mercantile commuuity were encouraged and promoted ; but, as far as my observation has reached (from the earlier days of the gold-fields up to the present time), gold-buying, and that alone, has been and is the him of the colonial banks. And is the miner thanked for thus depositing or selling his gold to them ? Not so. ' He has received his equivalent — a piece of bank paper, and he is therefore all right (?). By a liberal system of discounting, many a town I could mention in the colonies would by this time have assumed much larger proportions, and a more solid mercantile standing. In many instances banking degenerated from its generally acknowledged high standing into a system of pawnbroking on a large scale. Instances have been known where the usurious rates of interest and' the large securities required have crippled the energies of good business men, which was the more severely felt by them in the new gold-field towns of the colonies. This, of course, producing a depression in trade, influenced and affected the whole business community, and consequently, the progress of the town itself in a business point of view. Thus (as in the days of the Lombards), the bankers have resumed their places as mere moneylenders and traders in gold. The confidential basis which, in modern times even, in England rendered the banker a sort of father confessor, is almost unknown in the gold colonies, and mutual distrust has assumed its place. Granted that tho bankers, or agents, as they style themselves, have reasons for their discouraging the protection and advancement of the mercantile community, in the uncertain state of each new gold-producing town, from the fluctuations in the gold returns, aud the likelihood of decrease in tho digging population — yet why should they refuse to advance and promote the commercial interests of men of acknowledged integrity and good standing? Ido not advocate a rash and indiscriminate system" of discounting, but unless accommodation is given to merchants for the purposo of carrying out their plans with a view to more extensive enterprises, how cun any town advance as a place of commercial importance ? Dullness and stagnation must eventually ensue ; for tho bankers take the merchants' gold, and it goes to their credit on the books of the bank, but it yields the depositor no return. In short, the banker, instead* of (as in former days) lending the people gold, receives now their gold, not on loan, but in perpetuO) so long as the bank paper will float. The people are the depositors of gold, and the bankers the lenders, of paper. "Ohl temporal 0! mores! Such is the colonial banking system of the present day.-— I am, Sir, yours, &c. A Traveler through Sfacb,

roasoua