The Wairarapa Daily. MONDAY, APRIL 3, 1882.

Wairarapa Daily Times, Volume 4, Issue 1039, 3 April 1882, Page 2

The Wairarapa Daily. MONDAY, APRIL 3, 1882.

The most careless observer must have ■noticed a suspicious frequency of bank- . ruptcy notices of late in the Wellington 1 Provincial papers. At a time when the colony has emerged from the difficulties • whioh formerly beset it, when trade has revived, when money is plentiful, and when every man has a fair chance of earniug a living it may well be asked why so many failures should occur, The colony: is indubitably prosperous, yet there nnist be some unsoundness in its commercial organisation when we are flooded with innumerable petty bankruptcies. Does this intermittent schedulo' file-firing portond a coming storm, or does it arise out of the late panic wave which, three yea ra ago, ; broke on the shores ef New Z ea ] an d? It is very probable that when the financial; pressure was at its height in this colony many persons raised money : at a ruinous rate of interest, which .enabled them to tide over the actual period of depression, but, which slowly and surely brought to thorn the collapse which it;for a season averted. This may account for some of the disasters •which nqwjre.occurring, but it hardly covers all. One of the causes which formerly-exposed the colony to sevoro reverses was an undue. extension of credit, fins-cause wo fear is still in operation, and is in a measure responsible, for a large proportion of the bankruptcies of the present day. The inflation of public and private credit is the' principal danger, which threatens our present prosperity, and it is one which is Very difficult to' deal, with, We have very little hopeofan amended :bankruptey law, restoring'the com merce of the country: to a sounder footing;-; The present; Act- is ridiculously w?akjn its operation. It is all in favor of the.debtor, and iB but a very poor help ; : to jthe oreditor. Still, no law which is j likely to find acceptance in tihe sew-Zealand Parliament can;be expected to increase the dividends in insolvent estates. One might be enacted to punish' the reckless trader, but'creditors when"they find that they can get 'no'thiirlgqufc of an estate never, care to persecutotheimprudent insolvent, orhit him, as'it were, when he is : Banks ;bfjthe colony, in our opinion, are mainly responsible for, 'any undue., excredit in the- colony:. It is. they ;whb ..put on, the brake which restricts it pr' : remove'the checks which liberate it.^Wholesale.houses .when., they get [over, liberal. Credits from the 3Bahks K give - oVfr liberal credits: to retail houses, and retail hoijses in their turn ■ ghje oyer liberal'credits io •indi- ] vidual customerso::There' is : ' a:- keen: icompatition ..among--1 the;--half-dozen WfiVfti ,'.:,:-;; : d::t. ;..x.,;::r,u.^:,.

yuiilfo' wiiicli iiuuu iti liiis colony, ami it is. well known that to secure business they frequently go further' than they should do. They do not; make their customers toe the line, but, on the contrary, in many instance's encourage them to step over it. As .long as v a man has any tangible security they advance upon it, buoying him up till his account is worthless, and then, putting his head under water. In how many insolvent estates have not the Banks been the secured creditors who have swept up all the assets, leaving the ordinary creditors out altogether in the cold 1 We do not refer to any particular Banks, Competition, more or less obligesallbanking institutions occasionally to resort to practices which are

inconsistent with' any high standard of banking ethics, It is, however, desirable to draw public attention to the fact that our colonial banking institutions frequently relax the rules essential to commercial safety, and that the' consequence isa deterioration of commercial morality, which is followed by an undue proportion of bankruptcies.. When failures occur it is usually found that Banking institutions have protected themslves from direct loss, and that the whole burthen of the deficiency is thrown on other creditors in the estates, or in some instances where the Bauk is the sole creditor the unfortunate customer whom it has accommodated is cut adrift without a shilling, We consider that it is within the power of Banks to absolutely limit the extent of insolvency in any community. Their power in this direction is greater than that of the Legislature, or of all the Chambers of Commerce in the country. It would be unfair to deny that New Zealand owes much of its wonderful progress and vitality to the enterprise and liberality of its Banking institutions, but while admitting this it is desirable that such institutions should be closely watched,' and if it be found that competition or any other cause leads them to adopt courses draught with danger to the communiey, it is time that a protest wero lodged against them. The question which, in our opinion, demands serious consideration is whether- the bankruptcy practices of the colony aro not responsible for the excessive number of insolvencies which have latterly beon recorded.