BANKING ETHICS.

Wairarapa Daily Times, Volume 3, Issue 959, 9 January 1882, Page 2

BANKING ETHICS.

(From the Insurance and Banking record]

!We trust that it will not be considered aa exceeding our legitimate functions, if we devote a brief space to advocating the establishment of a code of banking ethics, such as may tend to conserve the honour and dignity of this admittedly important branch of business, and to insure tlie retention of the respect of the whole oorntumiity with whioh it has suoh intimate and confidential relations,

In the days prior to the inception ol joint'stook enterprise, a man's bankei ocoupied towards him a position some' what akin to that of his trusted family attorney. He was consulted on all qutstions of investment or enterprise, and often directed and controlled the' application of realised wealth, in scores oi channels, altogether apart from his individual interests.

As the typical bauker.of the last generation began to be replaced by the representative manager of a commercial venture, whose time was necessarily more fully occupied in supervising the ramifications of a large business, hebeoameless the trusted friend and adviser of his customer, but nevertheless retained something of tho old oclat that belonged to his •predecessors, and received the consideration due.tp[the responsible nature of hiduties. : '

But of late years the increasing compe-: tition in the Australasian field 6i banking, the a6.fiu.tned necessity of providing branch offices in every little township, and multi-! plying them indefinitely in the larger cities —has naturally reduced the status of the official position. The enforced parsimony —for it would be wrong to call it econosprings from this lavish dissipation of banking energy, frequently results in placing in charge of the new offices more youths, whose salaries are insufficient for tho maintenance of the social position they ought to ocoupy, and whose experience is inadequate to the exercise of independent judgment. Mature men'of the World do not care to ex plain their position, or unfold their schemes to youngsters on whose judgment they 'have no rehanco; aud the mar/ager himself wrestling ..with tho incubus of genteel • poverty, is, in. most instances ready to accept the dictum of his apparently, customer. • In' these natural feelings lurk abundantly the elements of banking-disaster, but the dangers are intensified by the undisciplined eagerness too' often shown by the • banking neophytes so 'placed, to.make the office at least pay its expenses. Ignoring the [fact for which they, are probably in no way responsible., that the branch .allotted ,to them was not wanted by the legitimate-requirements of the: district, they; s'e. ek, to. gp}, eustomers' by 7 the most | direot forms of/toutingi;andtpersonal r ßplicitajio>i. "li .have heard $«#)»

defended as'a necessity in starting a new business but 'feel thoroughly, assured that in suoh an enterprise as banking, it most be condemned by all responsible headers • fraught with danger, and absolutely fatal to the indenenderice of the bank's official. How can he exercise a restrictive pohoy towards a customer whom he has cajoled by promises of more liberal treatment to leave another institution where his new client liad no cause of complaint ? It is noticeable that: this m% departure from the principles of ; sniß~banking ig almost confined to ease; and this is, of to the fact that the quasi-agreement between the banks, by limiting the rate to be given on deposits, precludes the possibility of a depleted bank seeking to'., recruit its resources by attracting the deposits of another's customer at a higher rate. But, on the advance side, of their business, even when rates are fixed, there is a large margin for temptation, both in the amount and the duration of a loan; and it is in these facilities that the opportunity and the danger both lie. \. : ■ A variation on the form of personal canvass is occasionally made by adopting a wholesale appeal, and it has matter of notoriety.that a bank, whifl recently established a branch, sent a cif cular to every tradesman in the town, and placarded the hoardings and dead walls with gigantic posters, setting forth its superior advantages. To the outside observer such a proceeding would seem to indicate that the additional bank bad not been called into existence by ihe wanta of the district,'and the theory, at least, of banting, as of every other, business, it that there must be a want before there is any excuse for offering to'supply it. We think it must be taken for granted thai the solicitation of accounts by a bank manager is calculated Ho lower his own self-respeot, and frequently to embarrass the person applied to. . The latter may have no desire or reason for transferring his business, but yet be desirous upon personal grounds of obliging the young manager, and helping to make his venture a success'; indeed, it is obvious that by dwelling so muoh upon this, it may be made to appear to the person solicited, that upon his decision hangs the success or failure in.life of bis pushing young acquaintance,' and the sense of such a serious responsibility necessarily warps his judgment,

In the old established Anglo-Australian banks, their business is mainly kept together by their prestige, by the valuable connections they have formed, by the sense of their wealth and stability, and by the remembrance of the important services they rendered to the colonies in the olden time, They still hold, and probably will continue to do so, IheWam.of tho mercantile and squatting in ths leading commercial. the local banks have a great advantage in the large body of shareholders who can and do influence a'vast amount of business in the direction which benefits their terest. "With.auch an arniy.nljEjJJfl can be no urgent' need for Pjfl^^lV

tations and the desired and legitimately attained of dignity orp opriety. In.tjKutationi of business there will alwaysjMaecounta in course of transfer from one bank to another, but so .long'as the movement is spontaneous, the banker stands on a fait bWis, and if he makes a mistake, he hai at least the consolation: of reflecting that he did not do so under compulsion, If rumor berel'able, we fear that the "entente cordiale" is not. just now very pronounced, and,' perchance, the time ii not opportune 1 nevertheless, wo suggest to the A.ssooiated Banks, that they might with advantage draw up a code of banking ethics to which all might subscribe, and appoint a tribunal. empowered to deal punitivly with its breaohes, and to arbitrate on the ever recurring question of the ridioulous multipiibation of offices in small districts. Tho code need not necessarily be Draconian in its severity, but it should undoubtedly prohibit absolutely, touting for business, tendering for accounts, enabling shire councils to violate the Local Government Act (a very common offenoe), informal advances to evade/he stamp duty, and other irre'gularitiewfhioh are often boasted ot,by favorod'oustomers, at samples of their apeoial banfe'manager'a smartness.

Competition »ay be the soul of business, but we:incline to think that in theso matters, even uf in no other, a healthy combination Would be better for. the com, munity at large, 1 and would tend to pre* serve the honorabje position of a banker from the temptation which keen compatition is apt to engender.